TLDR: give money to the people who will spend it is a very effective way to move the production possibility frontier until it crowds out investment. ATM were not short of investment capital globally.
I was reading recently about a Canadian economist who proposed a different tax system.
Essentially, allowing people to pay no tax, on the first 200k canadian dollars they earn.
So someone on 25k a year, would pay no income tax until year 8/9 of employment.
Someone on 80k a year, would get 2 and a half years, tax free so to speak.
The idea, to money in the hands of the young, to give them a financial lift when they need it, help them 'move out' get houses or rent etc.
Its an interesting idea.
Imagine in the uk, the first 100k you earn, is income tax free, the second 100k is taxed at 10% (getting you used to the system) then after that you are in the system as normal - but potentially with a house, or some savings. Oh and the threshold for paying tax is scrapped, if you are in this system, then once you start paying tax, you pay it on all income, no 12k tax free buffer etc.
Money in the hands of the young, who are then likely to go out and spend it (thus through VAT etc you get a fair chunk of tax anyway) but also need it.
I'm no economist, I dont know practically how much such a change would cost, obviously a fair bit initially. But theoretically, would it be bad?
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