There’s a silver lining for the younger generation struggling to find a decent job, affordable home and a sense of security: many of the world’s most respected policy advisers understand their plight.

The International Monetary Fund, the Organisation for Economic Co-operation and Development and the Institute for Fiscal Studies are chief among the respected organisations that have published reports putting the growing financial burdens faced by young people to the fore.

It’s true that in-depth studies of how to improve education, skills and general employability drop off the thinktank production line almost every month. And government ministers say they worry about it, hence the apprenticeship levy on businesses to promote in-work training.

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But practical support for the victims of the modern market economy is not enough, and the global thinktanks know it. They recognise that a fundamental shift in the balance of power is needed to rescue young people and, by that virtue, the rest of society. And that means a reshaping of what we tax and when we tax it.

Not so much because they believe fairness is a goal in itself – more because their analysis tells them that the accumulation by certain groups of property and pension wealth, kept out of the clutches of the tax authority for the benefit of their children, creates a debilitating system of winners and losers. This system forces millions of young people into a new kind of serfdom, killing any chance of the team spirit needed to improve productivity.

This accumulation of wealth, not only by the top 1% identified by Thomas Piketty in his book Capital, but also by a broader group of middle-income earners over the age of 55 – the baby boomers – needs to be addressed. It is time to ease the taxes on income, making work pay, and start to look seriously at the best ways to limit the gains from property and savings.



At the moment, politicians are in thrall to the baby boomers and, to the dismay of the OECD and IMF, tax policy is going in the opposite direction.

Take the changes to university education funding as a case study. Developed by the Liberal Democrats and seized on by a Tory leadership desperate to make savings, it shifts a large proportion of the costs to students, who must take out loans to fund themselves and then pay back the loan through a new tax system.

The first crop of graduates face a combined tax and national insurance rate of 41% on annual incomes above £21,000, compared with the 20% income tax and 12% national insurance paid by non-graduates.

A recent announcement by George Osborne makes a bad situation worse. Should a graduate complete a master’s degree (pdf), they would need to pay another 6% from their income (over a set threshold) to cover the extra debt on top of the 9% for their bachelor’s degree.

It is another instance of young people paying through the nose for something that the previous generation had for free. And soon the situation will worsen when ministers, under pressure from the Russell Group of universities, allow the annual fees cap to rise above £9,000, leading to even bigger loans and a bigger bill for future generations to pay.

It’s not hard to understand why Osborne would want to protect the accumulated savings of the older generation from extra taxes at the expense of the young. Older people vote, and in large numbers. At the last election, the over-55s made up more than half of the electorate.

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So it may need another government before a tax on property sits alongside income tax, national insurance and VAT as the main revenue earners. Not stamp duty, which only taxes transactions and hinders the movement of young workers around the country while inflating estate agents’ commissions, but an annual tax on property with the promise that those in work get to keep more of their wages.

Many analysts inside the OECD and IMF agree on this, aware that 70 years of wealth accumulation has brought the west to a point where trading in assets – the stocks and bonds in pensions funds and ever-inflating property – is more financially rewarding than working for a living. That needs to end or the UK, like other developed nations, will continue to allow the desperate search for income and security from ever-greater wealth to create a society that is poorer and desperately insecure.