Think of it like state pension provision in reverse
Bubble — By Adam Higgitt on July 15, 2010 1:15 pm
At least not if it's done right
WHAT are the objections to the graduate tax? To some, obliging the users of eduction to meet its costs is unjust. The patient may not have gone to university, but he certainly benefits from the training of someone who did. Higher education may enable higher earnings for those who access it, but society as a whole also benefits.
The graduate tax, however, recognises this. It imposes some cost on non-graduates, while also asking those who benefit above and beyond the general social good (graduates also have cause to see the doctor from time to time, after all) to make an additional contribution.
But there is another equity objection. A graduate tax could, if poorly designed, make some people pay very much more than is deemed their fair share. J K Rowling (estimated fortune £591 million) graduated from Exeter University in the late 1980s with a degree in French and Classics. Had a graduate tax been in place then, the creator of Harry Potter would today be paying for a sizeable chunk of the higher education sector single-handedly.
Great, you might think, we can have a better funded education system on the backs of the ultra rich. But there is no reasonable way that J K Rowling’s phenomenal wealth is as a result of her graduate status. If we are to go down this route we may as well be honest and introduce new bands of tax for very high earners regardless of their use of higher education.
At the other end of the scale it is also inequitable for those who gain little or no premium from a university education to pay for it. In other words, what we need is both a floor and a ceiling on any graduate tax contributions.
So it is fortunate that the current tax regime has precisely such a mechanism. National Insurance Contributions (NICs) only kick in at a certain level and top out at an upper level. These payments are also hypothecated, or at least nominally so. Some people, including the government increasingly treat NI as merely another component of income tax. Nevertheless, this should not detract from the fact that it remains an excellent template for a successful graduate tax system. It is a scheme designed to elicit an additional contribution for a benefit to be derived at a later date, and is levied only on the middle band of income for that reason. A graduate tax that makes use of the NIC mechanism would simply be the same principle but in reverse; recipients would derive the benefit first and make the banded contributions later.
Tags: taxation
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7 Comments
The Adam Smith Institute makes some similar points, particularly around the proposed system not picking up on inexpensive education then high pay not being recognised – http://www.adamsmith.org/blog/education/graduate-tax%3a-bad-idea/
I have always taken the view that Students must be willing to fund parts of their higher education. I also don’t believe in the ever increasing percentages Labour (although I think other parties support?) of young people going to universities. We need to increase vocational, apprenticeship and professional training and lift that education on a level par with academic training. In the UK we are producing more photography graduates than the whole of Europe needs.
While I would not want to stop anyone wanting to study whatever they like, having an element of contribution seems fair to balance that.
Young people are being sold a myth about degrees, leaving them with a desmond classification, indebted and back to the same job they could have go beforehand. We owe to young people to provide better avenues, away from degrees, to gain skills and better access to jobs.
I support a graduate tax, and I certainly think the argument Adam has put is sound enough. My own view is that having a more equalising tax system in general would be a worthwhile endeavour to go alongside this. Hence why I would “introduce new bands of tax for very high earners regardless of their use of higher education.”
I also think, as we are on the subject, that Peter Wilby’s old argument about Oxford and Cambridge was a novel idea. He argued that every school in the land should have two places each in those universities each year – so the top two pupils from every school would get a place. I digress.
Mr Warner wrote …
…- so the top two pupils from every school would get a place.
I cannot imagine being so cruel sending young people to Oxbridge that were academically, possibly socially, ill-equipped for the experience,
… do we not send the best to the best lest the best become like the rest
just thinking aloud …
“I cannot imagine being so cruel sending young people to Oxbridge that were academically, possibly socially, ill-equipped for the experience,”
Crueller still the assumption that each school, including those horrid working class ones, do not have two pupils able to go to Oxbridge.
http://www.newstatesman.com/199903260006
“Crueller still the assumption that each school, including those horrid working class ones, do not have two pupils able to go to Oxbridge. ”
Marcus – they might, but to insist they do on a quota basis is surely wrong?
I don’t insist on anything matey, I merely said it was a novel idea to look at breaking down some of the barriers for working class kids in top universities.
What is this niche general fascination with Oxbridge?
A lovely networking club, PR face of the UK education system, and place for the uber-rich to tick one of their life boxes, it may be …but it remains a niche.
University entrants aspire, but to different levels. They do not all want to lead corporations and countries; and life outside the boardroom, politics, and the media, is not always about which club you are a member of.
I remember a straight-A school-friend of mine laughing off the offer of taking The Entrance Exam. He preferred to study – to the indignity of our old head – at Bath, as it offered a far better degree in his subject (pharmacy).
The pupil wanted the best education. The school wanted the celebrity. Go figure.
Some go to university as a prerequisite for a job in a certain sector. Others go with a hope that those few letters after their name will get them a job interview one day. Some day. Any day, but just not today.
Others go because it is a continuation of school, and they’re used to school. Others just don’t want to let down mum, and steal from her those three/four years of proudly telling everyone that her boy is at university.
Train driver and astronaut. Man Utd and captain of Wales XV. Pop star and contestant on Big Brother. Oxford and Cambridge: 1 Corinthians 13:11 anyone?
When Mr Warner writes …
… I merely said it was a novel idea to look at breaking down some of the barriers for working class kids in top universities.
… I believe it might be a better strategy to equip our children so that Oxbridge and the other red brick universities become a realistic option, the quota is reminiscent of central planning …