National Post Staff
“In fact, if we do not act now, there is a serious risk that over the coming decade, when the younger generation of voters begins to outnumber the older generation, a populist politician could corral the anger of the young,” the report reads.
“We should avoid a simple age-related tax. A blunt instrument makes no sense.”
Baby boomers have been able to grow their wealth with ultra-low interest rates; urbanization that’s inflated property prices; investing in companies that exploit the environment; access to cheaper education decades ago; and their mere population size outpacing younger generations, which allows them to win democratic elections.
To help close the wealth divide, the report suggests several tax policies:
• The first would be a tax on primary residence. It could be done through a capital gains tax, which could be focused on houses exceeding a certain value, to acknowledge the leverage boomers were able to take advantage of decades ago.
• Another area policymakers could focus on is additional taxes on financial assets such as stocks and bonds. This could be key because baby boomers are benefitting from low interest rates as they begin to sell the assets heading into retirement
Remote workers should be taxed for privilege of working at home, says Deutsche
• Reid and Templeman also recommend a “super tax” on stocks to make up for gains that companies made by exploiting the environment. Governments could then in turn reinvest the funds in stemming climate change.
The suggested taxes on capital gains is to avoid higher taxing on income, the two write, as it’s an “invasion on hard work” and there is a risk that work would be disincentivized.
The report also urges policymakers to address disparities in landownership and education.
Cities have to instigate a mass shakeup of existing rules that leave a low supply of homes for a growing population. When it comes to education, higher costs for higher education are outpacing graduate salaries.
If policymakers choose to avoid the wealth gap between baby boomers and the younger generations, it could spell disaster, the report says.
“If we do not enact substantial change now, then a generation of young people will soon take power,” Reid and Templeman write. “When they do, all indications are that they will enact policies that not only forcibly redistribute in blunt ways, but also upend the very foundations of capitalism.”
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COVID-19 could be the catalyst that forces embittered millennials to overthrow the capitalist order — but policymakers could intervene before that happens, a new report by Deutsche Bank proposes .
Out of the pandemic emerged younger workers who were disproportionately affected by the economic crash because they are more likely to be employed in industries such as retail or hospitality, where working from home was not a possibility. As well, job prospects have dwindled for the newer graduates and they have little in savings.
The authors of the report, strategists Jim Reid and Luke Templeman, predict “sudden and seismic shifts in the established capitalist order” if young workers continue to experience economic inequality.
“In fact, if we do not act now, there is a serious risk that over the coming decade, when the younger generation of voters begins to outnumber the older generation, a populist politician could corral the anger of the young,” the report reads.
In order to address this, Reid and Templeman suggest that rather than taxing all baby boomers, policymakers should look at where baby boomers made their wealth and tax them accordingly.
“We should avoid a simple age-related tax. A blunt instrument makes no sense.”
Baby boomers have been able to grow their wealth with ultra-low interest rates; urbanization that’s inflated property prices; investing in companies that exploit the environment; access to cheaper education decades ago; and their mere population size outpacing younger generations, which allows them to win democratic elections.
To help close the wealth divide, the report suggests several tax policies:
• The first would be a tax on primary residence. It could be done through a capital gains tax, which could be focused on houses exceeding a certain value, to acknowledge the leverage boomers were able to take advantage of decades ago.
• Another area policymakers could focus on is additional taxes on financial assets such as stocks and bonds. This could be key because baby boomers are benefitting from low interest rates as they begin to sell the assets heading into retirement
Remote workers should be taxed for privilege of working at home, says Deutsche
• Reid and Templeman also recommend a “super tax” on stocks to make up for gains that companies made by exploiting the environment. Governments could then in turn reinvest the funds in stemming climate change.
The suggested taxes on capital gains is to avoid higher taxing on income, the two write, as it’s an “invasion on hard work” and there is a risk that work would be disincentivized.
The report also urges policymakers to address disparities in landownership and education.
Cities have to instigate a mass shakeup of existing rules that leave a low supply of homes for a growing population. When it comes to education, higher costs for higher education are outpacing graduate salaries.
If policymakers choose to avoid the wealth gap between baby boomers and the younger generations, it could spell disaster, the report says.
“If we do not enact substantial change now, then a generation of young people will soon take power,” Reid and Templeman write. “When they do, all indications are that they will enact policies that not only forcibly redistribute in blunt ways, but also upend the very foundations of capitalism.”
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