Graduate Tax

June2008

So in today's Irish Times is an article written by one of the legendary law lecturers - James McDermott regarding the reintroduction of 3rd Level Fees. One of the proposals is introducing a graduate tax as people who go to college generally end up in higher paid jobs therefore can afford a tax. The scheme proposes to introduce this tax to individuals who have reached a certain income bracket because they reaped the benefits of a 3rd level education.

I agree in principle to the reintroduction of fees but I don;t feel this is the way to go about it. For starters it would render the entire free system defunct as we will be effectively repaying for our education. Also what about widly successful people who didnt go to college? People like Sir Alan Sugar and Richard Branson didnt go to college and while it is unfair to tax such people who didnt get the benefit of college but is it not equally unfair to tax Joe Average who earns an good but average wage simply because he went to college?
Also it is not guaranteed that a college education gets you a good job so how will the scheme deal with this?

Sorry for my rant but just want to see what people's opinions are on this?

jon1981

That measure would also increase the numbers of people applying across the water,given the choice i know i'd very much rather stump up the money to go to college in the UK over paying a higher rate of tax forever. This is the stupidest suggestion i have heard. there are just so many holes in that...

Économiste Monétaire

Clearly we should listen to a Law lecturer about tax and incentive structures. Verbal diarrhoea.

June2008

http://www.irishtimes.com/newspaper/opinion/2008/0807/1217984184925.html

here is the link to the article, probably should have posted it up originally!

Why not listen to a law lecturer? It's widely acknowledged by most university lecturers that we need to reintroduce fees and law lecturers who also practise as barristers will generally be more articulate rather then the general "we need money now no matter what" administrators

Économiste Monétaire

June2008 wrote: »

Why not listen to a law lecturer?

A lot of lecturers do agree that we need a reintroduction of fees. How we introduce those fees is the area of contention. Just how you would quantify how much more a university graduate earns over a school leaver is contentious. Graduates can up and go - moving to another country, simple avoiding the 'graduate tax'.

When would the tax come in? Who sets the tax band for this graduate tax? Is there a limit to how much one would pay? How long would the tax last, until a certain age or until the cost to the government has been repaid? (inflation/interest included in that? Admin costs in calculating the tax alone...). It's too complicated a structure to tax someone that far after the fact. Not to mention creating a disincentive to people in the lower socio-economic ladder (apologies if anyone is offended by that).

June2008

I agree with all the points you've made, I started this thread as i am also opposed to using a graduate tax!

I only stated why not listen to a law lecturer due to your contention that they spew "verbal diarroeha"

But i agree with you

Économiste Monétaire

June2008 wrote: »

I agree with all the points you've made, I started this thread as i am also opposed to using a graduate tax!

Aye, I knew that. The questions were directed at the idea of a graduate tax, not at you personally.

I only stated why not listen to a law lecturer due to your contention that they spew "verbal diarroeha"

I didn't say that all law lecturers "spew verbal diarrhoea". I meant that this one is, and he would be whether he was a law lecturer or not - because his idea of a graduate tax isn't properly thought out. Tax (& tax policy creation) in general is a complicated area, a lecturer in 'Contract Law
Legal Systems & Method' is hardly the best person to do this. It should be left to those of the dismal science

spaceylou

Surely a better idea than a tax is a government loan of sorts to cover your education so that once your income hits a certain level you start paying it back but which has a clear limit so that once your income reaches x you pay 5% of your gross for y amount of years or until a certain figure is reached!! Rather than having an additional tax for the rest of your career simply because you went to college.

As far as I know, (and I could be wrong) something similar operates in Australia.

Stabshauptmann

Its a bad system.

The benefits of college are hard to quantify, ppl seem to forget oportunity costs aswell of attending, opportunity in itself doesnt guarentee success - Id be more eager to tax those who wasted a college education than those who put it to good use, the time span is hard to tie down, etc

If you were to reintroduce fees why not do it the simplest way, at the source. You pay for college as you go there.

GusherING

God forbid we raise general income tax in a progressive manner to fund third level. The obvious answer is the least talked about one because politicians lack the balls to try and convince the public of its merits. For all the right-wing rhetoric so dominant in Ireland, even the right should support free third level education, so at least all in society have some equality of opportunity to improve their standards of living.

Économiste Monétaire

There's no way that anyone who is right-wing would support, an interventionist policy like, raising a tax rate to support a social initiative.

It has been discussed before that the 'free fees' initiative doesn't increase (significantly) third level access for people whom you think would benefit most. Kaptain Redeye's fees at the point of use is the most likely path the government will go down.

spaceylou

While fees at the point of entry is probably the most likely way in which fees will be re-introduced it will create significant barriers to people from less affluent backgrounds attending third level.

The reason (imo) that free fees in this country has not created a more equitable education system is that while the fees may be free the level of grant support is laughable and doesn't even cover rent in the bigger cities let alone provide students with money to buy books, eat etc. And it is really difficult to work part-time and maintain high grades.

On top of that you have to look at the feeder schools for the big universities - they are predominately fee paying schools, and while the points system is meant to be a fair way of assigning places because each student is simply a number it is obvious that what school you go to does matter. Now this could be because students in these schools get better points OR it could be that students in these schools can generally afford to go to university and so are likely to have it as their first, second and third choice on the cao form, or maybe its a little bit of both.

And I know this post is getting a bit long, so really my point is that the way education is funded in this country, from primary to fourth level needs to be examined. And that unimaginative solutions like the re-introduction of fees for third level at entry are not necessarily the best way to go.

the evil lime

GusherING wrote: »

God forbid we raise general income tax in a progressive manner to fund third level.

Yes. Please, if you're listening God, forbid such tax increases. The government already takes enough money from people, particularly high earners. To properly fund third-level education, we'd need a rather large increase I'd reckon. Personally, I don't particularly like the idea.

The idea of a loan repaid at a later date is somewhat appealing, as compared to the alternatives.

Seifer

spaceylou wrote:

The reason (imo) that free fees in this country has not created a more equitable education system is that while the fees may be free the level of grant support is laughable and doesn't even cover rent in the bigger cities let alone provide students with money to buy books, eat etc. And it is really difficult to work part-time and maintain high grades.

You complain that free fees aren't enough, the distribution of free money must increase? At what point do you stop throwing money at the problem and accept maybe that money isn't the biggest factor in why certain demographics don't attend third level education?

The system in the UK and elsewhere of paying back a loan once you are earning seems to be the fairest if they are to be reintroduced. The tax idea is academic thinking that doesn't fit in with the practicalities of the real world.

Unshelved

There is no way that fees are going to be reintroduced in this country in the foreseeable future, and the sooner the Heads of the Universities accept that fact the better. No Government is going to risk alienating the middle classes by reintroducing fees - it's just not going to happen.

While I don't necessarily agree with the idea of a Graduate Tax, at least it shows that someone is trying to come up with something new instead the likes of Brady, Hegarty et al. bleating on about the reintroduction of fees instead of coming up with some viable alternative to make up for the shortfall in funding. Aren't their hefty salaries paid so that they can come up with something other than a broken record?

GusherING

the evil lime wrote: »

Yes. Please, if you're listening God, forbid such tax increases. The government already takes enough money from people, particularly high earners. To properly fund third-level education, we'd need a rather large increase I'd reckon. Personally, I don't particularly like the idea.

The idea of a loan repaid at a later date is somewhat appealing, as compared to the alternatives.

If you're paying for it one way or the other, why not? The advantage is that those from the less-advantaged backgrounds don't get stung with the cost so access won't decline. Seems the obvious solution to both issues.

the evil lime

Well, considering that in the higher tax bracket, to pocket €1000 you have to earn €2000, I'd rather not see that go up, as I aspire to earn therein.

Considering college is supposed to increase our earning potential (if not it makes no sense for the government to pay for anyone to attend) we should be able to afford to repay such a loan maybe five years after graduation.

Also, it means that your parents never get hit with the cost. You can make a life decision on whether or not to go to college no matter what your background as you could conceivably work extra cash for expenses into such a loan. Of course, then there is the issue of people who don't pay. But it's the government, they can take the money out before it reaches you.

Where as increasing taxes is increasing taxes, and usually bad for the economy as a whole what with there being less disposable income about.

GusherING

the evil lime wrote: »

Well, considering that in the higher tax bracket, to pocket €1000 you have to earn €2000, I'd rather not see that go up, as I aspire to earn therein.

Considering college is supposed to increase our earning potential (if not it makes no sense for the government to pay for anyone to attend) we should be able to afford to repay such a loan maybe five years after graduation.

Also, it means that your parents never get hit with the cost. You can make a life decision on whether or not to go to college no matter what your background as you could conceivably work extra cash for expenses into such a loan. Of course, then there is the issue of people who don't pay. But it's the government, they can take the money out before it reaches you.

Where as increasing taxes is increasing taxes, and usually bad for the economy as a whole what with there being less disposable income about.

Your whole argument comes from a paradigm which sees a third level degree as purely for economic gain. That's fair enough and there is obvious truth in that, but its not the sole reason for pursuing third level education either. One who earns a classics degree for example is unlikely to increase their earning potential exponentially but it does have some value to our society on the whole. Society and the government have some interest in this. This is a bit off the point, but I just wish to note that universities are more than just about creating workforces. This aspect also informs my opinion on fees and I feel yours fails to pay enough attention to that aspect.

But back to the substantive issue. Obviously if you're in the higher bracket of taxpayer you pay more, but then as you point out, you're able to earn more. Others are less fortunate. I dare say you subscribe to the view that equality of outcome is impossible in life, but what about equality of opportunity? That is, the belief that everyone should have the opportunity to better themselves, much as you aspire to do? There are clearly socio-economic and demographic factors which hold back certain sectors of society from accessing third level. Presuming, as you do, that everyone can just automatically decide to go to college with a large loan ignores the point of my first paragraph and presumes that everyone will get a high paying job. That's sadly not always the case either.

We never hear anyone advocate the abolishment of universal and free primary or secondary education in Ireland? Surely they give you some increased earning potential by your logic?

Finally, I would argue that having more third level graduates earning high wages would increase tax intake and lead to higher levels of disposable income in society at large. The benefits seem self-evident for the sake of a relatively minor tax increase. It's the key to a genuine knowledge economy: the more graduates, the better.

the evil lime

The point I'm making is that unless the degree will provide a tangible increase in the utility of the individual (financially), the government is being fiscally irresponsible by funding such a degree. The idea of free third-level education is to reap some benefit for the economy. I'll accept that classical education can do this. It's a matter of being taught to think and learning to apply oneself. The exact nature of the course is pretty irrelevant unless you're aiming for a profession such as law or medicine.

Not everyone needs or wants to go on to third level. Second level education is now accepted as the basic standard required to function in most employment environments (you won't need all of it, but you'll need some). If you reckon that going on to third level is something that you want to do as an experience, but you don't want to use it to improve the economy in some fashion, then frankly I don't want you spending my money on that. It's something you want to do for yourself and as such, should pay for yourself. If you are going to use it to earn more, you can afford to pay for it later too.

As regards those in the higher tax-bracket earning more, that's usually because they work harder at some point. High pay is a reward for a combination of hard work, long hours, high stress, skill-set and experience.

Nice though it would be, equality of outcome is impossible as the world is. Unless we all want an equally bad set of circumstances; that can be sorted. Equality of opportunity is similarly impossible. Genetics and our socioeconomic backgrounds are a lottery.

One child may have the opportunity to take advanced classes, study music, drama, martial arts or whatever else they desire or their parents feel is beneficial. Another may have none of these benefits. Similarly our health, appearance and basic ability in a variety of areas is a part of this lottery. Equality of opportunity is not possible.

Equality of choice, however, maybe. Throughout our education we are given a variety of choices. Broadly, we all receive the same ones. Whether to continue our education past age 15 or go out seeking a job or a trade. Whether to take higher or ordinary papers in our exams. How much work we put in to them. Of course, returning to the opportunity issue, the home environment in this regard is a major deciding factor.

Still, if we are all given a choice of whether or not to go to third level, most of us under the present system chose to do so. It costs us little (excepting the lost three or four years of our lives) and to many people serves as an extended holiday from reality. They spend their time in the bar, fail exams, repeat years or simply drop out. They do this on taxpayer money. If, on the other hand, they were working under a loan system, spending their own money from day one, there would be a much greater incentive not to mess about.

Frankly, that's a lot longer than I intended it to be, but I'm disinclined to go back and edit it.

spaceylou

Seifer wrote: »

You complain that free fees aren't enough, the distribution of free money must increase? At what point do you stop throwing money at the problem and accept maybe that money isn't the biggest factor in why certain demographics don't attend third level education?

The system in the UK and elsewhere of paying back a loan once you are earning seems to be the fairest if they are to be reintroduced. The tax idea is academic thinking that doesn't fit in with the practicalities of the real world.

Money can be a huge factor in allowing someone the opportunity to attend third level education. Free fees are not enough on their own, a better funded grant system is needed if free fees are to work and access increased from all backgrounds.

However you seem to think that this is what I am advocating. I never said that the government should throw money at the problem I merely suggested that fees charged at entry would create further barriers to third level education and the current system hasn't yielded any significant increase in people from disadvantaged backgrounds attending third level because it only tackles the issue of fees and doesn't look at the whole picture.

But more importantly perceptions about third level need to change. For my grandparents generation it was generally unheard of for "certain demographics" to attend secondary school, now it is the norm. And while I am not saying that third level is for everyone and obviously money is not the only factor in a persons decision to attend third level it still does remain a factor and if fees at entry point were re-introduced it will become an even bigger factor. So if the government takes the unimaginative and easy (for them) route of reintroducing fees at entry there won't be the opportunity to work on other issues about why despite free fees there still appears to be a clear class divide (borne out in the stats and numbers) in access to third level and especially universities.

Based on the governments past actions over the last number of years, the funding of third level will not be examined in a 'joined-up thinking' manner, opportunities will be lost and it will be a regressive step. I am not against paying for my education per se but having come from a "certain demographic" myself I could not have afforded college if I had to pay fees at entry and as it is I am in ever mounting debt with another 15 months left before I finish because the grant does not even cover my rent let alone other living expenses.

Dr Strange

Todays headline:

http://www.rte.ie/news/2008/0811/education.html

RT&#201 wrote:

Return of third-level fees considered
Monday, 11 August 2008 10:05
The Department of Education has confirmed that it is considering the reintroduction of third-level fees.

It is understood that any new charges would target better-off families and would not apply to the less well off.

Minister for Education Batt O'Keeffe is understood to be looking at the return of fees in the context of the economic downturn.

However any such significant policy change would require full Government approval.

Since the abolition of fees under the Rainbow coalition in the 1990s, the number of students going on to third-level education has gone up.

However universities have complained of difficulties in competing on the international stage in the absence of funding.

The reintroduction of fees was ruled out in last year's programme for Government.


Story from RTÉ News:
http://www.rte.ie/news/2008/0811/education.html