Demographic timebomb solutions?

[Adamski]

How could the govt solve the demographic time bomb, and make it so that old people aren't too much of a burden on young taxpayers to bear?

Issue raised in yesterday's guardian by Polly Tonybee. Her suggestions included paying more taxes on property (capital gains on main home, higher council tax), not triple lock state pensions, means testing state pension, free eye tests, free prescriptions, pensioners to pay NI.

The biggest assets for most are their houses and pensions so naturally these will be targets for future wealth taxes.

I don't agree some of these but no easy answers, as problem only going to get worse as population continues to age.

So what's your opinion on what taxes could be raised and what cam be done. Thanks

[Tedx]

I didn't think that the Health and Social Care Levy was a bad idea. 1.25% on National Insurance ringfenced.

That should get you a basic, but free at the point of use, level of care. If you want more, sell your stuff to pay for it.

[GeoffF100]

Overspend and under tax to create massive inflation is the plan that is in operation, along with bringing more youngsters into the country.

[Lootman]

How could the govt solve the demographic time bomb, and make it so that old people aren't too much of a burden on young taxpayers to bear?

Issue raised in yesterday's guardian by Polly Tonybee. Her suggestions included paying more taxes on property (capital gains on main home, higher council tax), not triple lock state pensions, means testing state pension, free eye tests, free prescriptions, pensioners to pay NI.

That is Polly's "solution" to every problem! She is like a stopped clock.

If the only tool you have is a hammer, then every problem looks like a nail.

[88V8]

How could the govt solve the demographic time bomb, and make it so that old people aren't too much of a burden on young taxpayers to bear?

One consideration is that older people tend to vote, so there's the turkey/Christmas thing.
If it were not for that, one could cut off free healthcare at an age limit for instance.

Since some years Japan has the same demographic situation. They are seeking to prop up the status quo with more immigrants, but also raising the retirement age which must surely be a key aspect in most countries - not France of course - and yet in the UK we have the absurd disincentive of the pension cap.

The State pension is already taxed, why does it need to be means tested. Means testing is expensive.

Property taxes are of limited value as domestic property is illiquid, but perhaps the State could run an equity release scheme to suck value out of the domestic estate and enable oldsters better to fund themselves.

Those lefties like Toynbee who wish for more punitive IHT are just preaching the politics of envy, after all isn't it yoof that would lose its chief source of inheritance?
Which is also an issue if their inheritance has gone in the form of equity release. A young family in our village recently learned that their parents had equity released their home, so the six-figure inheritance they were expecting has largely vanished.

Given we can't even sort out our current social care muddle it's hard to imagine all this being magically solved... the simple fact is that we cannot afford our health & benefits system but no one will get elected by saying so.

Politicos seem to forget that the entire tax base ultimately depends on the private sector, and just this week I heard calls for companies to give employees divorce leave, yet another imposition on competitiveness. Having happily outsourced our manufacturing to China, politicians now seek further ways to chip away at our tax base by making us expensive and uncompetitive.

V8

[tjh290633]

It should encourage more people to make provision for their old age. Removing restrictions on how much can be saved per year or in one's lifetime is an obvious step. This does not help those who cannot save enough, so occupational and state pensions need to be enhanced. Restoration of age allowances, coupled with the amalgamation of income tax and NICs, would allow higher levels of state pension to be offered.

Care allowances for those taking care of family members should be enhanced. The costs of care should be tax deductible and zero rated for Vat.

My favourite measure would be to ensure that nobody receiving benefits should pay income tax, and that there should be a band of income where no benefits are received nor any income tax be paid. I think that income tax should be levied at a flat rate, with a high starting level of income. There is no point in sending money round in circles.

TJH

[Lootman]

amalgamation of income tax and NICs, would allow higher levels of state pension to be offered.

But how would you avoid the huge rise in tax that would inflict upon those with income that is currently not subject to NICs like interest, dividends, rent and any kind of pension?

income tax should be levied at a flat rate, with a high starting level of income. There is no point in sending money round in circles.

Agreed, a single rate of income tax that starts at a higher level, say 20K a year. The single flat rate could be set at whatever level is revenue neutral.

[Nimrod103]

amalgamation of income tax and NICs, would allow higher levels of state pension to be offered.

But how would you avoid the huge rise in tax that would inflict upon those with income that is currently not subject to NICs like interest, dividends, rent and any kind of pension?

income tax should be levied at a flat rate, with a high starting level of income. There is no point in sending money round in circles.

Agreed, a single rate of income tax that starts at a higher level, say 20K a year. The single flat rate could be set at whatever level is revenue neutral.

AIUI National Insurance is the only hypothecated tax, in that one's state pension level is entirely determined by the level of NI payments. Divorcing NI from earnings and amalgamating with Income Tax will almost certainly eventually lead to the state pension being means tested or otherwise restricted away from those with private pensions.

I still fail to get where the problems are. AIUI raising the normal retirement age was supposed to account for the increase in longevity. while confiscating S2P contributions allowed a higher basic state pension all around. The whole thing was supposed to balance?

There has been a lot of fuss about whether the Triple Lock was fair on younger generations or affordable, yet the state pension has always been uprated with inflation, and the only year when it would have risen higher due to the earnings link, that link was specifically reneged on. Over the next 10 years or so, it is impossible to imagine that earnings growth will exceed inflation.

The main problem area is affording care (at home or in institutions), which has resulted in bed blocking in hospitals. Providing this care for those without significant assets is almost bankrupting local authorities. ISTM the fairest way of handling this is for those elderly who still have capability, to look after those who are beyond help. By helping to care for the really infirm, the more able can earn their keep, and their place to be looked after at the end of their lives. That way it lifts the burden of care from the younger generation, who have their own problems looking after children.

[Lootman]

The main problem area is affording care (at home or in institutions), which has resulted in bed blocking in hospitals. Providing this care for those without significant assets is almost bankrupting local authorities.

LAs are in a bind because the central government mandates that they fund senior and social care. Finite funds but potentially unlimited liabilities. So expect more municipal bankruptcies. By 2040 I doubt there will be any public libraries or leisure/recreation centres because all the LA funds will go to care and other welfare.

Polly can chirp all she wants about taxing more and more. But the next shoe to drop is the NHS and by then there might be nobody left to tax.

[Eboli]

Nimrod103 said

AIUI National Insurance is the only hypothecated tax, in that one's state pension level is entirely determined by the level of NI payments. Divorcing NI from earnings and amalgamating with Income Tax will almost certainly eventually lead to the state pension being means tested or otherwise restricted away from those with private pensions.

I still fail to get where the problems are. AIUI raising the normal retirement age was supposed to account for the increase in longevity. while confiscating S2P contributions allowed a higher basic state pension all around. The whole thing was supposed to balance?

There has been a lot of fuss about whether the Triple Lock was fair on younger generations or affordable, yet the state pension has always been uprated with inflation, and the only year when it would have risen higher due to the earnings link, that link was specifically reneged on. Over the next 10 years or so, it is impossible to imagine that earnings growth will exceed inflation.

The main problem area is affording care (at home or in institutions), which has resulted in bed blocking in hospitals. Providing this care for those without significant assets is almost bankrupting local authorities. ISTM the fairest way of handling this is for those elderly who still have capability, to look after those who are beyond help. By helping to care for the really infirm, the more able can earn their keep, and their place to be looked after at the end of their lives. That way it lifts the burden of care from the younger generation, who have their own problems looking after children.

There's a lot to unpick there!

1. NI is not hypothecated despite this being the illusion why it only applies to income that would normally be superannuated. A true hypothecation would result in some form of pot out of which pensions are paid. But there is no such pot. As Lootman has already pointed out lots of income is outside the scope of NICs. To treat NICs as additional income tax would produce substantial tax hikes on pensions and rental income to name 2 sources of income.

2. Clearly the state pension is NOT determined by the level of NICs. The only disguise to suggest otherwise is the Upper Earnings Limit for Class 1 contributions (and the equivalent under Class 4). In truth NICs is the closest we come to in the UK to a regressive tax justified by a mendacious argument that the State Pension is set at a low level.

3. It would be a disaster for any Government to suggest means testing the state pension...It would require, for a start, an admission of the lie that somehow your NICs are hypothecated. And what would then be the justification for requirement a minimum number of years of contribution?

4. I agree with your comments on the Triple Lock. But I think it highly probably that each element of the Triple Lock will be the highest of the three over the next 10 years. Most defined benefit pensions do not have a triple lock: indeed most are simply semi-linked to inflation (and in most cases that means CPI rather than RPI) - semi because that measure is more often than not capped (either to 2.5% or 5%).

5. May's solution to the care problem was dismissed with shrill cries even though it probably represented the most honest attempt to cap the costs for the user. I foresee LAs wanting far more access then they have at present to capital locked in main private residences (which is a poor solution to the more obvious Land Value Tax).

Eb.

[Harry23]

Polly Toynbee gives a typical socialist solution which is to solve family problems by increasing the size and power of the state. However, this only gives a short term sticking plaster over the real problem, which is not financial but the breakdown of family life. And this breakdown has at least coincided with, some would say been caused by, the replacement of family and community life with public services.

According to evolutionary theory, the reason why us humans live this long to become old, and grandparents, especially women, is to support the younger generation with childcare and home making.

The problem isn't too many burdensome old folks with assets which can be stripped by the state: it is that the young adults aren't having enough children, for a whole variety of reasons which include expensive childcare, difficulty setting up homes, and consumerist "peter pan syndrome". Also reliance on immigration is another false dawn because it only postpones the problem; we've had mass immigration for over 70 years and we've still got this problem.

My solution is therefore not to raise tax, but to gradually reduce it, in order to restore wealth and responsibility back to the extended family and community where it belongs. We still need government of course to provide laws, security and a safety net. As well as education programmes for this transition. However, we all need to take ownership of the future by creating strong families rather than passing the buck to the government, which only locks in these demographic problems.

[ursaminortaur]

Polly Toynbee gives a typical socialist solution which is to solve family problems by increasing the size and power of the state. However, this only gives a short term sticking plaster over the real problem, which is not financial but the breakdown of family life. And this breakdown has at least coincided with, some would say been caused by, the replacement of family and community life with public services.

According to evolutionary theory, the reason why us humans live this long to become old, and grandparents, especially women, is to support the younger generation with childcare and home making.

The problem isn't too many burdensome old folks with assets which can be stripped by the state: it is that the young adults aren't having enough children, for a whole variety of reasons which include expensive childcare, difficulty setting up homes, and consumerist "peter pan syndrome". Also reliance on immigration is another false dawn because it only postpones the problem; we've had mass immigration for over 70 years and we've still got this problem.

My solution is therefore not to raise tax, but to gradually reduce it, in order to restore wealth and responsibility back to the extended family and community where it belongs. We still need government of course to provide laws, security and a safety net. As well as education programmes for this transition. However, we all need to take ownership of the future by creating strong families rather than passing the buck to the government, which only locks in these demographic problems.

Unfortunately with an aging population where both marriage partners need to work to support their children there is both little appetite or ability to support their elders in the home ( and many of the elderly may have no children or grandchildren ).

Even in countries such as Japan where there is a tradition of families caring for their elders the true situation was often far from the myth with elders suffering neglect, malnutrition and often taking their own lives.

https://www.historyandpolicy.org/policy-papers/papers/the-care-of-older-people-in-japan-myths-and-realities-of-family-care

The limits of family 'care'
Historically Japanese family care did not involve long-term constant or intensive nursing for very sick or disabled older people because of insufficient medical care and correspondingly low survival rates after acute or critical illnesses, or among survivors with severe disabilities or poor health. Only 30 per cent of Japanese people reached the age of 65 and average life expectancy was 63 years for men and 67 years for women in the mid-1950s. A universal health care insurance system was introduced in Japan in 1961, but this covered only half of older people's total medical costs, leaving many without access to medicine and medical treatment.

Fully 80 per cent of Japan's older people still lived with their offspring in extended families, but many became victims of neglect or abuse from family carers too poor or too busy making ends meet. For example, in rural Japan the main cause of death was cerebral vascular disorder; its survivors were usually left with severe disabilities or medical conditions. With their families fully occupied with housework, agriculture or sericulture, such people were often left with just rice balls and water at home during the daytime, as were the chronic sick, frail or senile elderly. Malnutrition and poor sanitary amenities often caused severe bedsores and those frail elderly who became wholly bedridden or fell into an acute condition, and families, simply gave up and accepted their fate. With severe poverty, lack of time and resources for care, and the absence of public institutional alternatives, Obasuteyama seemed to have arrived in the family home.

Japan's economic recovery failed to alleviate matters. In 1968 the first comprehensive investigation revealed that about 200,000 of the over-70s living at home were bedridden, one-half lacking medical treatment and just 8,000 receiving extra-family support. Experts were shocked that four per cent of Japan's older people were bedridden, about twice the European rate, and the exposure of domestic Obasuteyama challenged conventional depictions of family care and the stigmatisation of public residential care. Although the government subsequently encouraged expansion in nursing homes, this failed to keep pace with demand, with 360,000 bedridden older people at home, compared with the 40,000 available nursing home places in 1975. Meanwhile, public forms of care at home remained limited to the most needy elderly and subject still to association with stigma.

Equally disturbing were the high suicide rates among Japanese older people, averaging sixteen deaths daily. Loneliness, family conflicts, illness or financial matters featured, but most common was self-sacrifice to eliminate stresses upon others, placing family above all, a practice seemingly morally and socially endorsed. Interestingly, at Pokkuri-dera (literally 'sudden-death without suffering') temple near Kyoto, over 40,000 elderly visitors annually placed underclothing before the Buddha, praying 'please let me die peacefully before I am no longer able to change my underclothing and have to face shame and burden my family'.

Alarmingly a 1994 national survey claimed that one in two family carers had subjected frail older relatives to some form of abuse, with one in three acknowledging feelings of 'hatred'. This state of affairs was partly attributable to shrinking numbers of care-givers and the heavier burdens placed upon them, reflecting further changes in demographic and residence patterns, gender roles and employment practices. According to a 1999 official survey, nearly one-quarter of family carers daily spent over eight hours on caring tasks and half were aged 60 or over. Many concealed their abusive conduct, suffered strong guilt and shameful feelings, or blamed themselves rather than inadequate public care provision. Here was the context for the social problem of 'care-giving hell', extreme cases involving the killing of whole families and forty reported homicides annually.

[vand]

There is a very simple but very politically unacceptable solution, which is to return to sound money - historically based on gold but could be something else in the future, though nothing else works as well as gold when it has been tried.

This would force government's to run balanced budgets and make it impossible to fund social programmes through creation of debt.

Of course to the likes of Polly Toynbee this is like chopping off your head to stop your hairline receding as they want to have their cake and eat it.

[Harry23]

duplicated post.

[Harry23]

Unfortunately with an aging population where both marriage partners need to work to support their children there is both little appetite or ability to support their elders in the home ( and many of the elderly may have no children or grandchildren ).

Even in countries such as Japan where there is a tradition of families caring for their elders the true situation was often far from the myth with elders suffering neglect, malnutrition and often taking their own lives

With vulnerable people like the children, disabled and the elderly, there needs to be a system of oversight to find out the cases of neglect and abuse. But the fact that neglect does occur shouldn't be an excuse for a total nanny state, which apart from anything else becomes prohibitively expensive and labour intensive.

Hence the premise of this thread, that we can't afford to continue in the direction we're currently heading without more tax increases (and by implication increasing the proportion of the workforce for this service). Causing increased expenses for us all, and more likely that both partners need to work full time ... making it harder to have enough children to sustain the population .... continuing the demographic crisis ... Imo we're in a vicious circle of national decline at the moment and just tinkering about with tax rises and property grabs ain't going to fix it.[/quote]

[Harry23]

duplicated post.

[1nvest]

The biggest assets for most are their houses and pensions so naturally these will be targets for future wealth taxes.

Care home costs are typically £1000 to £1500 per week, where those cared for are expected to sell their home to fund that. Once all-spent then local authorities fund the care costs, up to a point, so can involve moving into 'more affordable' alternatives. More usually applicable to the longer surviving partner, for the first often their partner serves as the carer, receiving around £9/day for their efforts (carers allowance).

[Harry23]

There is a very simple but very politically unacceptable solution, which is to return to sound money - historically based on gold but could be something else in the future, though nothing else works as well as gold when it has been tried.

This would force government's to run balanced budgets and make it impossible to fund social programmes through creation of debt.

Of course to the likes of Polly Toynbee this is like chopping off your head to stop your hairline receding as they want to have their cake and eat it.

I like the idea of sound money (tho it looks like we're moving further away from this with crypto, CBDC etc) but I fear there's powerful forces opposing it. Although I think our problems run deeper than just the currency while there's such an imbalance in the population demographics. The baby boomer generation ourselves (I'm one) failed to have a sustainable family life and now we're reaping the results.

[mc2fool]

There is a very simple but very politically unacceptable solution, which is to return to sound money - historically based on gold but could be something else in the future, though nothing else works as well as gold when it has been tried.

This would force government's to run balanced budgets and make it impossible to fund social programmes through creation of debt.

Of course to the likes of Polly Toynbee this is like chopping off your head to stop your hairline receding as they want to have their cake and eat it.

How would it make that impossible? Money being based on gold never stopped governments borrowing. George Osborne (finally) paid off the South Sea Bubble debt, the Napoleonic War debt, the recompensing slave owners debt, and the potato famine debt and, of course, being on the gold standard didn't stop us borrowing lots for two world wars.

In any case, both major parties say (at least) that they're not going to borrow for running costs and, according to the OP, Toynbee is proposing increasing (lots of) taxes and means testing benefits, not creating debt.

[1nvest]

Overspend and under tax to create massive inflation is the plan that is in operation, along with bringing more youngsters into the country.

Many in present day care (as patients) are those that migrated as youngsters.