Vince Cable’s proposal for a graduate tax is prominently discussed in the news. Cable proposes a graduate tax which would make repayments of student funding dependent on earnings. Partly, this is already the case: student loan repayments only start after a minimum earnings threshold has been reached. A graduate tax could vary more finely with the salary but, more importantly, it would probably not end after the original fees have been repaid.
This is the most important difference: the best and the brightest can easily skip repayment altogether by working abroad. If you owe the government a fixed amount of money any interest you have in clearing your debt does not vary with your place of residence. Your tax burden however does, hence there will be an added incentive for graduates Read the rest of this entry »