The Wiki Man

Should the young pay less tax than the old?

2 April 2022

9:00 AM

2 April 2022

9:00 AM

In evolutionary terms, it is obvious why we get more conservative with age. Two strong forces, acting in the same direction, lead us not to bet on rank outsiders when we’re nearing the last race of the day.

First, older people have more experience to draw on when making decisions: if you already know what you like, the need to experiment is much less. But that’s not all. The elderly also have far less time remaining to benefit from experimentation. If you happen on a new cuisine, band, social circle or holiday destination in your twenties, you have many decades to profit from the discovery. Someone in their sixties might have one or two.

In artificial intelligence this is known as the explore-exploit trade-off. Early in the game it pays to invest time in exploring and evaluating your options; later, as the time left for new findings shrinks, it makes sense to devote more energy to exploiting what you have already learned.


One upside of all this is that being old can be quite cheap. You own a lot of stuff already, you don’t have to engage in costly signalling, and you don’t need to keep trying things you already know you dislike.

It is hence easier for the old to live modestly than the young. A friend of mine had an elderly neighbour in his Lebanese village who led a simple life, producing his own honey and eating homegrown food. When he died, it emerged that he owned $100 million of American real estate. My former colleague, the late Jock Elliott, retired from a stellar career in New York and rented a tiny cottage in Scotland while searching for a castle to buy. While in the cottage, he realised that if he moved to a huge estate he would end up fancifying his social-life to a point where he could no longer drink with the local fishermen. He bought the cottage instead.

The reverse of this, of course, is that being young is disproportionately expensive. You haven’t been around long enough to enjoy capital gains or compound interest, there is a lot of stuff you still need to buy, and you need to experiment more. You pay fully for the NHS, even though you rarely use it. Yet young people may be more valuable to the economy in part because they are more inventive in the way they spend.

Shouldn’t the tax system acknowledge this discrepancy? There is an easy way in which it could. The Canadian business guru Roger L. Martin proposes that, rather than tax-free allowances being applied to earnings each year, you could have the option of taking the lifetime allowance up front. In Canada, where the idea was adopted by the Conservative party, this would have meant the first $250,000 someone earned in their life would be free of tax. After that, you would pay tax on all income at a rate determined by cumulative lifetime earnings, not one year at a time. Until recently such ideas – and allowing people to choose between different tax arrangements – would have been technologically impossible. Now it is time to experiment.

I am delighted to be one of the judges for the Building Beauty Awards, run by the Royal Fine Art Commission Trust and sponsored by Ballymore. Anyone can propose any building, bridge or other space or structure in the UK which is visible to the public, completed since January 2019 and goes beyond mere function in contributing to public happiness and enjoyment. The website for nominations is: buildingbeautyawards.com/enter

This happily coincides with the National Planning Policy Framework being rewritten to give councils power to reject applications on aesthetic grounds. Welcome news to Swale council which, owing to an administrative error by a web designer, recently denied a planning application on the grounds it was ‘proper whack’.

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