Friday, April 14, 2006

The elasticity of youth

Greg Mankiw writes about a paper arguing that taxes should be lower for young people, as young people are likely to cut (or increase) the work they based on how much the bejeesus is taxed out of them.

That said, it is also good for young people to save and invest -- compound interest needs time to work its magic.

Social security works by taking money from young people today and giving it to old people today. If it worked by taking money from young people today, and then giving it back to those same individuals when they were older it would not be a tax, it would be savings. I wonder if young people would react to a forced savings scheme in the same way as they react to taxes.


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