Estimates about Italy

by on February 25, 2013 at 7:08 am in Current Affairs | Permalink

Italians born in 1970, who are about 43 now, will pay 50% more in taxes as a percentage of their lifetime income than those born in 1952, according to research from the Bank of Italy and the University of Verona. The research also found they will receive half the pension benefits that Italy’s 60-somethings are getting or are poised to get.

The story is here.

Edward Burke February 25, 2013 at 8:22 am

Where are Luigi Barzini and Carlo Cipolla when you need them: what is Italian for “OUCH!”?

Frederic Mari February 25, 2013 at 8:32 am

What’s the situation for Michele Ferrero, Leonardo Del Vecchio, Miuccia Prada & Berlusconi? What’s the evolution of their taxes?

Jan February 25, 2013 at 8:44 am

Those spendthrifts!

Tom February 25, 2013 at 8:51 am

This type of analysis would be great to try to do on various US colleges for the (estimated) median graduate every 5 years since 1950, altho that becomes more complex.
It looks like the Italian baby boomers are just using the gov’t to tax their children & grandkids in the future, in order to have more income now.
The Over-65 range going from 65% to 100% was a big increase.

But this is income, not net wealth. Wealth is long term more important, tho income is easier to measure and to measure differences.
The ease of measuring income accurately, objectively, has skewed most economic based quality of life discussions around changes in income, rather than current, past, and expected consumption. The graphs also look at average income as 100 -based index, not absolute numbers. This also skews discussion.

Cornelius McCracken February 25, 2013 at 5:05 pm

“This type of analysis would be great to try to do on various US colleges for the (estimated) median graduate every 5 years since 1950, altho that becomes more complex.”

A thousand times this. Has this been done before?

Andreas Moser February 25, 2013 at 9:51 am

They can also move to 3 times as many other EU countries than the previous generation if they don’t like it in Italy anymore.

8 February 25, 2013 at 10:24 am

Or they could put all the elderly Italians in gypsy run Romanian nursing homes.

Very Serious Sam February 25, 2013 at 10:36 am

The figures may vary a bit, but the general picture is the very same for Germany
The sandwich generation are the now 35-55 year old called
They have to pay immense social security contributions – which are immediately spent, mainly for already retired people
Their own entitlements for these payments are reduced year per year
They have to save more and more for their own old age, but will get less pension nevertheless, since the pay-as-you-go pensions system was partially privatized by SPD and Grüne
They have to pay more and more for day care, education and so on of their children

Emil February 25, 2013 at 5:19 pm

yup, it’s the same all around europe. those of us born from the 70s onwards are paying for the stuff that the ’68 generation promised themselves. Italy is somewhat worse (partly due to being worse and partly due to demographics).

Yancey Ward February 25, 2013 at 10:52 am

What the hell are you talking about- I thought everybody knew governments are not like households, so no government even needs taxes to pay for benefits.

dearieme February 25, 2013 at 11:41 am

Never mind, they’ll inherit the old folk’s wealth and presumably, this being Italy, will pay no tax on it.

JWatts February 25, 2013 at 12:00 pm

File under: We get the government we deserve.

Ray Lopez February 25, 2013 at 12:24 pm

Oh no–The Comedians are winning (Graham Greene)–I Haiti hate it!: “Early results from Italy’s election suggest the houses of parliament may split between left and right, causing new anxiety in the eurozone. A protest movement led by comedian Beppe Grillo has surged into third.”

Brian Donohue February 25, 2013 at 12:57 pm

Italy is a specific example of a general phenomenon. Congratulations to boomers everywhere!

GiT February 25, 2013 at 1:02 pm

Of course, their lifetime income will probably be about 2x as much. I’ll take 70% of 200 over 80% of 100 any day of the week.

GiT February 25, 2013 at 1:22 pm

So, interestingly enough, increasing pension/social security burdens paid by the young to the old are just a form of inter-generational equalization of absolute living standards. One can pay more for less and still have more – the rich do it all the time.

JWatts February 25, 2013 at 2:13 pm

I think that you make a good point.

And are you willing to push for the same standard for Government revenues?

Tracy W February 26, 2013 at 7:10 am

The linked article says that so far since 1991 the income of the 45-54 year olds has only grown by 5%, while those of the 19-34 age group has fallen by 3% and 34-44 age group has fallen by 1%. The 45-55 year olds are kind of running out of time to get to a 2x increase in their working lives.

GiT February 25, 2013 at 3:07 pm

But the complement to each (richer) individual being able to be taxed at a higher rate is that the common pool of money taken by the state, as a proportion, increases (potentially). So if the argument is that individuals are richer, they can give up more, then the proportion of income given to collective redistribution goes up.

If the argument is that society is richer, therefore it’s collective political institutions can perform the same functions with a lower proportion of wealth, then the proportion of income individuals retain goes up.

If the state is, to simplify, about equitably distributing surplus/excess, then take argument 1.
If the state is, to simplify, about efficiently providing a discrete, limited set of public goods, then take argument 2.

Not that the state either equitably distributes things or efficiently provides a discrete, limited set of public goods…

GiT February 25, 2013 at 3:07 pm

Whoops, that was supposed to be a reply.

Yancey Ward February 25, 2013 at 5:33 pm

The only currency that really matters in human psychology is time. Think about it, and you will understand.

GiT February 25, 2013 at 5:44 pm

Time is money?

GiT February 25, 2013 at 5:46 pm
x February 25, 2013 at 6:10 pm

This assumes no retroactive cuts to existing pensions and no default on sovereign debt, but of course both things are quite doable and would fix the issue.

Jeff February 26, 2013 at 12:14 pm

The problem with social security type pensions is that their is really nothing guaranteed about them. Once the younger (screwed) generation constitutes a voting majority, the pensions will be reduced.

Jeff February 26, 2013 at 12:15 pm

s/their/there/

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