{"id":84857,"date":"2025-08-10T07:21:44","date_gmt":"2025-08-10T06:21:44","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=84857"},"modified":"2025-08-11T06:27:35","modified_gmt":"2025-08-11T05:27:35","slug":"why-spend-before-tax-is-the-key-to-unlocking-a-future-for-young-people","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2025\/08\/10\/why-spend-before-tax-is-the-key-to-unlocking-a-future-for-young-people\/","title":{"rendered":"Why \u201cspend before tax\u201d is the key to unlocking a future for young people"},"content":{"rendered":"

In a post\u00a0I published here yesterday<\/a>, I explained that in a country like the UK, which issues its own currency, has an effective tax system, a functioning legal system, and with that currency being acceptable for international trade, government spending always comes before tax.<\/span><\/p>\n

That is not just a technical insight into how public finance works. It is, in my opinion, a political game-changer. A commentator then challenged me on that and asked how this might assist younger people in particular. I will define those as being under 35, or perhaps under 30. Then my focus is on how this understanding might let us tackle the structural crises that are shaping the lives of people of that age, so that people of my age do not leave them a politics of permanent scarcity, as could happen unless we change our economic narratives.<\/span><\/p>\n

If we think \u201ctax comes before spending\u201d, that story is necessarily one of limits. That narrative suggests that we can only achieve better housing, jobs, education, or climate action if the money can be \u201cfound\u201d through higher taxes, borrowing (which they choose to forbid to eliminate that choice), or cuts in government services elsewhere. The result is a politics of managed decline, where almost nothing ever changes.<\/span><\/p>\n

If, on the other hand, we understand \u201cspending comes first\u201d, the story changes. The question is no longer \u201ccan we afford it?\u201d but is, instead, \u201cdo we have the resources, skills, and technology to do it?\u201d If the answer is yes, then, as John Maynard Keynes once noted, whatever it is we want can be done. The government can create the money, direct the work, and use taxation afterwards to keep the economy balanced, and that opens the door to a completely different policy agenda for younger people for all the reasons I note below.\u00a0<\/span><\/p>\n

Removing the \u201cthere is no money\u201d excuse<\/b><\/b><\/span><\/p>\n

The most corrosive political message in the UK over the past fifteen years has been that \u201cthere is no money left\u201d. It is the line used to justify cuts to public services, freezes in pay, and neglect of infrastructure.<\/span><\/p>\n

Once we accept that spending comes first, this argument collapses. This correct narrative makes clear that the state is not dependent on tax revenues to act. It is dependent on the capacity of the economy to deliver what is needed. If there are unemployed or underemployed people, unused capacity or idle resources in the economy - whether in the state or private sector -\u00a0 the government can put them to work.<\/span><\/p>\n

For younger people, this means public investment is always possible if the political will exists, whether that is in housing, jobs, climate action, or education. The barren landscape they now face can be transformed.<\/span><\/p>\n

Full employment and skills guarantees<\/b><\/b><\/span><\/p>\n

In particular, understanding spending-first economics means the government can guarantee work, training, or education for everyone who wants it.<\/span><\/p>\n

For those under 30, that could mean:<\/span><\/p>\n