Little bit of creativity and No need of Austerity.
Under New Flat world multinational Company have to recruit talent from anywhere across the world if not here they can be recruited anywhere in world. If company does not do this then competitor will benefit. So Any country to cutting pie in this would loose.
Like suppose decision to bring Highly Highly Skilled people into country.
4,000 Experience IT professional Enter Every year with expected salary range 45,000 Euro
Study spend: 25,000 Euro.
Salary : 45,000
Income Tax: 13,000 Euro/year ( assuming 20% upto 32,000 and 50% above that)
Spending per year: @rate 1,000 euro Rent+Household. = 12,000 Euro.
So We get three basket
Government Revenue from Income tax: 12,000 euro (+indirect tax 10% of 17K~ 2K).
= 14K (G)
Personal benefit (P): 45K-13K-12K= 20K – Emergency Expenditure(5K)= 15K.
Local Economy (L): 12K+5K= 17K. + 25K Education = 41K
So three basket (G,P,L) = (14K, 15K , 17K).
Total benefit to local Economy G+L: 14K + 17K = 31K. (with Education 56K)
Personal Benefit for Highly skilled: 15K.
For 4,000 people this amount will be:
Personal benefit: 4K X 15K = 90 million Euro.
Benefit to local Economy: 4K X 17K = 68 million Euro.
Tax to Government: 4K X 14K = 56 million Euro.
Total benefit to Local Economy G+L = 4K X 31K= 124 million Euro per year.
Considering Education Expenses in this= 4K X 56K= 224 million Euro per year.
Now these immigrants do not get any benefit for the taxes they pay like healthcare or jobless benefit etc so All benefit percolate to local population.
Its Well known fact Every IT job create 3-4 other secondary jobs in form of security, govt staff, housing, Food etc staff.
So 4K jobs create = 12K jobs (1:3) ratio. Actually it may go 1:5.
5 yrs 5 X 4/2= 10 , 12K X 10= 120,000 jobs
Power of compounding:
if people keep arriving Each year @ rate 4K then
Year 1: 225 million Euro.
Year 2: 450 million Euro.
Year 3: 675 million Euro.
in 5 years at rate of 10% compounding = 5 X 4/2= 5 X 225 million=
considering 5% inflation increase in cost and 5 % hike in salary increase in income tax.
5 % interest.
2.25 billion euro in 5 yrs.
Considering Compounding (1.1)^5 + (1.1)^4 +(1.1)^3 + (1.1)^2 + (1.1) = 6.71
(1.1)^4 +(1.1)^3 + (1.1)^2 + (1.1) = 5.1
(1.1)^3 + (1.1)^2 + (1.1) = 3.5
(1.1)^2 + (1.1) = 2.21
Total Compounding: 18.62
5 years it would be 18.62 times= 225 million X 18.62= 4191 million Euro
or 4 billion Euro in 5 yrs
4 billion Euro Accumulated benefit to Local Economy without giving back any benefit to highly skilled immigrants.
At individual level:
Benefit to Highly skilled individuals P : 15K per year.
To Government and local Economy G+L= 31K per year.
At End of 5 Years considering compounding factor 18
Benefit to Individual in 5 yrs from work here (P) =15 X 18 =2,70,000
Benefit to local Economy from individual (G+L) = 31 X 18 = 5,58,000