If you want to see ISAs in practice, a very close thing to look at is the UK student loan programme.
Students can borrow 9k per year for tuition + 9-12k for living expenses (all univerisities are capped at 9k fees despite incredibly disparate outcomes and revenues). So a full time student could be borrowing between 27k (3 year degree, self-finance living) and 126k (6 year degree for a doctor, london cost of liiving). Or nothing at all if your parents can pay your way (why do this? We'll see...).
It grows indexed to RPI+3% if you earn enough. This was a "loan" but you only pay back when you earn over a threshold. When the system was introduced the threshold was like 25k and it was indexed up by inflation. You pay 9% on everything over the threshold and the loan is forgiven in 30 years if you haven't finished repaying.
Here was the problem: Before the first students under this scheme even graduated, the "loan" terms were changed to be more onerous on the students, and have continued to do so pretty much every year since. This year the minimum threshold was due to increase by 5% due to inflation this year. The government froze the threshold increasing the burden on graduates by hundreds of pounds. Essentially, it turns out that by taking this loan you signed a blank cheque for the government to tax you whatever it wanted in perpetuity. The latest proposals are that new student loans won't be forgiven for an extra decade.
Why all this fucking about? Well firstly, it's young people who don't vote. Secondly, it's a relatively small demographic so you can mess them about with relatively little poltical implications. But most importantly, as all the data showed: The scheme doesn't work. It doesn't generate enough revenue to actually pay for the thing it's meant to pay for. Most people are just going to age out of paying off the loan.
By living in a country you "sign a blank cheque" for the government to tax you as it sees fit, sort of. "Tuition fees" were always a graduate tax by the back door. This kind of thing goes back to Thatcher looting the GCHQ pension fund back in the '80s. I would say "don't make a "contract" with the government", but even if you don't have a "contract" they can still decide they want to take your stuff.
Well you don't have to live in the country for them to decide you owe them money in other ways too. Both the "loan" and any other taxes or sanctions are only enforceable to the extent that you have assets in the UK.
Students can borrow 9k per year for tuition + 9-12k for living expenses (all univerisities are capped at 9k fees despite incredibly disparate outcomes and revenues). So a full time student could be borrowing between 27k (3 year degree, self-finance living) and 126k (6 year degree for a doctor, london cost of liiving). Or nothing at all if your parents can pay your way (why do this? We'll see...).
It grows indexed to RPI+3% if you earn enough. This was a "loan" but you only pay back when you earn over a threshold. When the system was introduced the threshold was like 25k and it was indexed up by inflation. You pay 9% on everything over the threshold and the loan is forgiven in 30 years if you haven't finished repaying.
Here was the problem: Before the first students under this scheme even graduated, the "loan" terms were changed to be more onerous on the students, and have continued to do so pretty much every year since. This year the minimum threshold was due to increase by 5% due to inflation this year. The government froze the threshold increasing the burden on graduates by hundreds of pounds. Essentially, it turns out that by taking this loan you signed a blank cheque for the government to tax you whatever it wanted in perpetuity. The latest proposals are that new student loans won't be forgiven for an extra decade.
Why all this fucking about? Well firstly, it's young people who don't vote. Secondly, it's a relatively small demographic so you can mess them about with relatively little poltical implications. But most importantly, as all the data showed: The scheme doesn't work. It doesn't generate enough revenue to actually pay for the thing it's meant to pay for. Most people are just going to age out of paying off the loan.