Making the most of human capital: young people need a dedicated tax authority

The idea behind the ‘Start Tax’, on the other hand, focuses on a reform of personal income tax (IRPEF) that restructures taxation across the life cycle – for both employees and the self-employed – in line with the wealth accumulation curve, without horizontal inequalities (based on the type of income generated), which should have been eliminated or reduced under the enabling tax law, Law 111/2023.

‘At the start of one’s career,’ write Nannicini and Orecchia, ‘when accumulated wealth is virtually nil, every euro carries greater weight in the decision to pursue further education, set up one’s own business, take risks or stay put. The most ambitious version of the Start Tax turns this logic on its head: for those under 35, there are three reduced rates: 10, 20 and 30 per cent’. In short, age becomes the factor that determines the progressive nature of the tax.”

The figures compared with the proposal: without changing the tax brackets, those earning 25,000 euros a year would see an extra 270 euros net per month in their pay packets, and those earning 35,000 euros would see an extra 400 euros. The cost would amount to 10 billion. But this is an investment. In an ageing society, young people are a strategic resource – for everyone, but above all for the elderly – even from a purely pragmatic perspective.

This is in line with Confprofessioni, the confederation representing professionals, which has long been advocating an income tax scheme for young people that makes no distinction between the self-employed, employees and entrepreneurs. The scheme, for those under 35, provides for a substantial, ad hoc annual allowance of around 18,000 euros.

The ‘Start Tax’ scheme, setting aside the technical details, has found supporters amongst the trade unions, notably the CISL and UIL. Amongst the governing parties, however, the Lega is toying with the idea of a flat tax (one of the medium- to long-term objectives of Law 111): during the parliamentary debate on the 2026 Budget, a proposal was put forward for a 5 per cent tax rate specifically for those under 30.

Discussions on the 2027 Budget Bill are now set to resume. To move beyond short-sighted, stop-gap measures, certain figures should be borne in mind.

According to Istat (‘Young People and the Labour Market – Year 2024’, published in May 2026), there are just over 9 million young people aged between 20 and 34 living in Italia: 17.5 per cent have at most a lower secondary qualification, 57.5 per cent have an upper secondary qualification and 25.1 per cent have a tertiary qualification. It is confirmed that in Italia the proportion of young people with a university degree is significantly lower than the EU-27 average (-11.3 percentage points). Level of education is a factor influencing the employment rate: amongst 20–34-year-olds with at most a lower secondary qualification, the employment rate stands at 56.2 per cent; it rises to 71.1 per cent amongst young people with a secondary school diploma; and reaches 82.2 per cent amongst those with a tertiary qualification. On the other hand, young people who are not in employment and have a low level of education are more likely to be economically inactive – the inactivity rate stands at 32.2 per cent, compared with 19.8 per cent for those with a secondary school leaving certificate and 11.4 per cent for university graduates – or unemployed: the unemployment rate stands at 17.1 per cent, compared with 11.3 per cent among those with a school-leaving certificate and 7.2 per cent among those with a university degree.

These characteristics of the labour market are rooted in the general ageing of the population, with the age of workers rising steadily, particularly amongst the self-employed. Another trend is emerging in the world of work, highlighted by the Confprofessioni survey ‘Generations: a comparison of demographics and incomes’, presented on 7 July. In parallel with the ageing of the workforce, the distribution of income across the life cycle is changing. ‘The 25–34 age group’s share of average income falls from 97 per cent in 1987 to 78 per cent in 2022. The peak income is shifting from the 45–54 age group to the 55–64 age group’, explains Marco Natali, president of Confprofessioni, commenting on the data compiled by the Observatory on the Liberal Professions. The point at which a more appropriate income is achieved is shifting further and further into later years, and this is particularly significant for the self-employed.

In this context, the flat-rate scheme for VAT-registered individuals (a 15 per cent flat-rate tax on revenue or remuneration up to 85,000 euros, 5 per cent for the first five years of business, with a limit of 20,000 euros on employee-related expenses) is certainly favourable from a tax perspective, but – as also summarised by the European Commission in the Country Report – the entry thresholds and requirements for remaining in the scheme can have distorting effects, prompting some taxpayers to voluntarily limit the scale of their business activities so as not to lose eligibility for the scheme. Delaying invoices and organising work so as not to exceed the €85,000 threshold are some of the strategies employed, with the risk of discouraging growth and investment. In addition to the limit on employees, the flat-rate scheme is at odds with the collective pursuit of business activities. In short, the moral of the story is: ‘be content to stay small’ – and even a little isolated.

Perhaps it is also this evidence that explains the exodus of young people abroad. The peak was reached in 2024: 141,000 people left; in 2025, the figure stood at 109,000 (see the report ‘Internal and international migration of the resident population’, published by Istat on 3 August).

According to Istat’s annual report on the state of the country, between 2015 and 2024, the net migration figure for Italian citizens remained consistently negative, with an increase in emigration which, not being offset by returns, resulted in a net loss of around 590,000 residents.

In 2024, amongst young Italians aged 25–34 who held at least a university degree, the number of those moving abroad (25,000) far exceeded the number returning home (over 4,000). The loss of highly educated young people has an impact on GDP, as well as leading to a reduction in the value of investment in education by the state and households. In 2023, 16,000 Italian citizens with a degree left the country, but the overall net figure was positive by around 3,000, due to the arrival of approximately 19,000 young foreign nationals aged between 25 and 34 with a tertiary qualification. Overall, between 2019 and 2024, it is estimated that 78,000 young graduates aged between 25 and 34 left Italia (whilst 88,000 foreign nationals arrived).

Within the country, whilst in the Centre and North the migration of young graduates from the South almost entirely offsets the outflow abroad, in the South the exodus is twice as severe. In fact, the loss to other countries is compounded by that resulting from internal migration: between 2019 and 2025, the overall net figure was a loss of 150,000 people (see also the articles on pages 2–3).

Against this backdrop, the public administration is taking action. In June, the Revenue Agency and INPS launched a roadshow focusing on taxation, social security and digital services for businesses, workers and the younger generation. From September, the events will move to universities: ‘Our aim,’ says Vincenzo Carbone, director of the Agency, ‘is to offer practical answers to all those young people who are about to embark on their professional careers and who need to be aware of the rights and responsibilities that await them as they enter the world of work’. According to the director, “each stop will be an opportunity to take questions, explain the rules and help young people navigate the opportunities available to them, some of which may be little known. Above all, it is an investment in trust, because a simpler tax system also depends on the ability to communicate with the younger generation.”