The Benefits to Taxpayers from Increases in Students’ Educational Attainment

The Benefits to Taxpayers from Increases in Students’ Educational Attainment

Stephen J. Carroll
Emre Erkut
Copyright Date: 2009
Edition: 1
Published by: RAND Corporation
Pages: 142
https://www.jstor.org/stable/10.7249/mg686wfhf
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  • Book Info
    The Benefits to Taxpayers from Increases in Students’ Educational Attainment
    Book Description:

    Increases in educational attainment benefit the public because more highly educated people tend to pay more in taxes, are less likely to use social support programs, and are less likely to commit crimes. This volume examines the monetary value of these benefits over an individual's lifetime and how they vary with education level.

    eISBN: 978-0-8330-4937-7
    Subjects: Education, Political Science

Table of Contents

  1. Front Matter
    (pp. i-ii)
  2. Preface
    (pp. iii-iv)
  3. Table of Contents
    (pp. v-viii)
  4. Figures
    (pp. ix-x)
  5. Tables
    (pp. xi-xii)
  6. Summary
    (pp. xiii-xx)
  7. Acknowledgments
    (pp. xxi-xxii)
  8. Abbreviations
    (pp. xxiii-xxiv)
  9. CHAPTER ONE Introduction
    (pp. 1-12)

    Policymakers in most states face a fundamental challenge—motivating taxpayers to provide the funds required to meet the mounting educational needs of the nation’s population. This challenge is driven by major economic and social waves shaping the nation. The level of education that an individual needs to be competitive in the workplace has been increasing for the past 20 years.¹ The high-paying industrial jobs that used to be available to people who lacked even a high school diploma have largely disappeared. The service-related jobs taking their place require a level of knowledge and skill that require a high school diploma...

  10. CHAPTER TWO Analytic Approach
    (pp. 13-28)

    There is abundant evidence that people with more schooling earn higher wages and salaries. There is also evidence that more highly educated people are more likely to be employed and to work full-time when employed. A direct result of higher earnings and greater employment is increased income and, consequently, increased payments in income taxes and “consumption” taxes, such as sales, real estate, and excise taxes. Also, individuals with higher incomes are more likely to succeed using their own resources and, consequently, less likely to use social support systems. Finally, individuals better able to support themselves are less likely to resort...

  11. CHAPTER THREE Payments for Taxes and Social Programs
    (pp. 29-40)

    Greater educational attainment increases both the likelihood of employment and an individual’s earnings when employed. The higher income realized by more highly educated people results in higher federal and state income taxes. “Consumption” taxes, such as sales, real estate, and excise taxes, also increase as a direct result of higher income. Taxes on consumption and property depend on the amounts spent on consumption and property, which, in turn, depend on individual and household disposable income. Therefore, as a by-product of earning higher incomes, people with more schooling generally pay more in taxes.

    In addition, the higher earnings realized by more...

  12. CHAPTER FOUR Spending on Social Support Programs
    (pp. 41-60)

    The United States has built an extensive safety net for the poor and needy. Increases in educational attainment result in increases in earnings that, in turn, result in a reduced likelihood that a person will draw on this safety net and a decrease in the amount of benefit a person will receive from most social programs if he or she participates. In this chapter, we estimate the effects of increased educational attainment on social support program spending in each of the eight largest social support and insurance programs for which sufficient data on program participation and spending are available.

    Appendix...

  13. CHAPTER FIVE Educational Attainment and Spending on the Corrections System
    (pp. 61-68)

    The inmate population is less educated than the general population. According to a 2003 analysis by the Bureau of Justice Statistics (Harlow, 2003), 40 percent of state prison inmates and 47 percent of jail inmates nationwide have not completed high school. This compares rather strikingly with the 18 percent rate for the general population (Table 5.1).

    Investments in education could reduce the demand for correctional capacity. In other words, increased educational attainment yields benefits to taxpayers in the form of savings in the criminal justice system. In this chapter, we examine the effects of educational attainment on public spending for...

  14. CHAPTER SIX The Costs of Providing Additional Education
    (pp. 69-72)

    In previous chapters, we have described some of the financial benefits that taxpayers will realize if students attain higher levels of education. Presumably, however, those additional years of schooling will also cost money. In this chapter, we identify what the costs of providing additional schooling would be. As noted in Chapter One, we do not address the question of what could be done to induce students to continue their education to a higher level or what such efforts would cost. Rather, we focus on the benefits taxpayers would realize if students increased their education net of the costs of providing...

  15. CHAPTER SEVEN Educational Attainment and Public Revenues and Costs
    (pp. 73-86)

    The preceding chapters provide estimates of the benefits that taxpayers would receive from increases in educational attainment and the costs that would be incurred in providing the additional education. In this chapter, we review the estimates and then combine them to assess the total and net benefits to taxpayers of raising educational attainment.

    Greater educational attainment increases both the likelihood of employment and an individual’s earnings when employed. The higher income realized by more highly educated people results in higher tax payments and higher payments to social support and insurance programs, such as Social Security and Medicare.

    Increases in the...

  16. APPENDIX A Data and Sources
    (pp. 87-90)
  17. APPENDIX B Estimating Tax Payments
    (pp. 91-94)
  18. APPENDIX C Social Program Participation and Costs
    (pp. 95-110)
  19. APPENDIX D Incarceration Cost Estimations
    (pp. 111-112)
  20. References
    (pp. 113-118)