The Benefits to Taxpayers from Increases in Students' Educational Attainment

by Carroll, Stephen J.

• ISBN13: 9780833047427
• ISBN10: 0833047426
• Format: Paperback
• Copyright: 2009-08-16
• Publisher: RAND Corporation

Summary

Meeting the educational demands of the future will be expensive; however, in most states, public schools from kindergarten through the university level already experience budgetary challenges. Policymakers face the challenge of motivating taxpayers to provide the funds needed to meet mounting education needs. In this volume, Carroll and Erkut examine the financial benefits that taxpayers-regardless of whether they have children in school-realize from increases in educational attainment. First, investments in education benefit taxpayers because the investments produce more highly educated individuals, who tend to earn more income than those with lower levels of education and pay more in taxes, thus contributing more to programs such as Social Security. Second, more highly educated individuals are less likely to draw on social support programs, such as Medicare. And finally, more highly educated individuals are less likely to commit crimes, so increases in educational attainment reduce public spending on incarceration. Carroll and Erkut estimate the monetary value of these benefits over an individuals lifetime and how they vary as a result of education level. Book jacket.

Table of Contents

Preface	p. iii
Figures	p. ix
Tables	p. xi
Summary	p. xiii
Acknowledgments	p. xxi
Abbreviations	p. xxiii
Introduction	p. 1
The Problem	p. 1
Research Objective	p. 2
The Costs of Providing Education Versus the Overall Costs of Increasing Educational Attainment	p. 2
Research Questions	p. 3
Illustrative Examples	p. 5
Previous Research	p. 7
Definition of Terms	p. 9
Organization of the Report	p. 10
Analytic Approach	p. 13
Independent Variables	p. 13
Education and Earnings	p. 14
Tax Payments	p. 18
Federal Income Taxes	p. 18
State and Local Taxes	p. 19
Payroll Taxes	p. 19
Social Program Participation and Costs	p. 19
Incarceration Costs	p. 21
Estimating the Effects of Increased Education	p. 22
Transformations	p. 24
Critical Assumptions	p. 25
Putting the Results in Perspective	p. 27
Payments for Taxes and Social Programs	p. 29
Taxation Mechanisms	p. 29
Educational Attainment and Earnings	p. 31
Federal and State Tax Rates	p. 32
Federal Income Tax Rates	p. 32
Payroll Tax Rates	p. 33
Average State Tax Rates	p. 34
The Effects of Increased Educational Attainment on Tax Payments	p. 34
Related Studies	p. 36
The Effects of Multilevel Increases in Educational Attainment on Tax Payments	p. 37
Sensitivity Analysis	p. 37
Summary	p. 39
Spending on Social Support Programs	p. 41
Background	p. 41
Analytic Approach	p. 42
Effects of Educational Attainment on the Costs of Welfare Programs	p. 44
Effects of Educational Attainment on the Costs of Housing Subsidies	p. 46
Effects of Educational Attainment on the Costs of Food Stamps	p. 47
Effects of Educational Attainment on Supplemental Security Income Spending	p. 49
Effects of Educational Attainment on Medicaid Spending	p. 50
Effects of Educational Attainment on Medicare Spending	p. 52
Effects of Educational Attainment on the Costs of Unemployment Insurance	p. 53
Effects of Educational Attainment on Social Security Spending	p. 55
Effects of Educational Attainment on Spending on Social Programs	p. 56
Sensitivity Analysis	p. 58
Summary	p. 60
Educational Attainment and Spending on the Corrections System	p. 61
Analytic Approach	p. 62
The Effect of Educational Attainment on Crime Rates	p. 63
Effects of Educational Attainment on Incarceration Costs	p. 65
Sensitivity Analysis	p. 67
Summary	p. 68
The Costs of Providing Additional Education	p. 69
Educational Attainment and Public Revenues and Costs	p. 73
Effects of Increases in Education on the Public Budget	p. 73
Tax Payments	p. 73
Spending on Social Support and Insurance Programs	p. 74
Incarceration Costs	p. 74
Costs of Increased Education	p. 75
Net Benefits from Increased Educational Attainment	p. 75
The Effects of Increased Educational Attainment: An Example	p. 80
Sensitivity Analysis	p. 82
Putting the Estimates in Perspective	p. 84
Summary	p. 85
Appendixes
Data and Sources	p. 87
Estimating Tax Payments	p. 91
Social Program Participation and Costs	p. 95
Incarceration Cost Estimations	p. 111
References	p. 113
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