Who Pays for Higher Education? A Note on the Neglected Role of Income Tax Progression

Sturn, Richard; Wohlfahrt, Gerhard

doi:10.1628/0015221014006251

Cited by 3 publications

(1 citation statement)

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“…Based on data from 1990, the impact differed considerably depending on the choice of schooling, and lay between close to zero and -22%. Sturn & Wohlfahrt (2000) referred to the foregone smoothing benefit. Due to tax progression, combined with annual tax assessment, graduates pay more taxes than nongraduates with the same net lifetime earnings be-cause graduates accumulate their income in a shorter period of time.…”

Section: Introductionmentioning

confidence: 99%

Subsidies to Higher Education and Income-Tax Progression

Barbaro

2007

Public Finance and Management

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The impact of fiscal activity on human-capital formation has often been analyzed with regard to the expenditure side of the budget; i.e., the subsidization of (higher) education. However, recent contributions have increasingly focused on the effect of taxation on human-capital formation. Less attention has been given to the simultaneous effect of both subsidization and taxation. as subsidies to higher education may offset the distortionary effect of taxation, this paper aims to analyze the amount of subsidization that is necessary to counteract the discouraging effect of various kinds of income-tax progression on human-capital accumulation. An important policy advice derived from the analysis is that a country's educational policies should be evaluated, not just by the levels of educational spending, but also by the level and structure of taxation. The framework we use to illustrate our point is a two-period cohort model with heterogeneous agents, who endogenously decide on higher education with respect to taxation and subsidization. in this framework, we also demonstrate that subsidies may fail to offset existing tax distortions, limiting the optimistic view of some previous literature. in particular, we show that a second-best subsidy rate must be lower than unity. Otherwise an optimal subsidy rate leads to the problem of overeducation.

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Section: Introductionmentioning

confidence: 99%

Subsidies to Higher Education and Income-Tax Progression

Barbaro

2007

Public Finance and Management

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An equity perspective on access to, enrolment in and finance of tertiary education

Asplund

Adbelkarim

Skalli

2008

Education Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in ABSTRACT:The failure to achieve equitable access to university studies has turned the focus to the funding of European higher education systems. Since the large amounts of public subsidies injected in tertiary-level education have not succeeded in reducing disparities in access for children from different social backgrounds, this is seen as compelling evidence for there being a need to revise higher education financing not only on efficiency but also on equity grounds. Such policies are already pursued, planned or intensively discussed in most of Europe.More equitable access to and participation in university education through changes in the funding sources and mechanisms is a challenging policy with long-term implications. Hence, it should preferably be based on reliable empirical evidence. This raises the question of what the theoretical and empirical literature actually tells us about these matters. How severe is the under-representation of students from a socially disadvantaged background? Has this inequality changed over time across and within European countries? What role does funding play? Have the changes in funding systems already undertaken in several European countries improved the participation of students from low-income families? This review paper aims to answer these important questions by drawing together the available evidence, by contrasting it against pursued educational policies and by pointing to still existing knowledge gaps. TIIVISTELMÄ:Epäonnistuminen oikeudenmukaisen jakauman saavuttamisessa korkeakoulutukseen hakeutumisessa on kohdistanut huomion eurooppalaisten korkeakoulujärjes-telmien rahoitukseen. Niihin sijoitetut julkiset tuet eivät ole onnistuneet vähentämään eroja eri sosiaaliluokista tulevien lasten hakeutumisessa korkeakoulutukseen, mikä on nähty vakuuttavana todisteena siitä, että korkeakoulutuksen rahoitusta tulee uudistaa paitsi tehokkuuden, myös oikeudenmukaisuuden näkökulmasta. Monissa Euroopan maissa näistä uudistuksista keskustellaan, niitä suunnitellaan tai niitä jo toteutetaan.Rahoituslähteiden ja -mekanismien muutosten kautta saavutettava oikeudenmukaisempi pääsy yliopistokoulutukseen on haastava projekti jolla on pitkäaikaisia seurausvaikutuksia, joten se olisi suotavaa perustaa luotettavaan empiiriseen näyttöön. Tällöin herää kysymys, mitä teoreettinen ja empiirinen kirjallisuus sanovat asiasta. Kuinka vakava on vähempiosai-sista sosiaaliluokista tulevien opiskelijoiden aliedustu...

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Fiscal Policy, Human Capital, and Canada-Us Labor Market Integration

Wildasin

2003

SSRN Journal

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Who Pays for Higher Education? A Note on the Neglected Role of Income Tax Progression

Cited by 3 publications

References 7 publications

Subsidies to Higher Education and Income-Tax Progression

Subsidies to Higher Education and Income-Tax Progression

An equity perspective on access to, enrolment in and finance of tertiary education

Fiscal Policy, Human Capital, and Canada-Us Labor Market Integration

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