The Benefits to Taxpayers from Increases in Students - RAND ...

76 The Benefits to Taxpayers from Increases in Students’ Educational Attainment
the benefit to taxpayers if a student achieves a high school diploma rather than dropping
out, the benefit is the difference in expected tax payments, social program costs,
and the costs of incarceration between the average high school graduate and the average
high school dropout, and not simply the expected values for high school graduates
per se. We apply a similar logic to all costs and benefits.
Table 7.1 illustrates the study’s basic calculation. It shows the present value of the
total and net benefits to taxpayers, in 2002 dollars, of increasing a U.S.-born white
male’s education from high school dropout to high school graduate. Tables 7.2–7.5
provide the corresponding estimates for each of the groups for each of four increments
in education: high school dropout to high school graduate, high school graduate to
some college, some college to college graduate, and high school dropout to college
graduate.
Our estimates show that if the average U.S.-born white male high school dropout
were to continue his education through high school graduation, he would pay additional
taxes and Social Security and Medicare payments over his lifetime. These additional
payments into the public treasury would be worth about $54,000. He would
also draw, on average, about $22,000 less from the public treasury in social program
benefits and reduce demands on the public treasury for prison and jail costs by about
$13,000, on average. In all, the public treasury would need about $89,000 less from
taxpayers, on average, for each U.S.-born white male who completes high school rather
than dropping out.
If a would-be high school dropout completes high school instead, the taxpayers
will have to pay about $15,000 to pay for the additional schooling, so the taxpayers net
benefit if a high school dropout goes on to graduate instead is about $74,000.
Table 7.2 shows the benefits to taxpayers of increasing education from high school
dropout to high school graduate. Increases in a man’s education from high school
Table 7.1
Effects of Increasing Education from High School Dropout
to High School Graduate on Public Revenues and Costs for
a U.S.-Born White Male
Type of Increase or Cost
Increases to public budget
Amount
(2002 $,
thousands)
Increased tax payments 54
Reduced spending on social programs 22
Reduced spending on incarceration 13
Total increases in public budget 89
Cost of providing additional education 15
Net benefit to taxpayers 74
SOURCE: Appendixes B, C, and D.