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

36 The Benefits to Taxpayers from Increases in Students’ Educational Attainment
Figure 3.2
Present Value of Lifetime Increases in Tax Payments Resulting from Increased
Educational Attainment, U.S.-Born Women
250,000
Increases in tax payments (2002 $)
200,000
150,000
100,000
50,000
Bachelor’s degree
Some college
High school graduate
0
White Asian Black Hispanic
NOTES: The figure shows increases relative to the average taxes paid by a high school
dropout. Dollar amounts are expressed in 2002 dollars discounted to age 18 using a 3 percent
real discount rate.
RAND MG686-3.2
increases the 2002 value of tax payment about $90,000. The findings are similar for
native-born women in other race/ethnic groups.
Related Studies
The estimates are roughly equivalent to those obtained by Belfield and Levin (2007)
and by Rouse (2005). Belfield and Levin found that, assuming a 3.5 percent discount
rate and a 1.5 percent rate of productivity growth, the present value, in 2002 dollars, 3
of the effect of increasing a student’s education from high school dropout to high
school graduate or more, on his or her federal, state, and local tax payments would
range from $41,000 (black woman) to $153,000 (white man), depending on gender
and race/ethnicity. Over all demographic groups, the average effect of an increase in
education from high school dropout to high school graduate or more is about $85,000,
present value, in 2002 dollars.
3
Belfield and Levin present their results in the present value in 2007 of the effects of the increase in
education. We discounted their estimates to 2002 to compare them with our estimates.