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

38 The Benefits to Taxpayers from Increases in Students’ Educational Attainment
Table 3.5
Increased Tax Payments Associated with Increasing
Educational Attainment from High School Dropout to
College Graduate, U.S.-Born Men and Women
Increased Tax Payments (2002 $, thousands)
Race/Ethnicity
Men
Women
White 192 167
Asian 181 171
Black 144 128
Hispanic 165 148
SOURCE: Appendix B.
estimates. We then calculated the percentage reduction in the estimated effect of an
increase in education level for each of the native-born populations if the effect of the
increase in education on tax payments were only 75 percent of our estimate. Table 3.6
shows the range of percentage reductions across the native-born demographic groups
for each increase in the level of education. It also shows the native-born demographic
group for which each percentage reduction was observed.
For example, we replicated all the calculations assuming that the effects of
increases in education from less than high school graduate to high school graduate on
tax payments were 25 percent smaller than our estimates. The revised estimates for the
native-born demographic groups were 21 percent (white women) to 23 percent (Hispanic
men) lower than the original estimates. In sum, even if we overestimated the
effects of education level on the present value of tax payments by 25 percent, increases
in educational attainment still result in substantial increases in the present value of tax
payments.
Reducing the estimate of the effect of an increase in education level on tax payments
has essentially the same result for all demographic groups. The range of percent-
Table 3.6
Range of Percentage Reduction in Tax Payments If the Effect of
Increased Education Is Reduced 25 Percent, U.S.-Born Men and
Women
Increase in Education Level
Less than high school graduate
to high school graduate
High school graduate to some
college
Some college to bachelor’s
degree or more
Less than high school graduate
to bachelor’s degree or more
Percentage Reduction
21 (white woman) to 23 (Hispanic man)
27 (Hispanic man) to 27 (Asian woman)
31 (Hispanic man) to 32 (Asian woman)
28 (black woman) to 28 (Asian woman)