Should state taxpayers subsidize state-run universities?

Federal taxpayers provide massive subsidies to all universities via the guaranteed student loan scam.

In addition to this river of cash, state taxpayers have traditionally paid to subsidize state-run universities via free land, tax exemptions, and direct cash from the general budget.

Alaska is trying to cut off the second stream of subsidy: “University Of Alaska Readies For Budget Slash: ‘We May Likely Never Recover'” (NPR).

A Facebook friend who gets a guaranteed (tenured) paycheck from a private university posted the following:

This is mind-boggling, almost inconceivable: the Alaska state government is essentially trying to shutter the state’s premier university by defunding it. Please sign the petition! It seems to be putting the pressure on! If this goes forward, 2,500 faculty and staff will be laid off, over 20,000 students will have their educational paths derailed, public libraries will be closed, ESL teachers let go, etc. etc. etc. And all this carnage to help a rightwing ideologue fulfill his campaign pledge to his base to raise the annual dividend by $1200.

She was seeking people to visit change.org and sign a petition (always safe for someone who lives in Manhattan or Boston to demand that folks in Alaska pay higher taxes!):

Shouldn’t folks who are against income inequality also be against taxpayer-subsidized university education (and therefore support this governor’s initiative)? A university graduate will earn more than the median taxpayer. From the perspective of someone passionate about equality, why does it make sense to tax median earners to subsidize people who are primarily above-median earners (either because they work for the university or will be getting a degree and getting the higher wages that college graduates earn)?

She responded with the kind of winning argument that keeps American academics at the forefront of worldwide intellectual debate:

You’re a troll Philip. It’s never worth engaging with you.

But now I am curious. If people are against inequality, how can they be in favor of this traditional welfare program for high earners? Since college students tend to be disproportionately children of college graduates, isn’t a university a means of perpetuating privilege?

Of course they could simply say “We have PhDs and want market-clearing salaries for PhD employees to be higher. We’d like to see above-median earners trimmed back, but not above-median earners who have PhDs.” But that is not typically the argument.

[Separately, folks who work for universities often say that they are “underpaid”. If so, why the hysteria over being potentially laid off? Why would it be bad to get a new job at a market-clearing wage if the university has been paying below market considering all of the pluses and minuses of the job?]

18 thoughts on “Should state taxpayers subsidize state-run universities?

  1. A long way from making median from my degree. Above average yes, but above median no. Too bad the disappearance of the middle class requires us to only count medians instead of averages.

    The University of Alaska isn’t putting out above median incomes unless there are PhD’s in bush piloting & oil drilling. What is a degree worth if the university goes away? Despite the decline in organized religion, it’s quite obvious the church will never ever disintegrate, so the lion kingdom’s university will always exist. It might pivot away from religion & towards mortgages, in a few more rounds of quantitative easing.

    • > A long way from making median from my degree.
      > Above average yes, but above median no.

      That implies income distribution density is negatively skewed. Wow.

  2. I think the idea is to put give low-income students the chance to boost their incomes through university, thereby reducing inequality. In order to provide this access for low-income students, the state subsidizes the university itself and provides loans the students.

    Whether this idea works on in practice is a different story I guess.

    • >Whether this idea works on in practice is a different story I guess.

      It should be the most important thing, otherwise why bother ? That we accept public policy not to be judged by its outcomes, something we don’t accept in less impactful fields like bread-making, is mind-boggling.

  3. Of course this isn’t about lowering taxes as it might be in other states, its about increasing the dole provided to every Alaska resident in the form of annual check they receive from the state govt.
    Which then disproportionately impacts poor students, as the wealthier ones can still afford to head out of state for an education while those in lower income brackets have that option limited.
    Just another example of false populism working to keep cranking out those low information Trump voters.

  4. Under both flat-% and progressive taxation the total tax collected comes primarily from the above-median taxpayer.

    https://www.bloomberg.com/news/articles/2018-10-14/top-3-of-u-s-taxpayers-paid-majority-of-income-taxes-in-2016

    So any argument that uses “the median taxpayer pays” to describe expenditures from the general fund of an income tax are inherently flawed because the wealthy pay the lion’s share of every such program. In fact, I’d argue that we’re taxing the wealthy to make even more wealthy people who will pay even more tax, some of which can be siphoned off for more directly equalizing processes. Much like using the power you generate from coal to mine more coal, not because you want coal but because the loop provides a usable excess fraction.

    Now Alaska is a special case here because it doesn’t have income tax, but sales and property taxes still cause the wealthy to pay more of total tax paid.

  5. haha , classic Phil! wow.. she gave up pretty quickly. I guess when you don’t have any argument it’s easier to call the other person a troll… Where is Vince to keep the liberal torch going?

    Watch out Trump! Phil is vying for your #1 trolling position!

    • I’ve always mainatained that Phil is a such a troll.
      He forces innocent people to visit this weird site, read his hateful blog, and then comment, comment, comment.
      Phil is deplorable! 😉

  6. I’m mostly just surprised you have friends left. Real or FB…

    Your trolling often contradicts itself. Probably why she feels there’s no point arguing. Still, some nice thought experiments.

    • As a matter of fact *all* my friends (including ones in academia) think pretty much along the lines of Phil’s reasoning. I guess it’s selection bias on my part – I just can’t trust people who see nothing wrong with using force and threats to achieve their vision of better society. And make no mistake: taxes are collected under threat of violence.

  7. Why not just use oil revenues to fund the largest public universities like Texas does? Google “Permanent University Fund Texas” and you will see why University of Texas and Texas A&M dominate the state to the point where the state just turns the other “state schools” into the UT and A&M systems and defund them from the general funds. The sad part is that the general Texas budget pays more for prisons and roads than for Universities. States are raising tuition to where the general budget no longer funds the Universities, while payments to private prisons abound. Louisiana has exactly the same problem.

  8. Folks who say that Alaska is somehow tax-free…

    https://taxfoundation.org/state/alaska/

    says that the state and local tax burden is 6.5 percent of residents’ income. I assume that this does not take into account the Permanent Fund dividend, but even that, I don’t think, is sufficient to bring the total tax to 0%.

    If the state spends more money, therefore, I do think it is the case that taxes will have to be raised.

  9. I say we convert all the money sucking private airports to colleges and make the land productive. The 10 percenters can suffer on the freeway or public airports like the commoners!

  10. As one of those top-marginal-rate taxpayers, I’m not necessarily opposed to paying higher taxes to reduce the cost of higher education and/or improve the quality thereof. However, the current system wastes epic amounts of money on things that have little to do with education.

    According to the DofED, at 4-year public colleges the category of “Instruction” accounts for 28% of expenses. A whopping 3% goes to student grants:

    https://nces.ed.gov/fastfacts/display.asp?id=75

    Visit most any university today (including 2nd/3rd-tier publics) and you will find sports programs with dedicated facilities, fancy dorms, dining halls with more stations than a Vegas buffet, huge student entertainment centers, and so on. The carrying cost of this stuff is huge and it’s almost all waste. Even 25 years ago, when I started my freshman year, the mandatory Dining Services meal plan cost more than buying the same number of meals at local restaurants. Students should not be allowed to go into five-figure debt for lifestyle amenities. Let Equinox build a gym next to University of Southern Pawcatuckey and sell memberships to the students whose parents want to pay for it.

    Last, we should have independent examinations for graduates. Let the American Economics Association write an exam syllabus for BA Econ and then have instructors at Pawcatuckey grade the exams for Wackanackey State College and vice-versa so that the rich kids at Pawcatuckey don’t have an unfair advantage.

    My guess is that none of this will happen, but at least the lower half of private colleges by selectivity will go out of business in the next generation.

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