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ERIC Number: EJ1093296
Record Type: Journal
Publication Date: 2016
Pages: 26
Abstractor: As Provided
ISSN: ISSN-0276-8739
Easy Money: Tax Exporting and State Support for Higher Education
Foster, John M.; Fowles, Jacob
Journal of Policy Analysis and Management, v35 n2 p415-440 Spr 2016
There is a substantial literature that assesses the effects of tax-exporting capacities on the tax structures and aggregate spending levels that state governments choose to implement, but no work exists that isolates the effects of state tax exporting on higher education spending. Using state-level data for 1989, 1995, 2002, and 2007, we estimate for the median voter in each state the change in the marginal cost of higher education subsidization generated by tax exportation, and calculate the increased higher education spending that results. We consider three types of spending: state appropriations to public universities as well as need- and non-need-based aid awarded to in-state students. We find that neither type of aid is responsive to the marginal cost, or tax price, faced by the median voter. However, the median voter's price elasticity of demand for state appropriations is statistically significant and negative. We find that the median voter's tax price is substantially reduced by the presence of prominent mining and tourism industries and by the federal deductibility offset available to firms. Thus, these tax-exporting capacities exert upward pressure on voter demand for state appropriations to public universities.
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Publication Type: Journal Articles; Reports - Evaluative
Education Level: Higher Education; Postsecondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
Grant or Contract Numbers: N/A