Tax policy and human-capital formation

Article Abstract:

Two revenue-neutral tax reforms are considered. The flat tax is a flattening of the tax on labor earnings while the flat consumption tax is a similar flat tax on consumption. Tuition fee is not deductible in both reforms. Skill prices and interest rates are fixed in a partial equilibrium scheme compared to the closed-economy general equilibrium scheme where interest rates and skill prices are regulated. A shift to a flat consumption tax is less advantageous to human capital because it decreases the aggregate stock of human capital.

Tax reform

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Some effects of taxes on schooling and training

Article Abstract:

The implications of changes in the American tax system, particularly progressivity and nondeductibility of direct investment goods, on human capital schooling and training are examined using life-cycle human-capital investment models. Results show that the effects of changes in flat taxes are insignificant. Similarly, a transfer from a consumption tax to an income tax indicate minor effects on human capital.

Models, Economic aspects

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General-equilibrium treatment effects: a study of tuition policy

Article Abstract:

An evaluation of the general-equilibrium effects of a national tuition policy reveals that all of society is directly or indirectly affected by tuition policy. The study also finds that individuals availing of the plan before and after its implementation are often worse off in the end because the price of their skill is depressed and that they must pay higher taxes to finance the policy.

Economics, Research and Development in the Social Sciences and Humanities, Tuition tax credits, State aid to higher education, Federal aid to higher education, Government aid to higher education

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