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  • Who Pays For Education?

    Written on October 28, 2010

    In education debates, especially these days, there is endless talk about spending – how to spend money, what programs to cut, and how to increase the bang-to-buck ratio. This is not surprising: In 2007-08 (the last year for which national U.S. Census data are available), we spent almost $600 billion. That’s quite a figure, and we all have an interest in spending that money wisely.

    What is sometimes surprising is how little we hear about how we get that money. Of course, we all know that our tax dollars fund our public schools, and most of us know that state and local revenue is the primary source of this funding (about 90 percent; on average, about half state and half local). Less commonly-known, however, is who pays these bills – who bears the largest share of the tax burden, relative to their income? At the federal level, taxation is largely progressive, which means that, on the whole, higher-income families pay a larger percentage of their earned income to the federal government than lower-income families. This is, very simply, due to the fact that higher income brackets are taxed at higher rates.

    But when it comes to state and local taxes, the picture is different. The poorest families pay far more of their income than the richest (i.e., taxes are regressive). In other words, the money that funds public education is a burden disproportionately borne by poor and middle-income Americans. And the lower your income, the more of it you pay. Given this situation, combined with a fiscal crisis that threatens to linger for several years, the best solution – raising revenue through a more equitable system – may be the only one not on the table.

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