The Supply Side Argument for Subsidized Higher Education

“Supply Side Economics” tells us that a reduction in tax rates today will lead to a higher personal income tomorrow, and thus higher tax revenues for the state.

“Conventional Wisdom” tells us that higher levels of education today, will lead to higher personal income tomorrow.

With that as the starting point, let’s replace “tax rate” with “tuition rate.”

If higher education and lower tax rates today lead to higher income and higher tax revenue tomorrow; then the Laffer Curve that describes the “sweet spot” for tax rates should be modified for use to determine the tuition rate for education that the individual taxpayer (or individual student in this case).


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