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Who Pays for Higher Education?. A Note on the Neglected Role of Income Tax Progression


  • Richard Sturn
  • Gerhard Wohlfahrt


Do university graduates pay back the public subsidies which they received as students through higher income taxes? Assuming a life cycle version of the ability-to-pay-principle of taxation as the normative foundation, we suggest the "foregone smoothing benefit" concept (FSB) in order to obtain a meaningful answer to this question in the context of a system with progressive income taxation. The FSB-concept abstracts from tax-base-broadening-effects, but hinges on the "income condensing-effect". Using income data for academics and high-school graduates in Austria and the Austrian income tax schedule, we show that the fore-gone smoothing benefit may be quite sizeable.

Suggested Citation

  • Richard Sturn & Gerhard Wohlfahrt, 2000. "Who Pays for Higher Education?. A Note on the Neglected Role of Income Tax Progression," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(1), pages 126-126, September.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200009)57:1_126:wpfhe_2.0.tx_2-2

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    References listed on IDEAS

    1. Stefan Homburg, 1999. "Competition and Co-ordination in International Capital Income Taxation," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 56(1), pages 1-17, March.
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    Cited by:

    1. Berthold U. Wigger, 2001. "Higher Education Financing and Income Redistribution," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 58(1), pages 1-48, December.
    2. Salvatore Barbaro, 2004. "Tax Distortion, Countervailing Subsidies and Income Redistribution," Departmental Discussion Papers 121, University of Goettingen, Department of Economics.
    3. repec:hal:journl:dumas-00909926 is not listed on IDEAS
    4. Wildasin, David, 2003. "Fiscal Policy, Human Capital, and Canada-US Labor Market Integration," IZA Discussion Papers 889, Institute for the Study of Labor (IZA).

    More about this item

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods


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