On Tax Day 2012, a 90 Percent High School Graduation Rate Would Yield $1.8 Billion Annually in Additional Tax Revenues, Report Finds
FOR IMMEDIATE RELEASE
April 17, 2012
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“Governments at all levels are leaving money on the table by not graduating students from high school,” said Gov. Bob Wise.
Washington, DC – On Tax Day 2012, a new analysis from the Alliance for Excellent Education finds that graduating 90 percent of high school students would generate an additional $1.8 billion annually in tax revenues. Of that total, $1.1 billion would be federal tax revenue while the remainder—nearly $700 million—would be state and local revenue.
“In these tight fiscal times, governments at all levels are leaving money on the table by not graduating students from high school,” said Bob Wise, president of the Alliance for Excellent Education and former governor of West Virginia. “When students earn high school diplomas, they become more marketable in today’s highly competitive job market, while the higher earnings they pocket translate into increased tax revenues—all without any increase in the tax rate. It’s a win-win.” (Watch more from Gov. Wise by clicking on the image to the right or visiting http://youtu.be/Bs_9cEdTBPc).
Based on March 2012 data from the U.S. Bureau of Labor Statistics, the unemployment rate for high school dropouts is 12.6 percent, compared to 8 percent for high school graduates and 4.2 percent for college graduates. When employed, high school dropouts earn about $8,000 less annually, compared to high school graduates.
According to the Averaged Freshman Graduation Rate (AFGR) calculated by the U.S. Department of Education, the United States has a high school graduation rate of 75.5 percent, 14.5 percentage points below the 90 percent goal set by Grad Nation and envisioned in this analysis.1 Raising the nation’s graduation rate to 90 percent as determined by AFGR would mean ensuring that an additional 583,530 students earn their diplomas.
“Tax policy usually finds two groups, those in favor of tax hikes and those in favor of tax cuts, debating about which direction taxes should take,” Wise said. “Unfortunately, there is not enough discussion about this third direction—graduating more students from high school. The U.S. Congress is constantly concerned about long-term deficit reduction, but as this analysis shows, decisions on how to close budget gaps and build a strong economy must begin with ensuring better educational outcomes for the nation’s students.”
The complete analysis is available at http://www.all4ed.org/files/TaxDay2012.pdf.
1 AFGR provides an estimate of the percentage of high school students who graduate on time. It uses aggregate student enrollment data to estimate the size of an incoming freshman class and counts of the number of diplomas awarded four years later. Although not as accurate as an on-time graduation rate computed from a cohort of students using student record data, this estimate of an on-time graduation rate can be computed for every state with currently available cross-sectional data.
The Alliance for Excellent Education is a Washington, DC-based national policy and advocacy organization that works to improve national and federal policy so that all students can achieve at high academic levels and graduate from high school ready for success in college, work, and citizenship in the twenty-first century. For more information about the Alliance for Excellent Education, please visit http://www.all4ed.org.