Gifted Issues Discussion homepage Forums General Discussion Free tuition at US public Universities?

The United States has by far the most progressive income, payroll, wealth and property taxes of any developed country. Scandinavian social democracies like Denmark, Sweden and Norway have quite regressive direct taxes, as do the Netherlands and Switzerland

The 400 highest-earning taxpayers in the U.S. reported a record $105 billion in total adjusted gross income in 2006, but they paid just $18 billion in tax, new Internal Revenue Service figures show. That works out to an average federal income tax bite of 17%–the lowest rate paid by the richest 400 during the 15-year period covered by the IRS statistics.

All that tax money goes to paying for schools and keeping university fees very low (among other things).

Re: tax rates by income bracket between Canqda and the US, see pp.3. This is from 2000-- I'll see if I can find an updated graph.

http://www.statcan.gc.ca/studies-etudes/75-001/archive/e-pdf/5071-eng.pdf

http://www.nytimes.com/2014/03/21/opinion/a-quick-way-to-cut-college-costs.html
A Quick Way to Cut College Costs
By STEVE COHEN
New York Times
MARCH 20, 2014

...

Consider a family of four, earning $100,000 in income and having $50,000 in savings. The [Expected Family Contribution] says that this family will contribute $17,375 each year to a child’s college expenses. A $100,000 income translates into take-home pay of about $6,311 monthly. An E.F.C. of $17,375 means the family must contribute about $1,500 a month — every month for four years. But cutting family expenses by 25 percent every month is unrealistic.

Alternatively, the family could use its savings. But that would deplete their $50,000 before the start of the child’s senior year, leaving nothing for the proverbial rainy day, or for the second child’s education.

Let’s take income first. From your income, you get to deduct a number of expenses like taxes, employment expenses and what the federal government calls an “income protection allowance” — that is, an amount that is shielded from being sucked into the gaping maw of college costs. The size of the allowance is based on the household size and the number of college students in the house, and ranges from $14,460 for a two-person household where both are in school, to a high of $37,020 for a six-person household with one student.

Parents are then expected to contribute a percentage of what’s left over (the more that’s left over, the higher the marginal percentage, just like with income tax rates — except the rate here goes up to 47 percent).

...

What about discouraging saving? The more you’ve saved, the more you are expected to pay — so why save at all? The answer is that the oversaver is expected to pay more, but not terribly much more. And unless you want to cut your expenses drastically, you will need the extra savings to cover the enormous bills.

Using the Education Department’s FAFSA4caster, I played around with various scenarios, assuming my hypothetical student had 60-year-old parents with an adjusted gross income of $100,000. With $50,000 in savings, the expected yearly contribution was $16,977. With $100,000 in savings, it went up to $19,797 — over four years, that’s $11,280 more. A whopping $150,000 in savings generated a yearly contribution of $22,617 — an extra $22,560 over four years.