Chuck Collins, a senior scholar at the Institute for Policy Studies, directs the IPS Program on Inequality and the Common Good. His latest book: Born on Third Base: A One Percenter Makes the Case for Tackling Inequality, Bringing Wealth Home and Committing to the Common Good (Chelsea Green, 2016) Collins has co-authored with Bill Gates Sr. Wealth and Our Commonwealth, (Beacon Press, 2003), a case for taxing inherited fortunes, and, with Mary Wright, The Moral Measure of the Economy, a book about Christian ethics and economic life.
California can be an annoyingly trendy state. Think avocado toast, In-N-Out Burger, Hollywood fashion, even legal pot.
But Californians are now in the vanguard to fix the serious problem of how to pay for public higher education.
Over 44 million households in the U.S. are saddled with college debt — $37,000 on average. Together they owe over $1.4 trillion, surpassing credit card debt and auto loans.
In the 1970s, California led the world with its famously accessible public universities and community colleges. Millions of Californians received a virtually debt-free college education.
A friend of mine attended both undergraduate and grad school at the University of California in the 1970s and covered all of his tuition and expenses by painting houses during two months of the summer.
That’s not possible anymore. Decades of tax cuts for the wealthy, state budget cuts, and rising tuition and fees have pushed costs much higher — and right onto students and their families.
Between 2011 and 2017, in-state tuition and fees at the University of California rose by nearly a quarter, from $10,940 to $13,509. Out-of-state costs grew to over $40,000.
San Francisco voters took a bold step in 2016 to push back on that trend.
They voted to tax luxury real estate tax transfers, generating over $44 million a year from property sales over $5 million. The city allocated a portion of this revenue to provide free tuition and stipends to San Francisco Community College, boosting enrollment by 16 percent.
“I jumped at the chance,” said Cynthia Diaz, a San Francisco resident studying early childhood education. “I have less stress juggling work, family, and school.”
Diaz has joined an effort to expand the concept beyond San Francisco. She’s collecting signatures for the California College for All initiative to expand college access for over 2.5 million California students.
If successful, the effort will generate an estimated $4 billion a year to invest in public higher education — and greatly reduce tuition and fees. Over 80 percent of the funds will be targeted to students based on need.
Funds will come from restoring a state inheritance tax on Californians with wealth over $3.5 million and couples with over $7 million. These same households just got a massive tax cut at the federal level, as Congress voted to double the family wealth exempted by the federal estate tax from $11 million to $22 million.
At a time of extraordinary wealth inequality, taxing wealth to pay for higher education is a powerful idea. If the California initiative passes in November, it will serve as a model to the nation for how to both reduce concentrated wealth and expand college opportunity.
It may sound radical. But the idea basically restores the formula for college access from the post-World War Two era. In the decades between 1945 and 1980, we taxed high incomes and wealth at much more progressive rates and invested in expanding public higher education.
Other states are addressing this problem too.
Tennessee created the Tennessee Promise, a scholarship and mentoring program that provides two years of “last dollar” assistance to college students to fill any gap not provided by Pell Grants. In Michigan, a group of anonymous donors started the Kalamazoo Promise, guaranteeing free tuition to students who graduate from that city’s high schools.
Other states, such as New York and Massachusetts, are moving toward free community college.
But the California solution would be the most comprehensive initiative yet, covering millions more students at all levels of the public education system.
That’s the best idea since beach volleyball and Mickey Mouse.
Top photo: The University of California-Berkeley (Photo: Mike Procario / Flickr)
Yes, the Republican tax cut bonanza targets lower end millionaires for special relief. Now those struggling to scrape by with $15 million or $20 million can breathe more easily. And even lowly billionaires will be able to keep more of their wealth.
Why? Because Congress just increased the amount of wealth exempted by the estate tax, our nation’s only levy on inherited wealth.
In the bad old days, a family had to have $11 million in wealth before they were subject to the tax. This exempted the 99.8 percent of undisciplined taxpayers who, in the words of Iowa Senator Chuck Grassley, had squandered their wealth on “booze, women, and movies.”
Now no family with less than $22 million will pay it (or individuals with less than $10.9 million). This gift to “grateful heirs” will cost $83 billion over the next decade.
Gutting the estate tax is a bad idea — it raises substantial revenue from those with the greatest capacity to pay. Even in a weakened state, it would have raised over $260 billion over the next decade.
The estate tax was established a century ago during the first Gilded Age, a period of grotesque inequality. Champions of establishing a tax on inherited wealth included President Theodore Roosevelt and industrialist Andrew Carnegie, who viewed it as a brake on the concentration of wealth and power.
Modern Republicans, however, paint the tyrannical “death tax” as an unfair penalty on small businesses and family farmers. But that’s a myth.
The most vocal champion of estate tax repeal is Rep. Kristi Noem, a South Dakota Republican who became the GOP poster child for farmers touched by the estate tax. House Speaker Paul Ryan appointed her on the tax conference committee to advocate for estate tax repeal because of her compelling story.
Noem says her family was subject to the tax after her father died in a farm accident in 1994, a story she repeats constantly.
The only problem, as journalists recently discovered, is that her family paid the tax only because of a fluke in South Dakota law that was changed in 1995. Her experience has little to do with the federal estate tax, which has been substantially scaled down in recent decades.
And while Noem was complaining about government taxes, the family ranch has collected over $3.7 million in taxpayer funded farm subsidies since 1995.
Noem attacked the reporting as “fake news,” even though it was based on legal documents she filed herself.
The reality is that the small number of estate tax beneficiaries aren’t farmers at all. They’re mostly wealthy city dwellers.
Still, the fact that the estate tax lives on creates an opportunity to make it better.
Lawmakers should institute a graduated rate structure, so that billionaires pay a higher estate tax rate than families with a “mere” $22 million. And loopholes should be closed so they can’t pay wealth managers to hide their wealth in complicated trusts and offshore tax havens.
Estate tax revenue could be dedicated to something that clearly expands opportunity for everyone else.
Bill Gates Sr. argues that the estate tax should fund “a GI bill for the next generation.” In exchange for military and community service, young adults should be able to get substantial tuition assistance for higher education or vocational training, paid for by a progressive estate tax.
If Congress were concerned about the middle class, that’s the kind of proposal that would become the law of the land.