by James A. Bacon
In the on-going sparring between left and right over inequality in the United States, the left has succeeded in framing the debate by defining the issue as income inequality, as in income reported to the Internal Revenue Service. Conservatives have countered that IRS income does not include income generated through the $2 trillion underground economy, nor does it include more than $1 trillion a year in means-tested transfer payments such as Medicaid, food stamps, the Earned Income Tax Credit and Temporary Assistance for Needy Families. Conservative pundits have generated some traction by highlighting the government-funded income transfers but even that doesn’t tell the whole story.
Our society is riddled with other means-tested programs. Social Security skews payouts in favor of the poor. Medicare increases contributions based on income bracket. Many hospitals and doctors provide billions of dollars of free or reduced-cost health care services to the poor, or at least they did before Obamacare. Speaking of Obamacare, the Affordable Care Act itself is a massive income transfer scheme. And let us not forget private philanthropy, which underwrites thousands of community programs across the country. (See the list of programs, most of which are focused on poverty, supported by the United Way of Greater Richmond and Petersburg.)
Rarely considered, much less debated, is the income transfer engineered by higher education. The cost of education is significantly discounted for the poor. We always knew that as a generality. Thanks to today’s Times-Dispatch’s “Degrees of Difference” report, we now have that information broken down institution by institution for Virginia.
The chart above shows the average net cost of attending a Virginia university in the 2011-2012 school year. That includes tuition, fees, room, board, books and miscellaneous expenses. For each university, I have calculated the ratio of what households making $110,000 or more pay compared to what households making less than $30,000 pay. Thus, for the College of William & Mary, with the most “progressive” tuition scale in Virginia, students from upper-income families pay 6.7 times more than students from poor families. Please note: We’re not talking millionaires and billionaires here. A middle-class family with two working spouses can easily fall into that category.
My point here is not to criticize colleges and universities for discriminating against the middle class. I accept the idea that it is in society’s best interest to make it possible for talented lower-income students to attend college. I’m all in favor of promoting social mobility. (I’ll set aside for now the question of how many lower-income students are prepared for college and how many drop out, accumulating large debts in the process.) My point is that our society is steeped and marinated in wealth transfers. But for liberals, nothing is ever enough. President Barack Obama has dedicated the remainder of his second term to flagellating the idea that income disparities are too great and that society needs to do something more.
Fine, let’s have that debate. All I ask is that, instead of focusing purely on income reported to the IRS, that we consider all the actions our society is taking to ameliorate the effects of poverty. That includes the cost of a very big-ticket item, attending college.