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Amendments to the Internal Revenue Code:
The Congress shall have power to lay and collect taxes
- The Sixteenth Amendment to the United
As you know, people with college degrees, elite school admissions, and
occupational licenses have a much easier time "earning" a living than the
poor, the homeless, the abused, and the rejected. Therefore, a graded
tax levied upon income-generating academic credentials may be very
desirable in the progressive socio-economic sense, though long overdue.
The United States Constitution allows the taxation of income from any
source, and the statistics clearly demonstrate income advantage for
people in proportion to their level of academic completion.
This article is primarily to describe what such a taxing scheme should look like in the
Internal Revenue Code along with some explanations. Individual states and foreign countries
could use the same model for their own income tax schemes. In a previous commentary, Economist Warns Against Tuition Increases, several pros and
cons of
this type of tax were discussed.
The credential tax rate should depend in part upon the individual's level
of academic completion, and the ratings of the academic institution
attended. A person with a doctorate would be taxed more than a person with
only a baccalaureate. A person with a degree from Harvard would be taxed
more than a person with a degree from the University of Illinois.
People who have occupational licenses and drivers' licenses should also
have to pay an additional tax.
Because of a general fiscal preference for college students and
graduates in terms of employability, entry level and rate of pay, the
imposition of the tax should be independent of a person's occupation.
In other words, a college graduate working in a gas station, a pub, or in
some other setting that traditionally does not require a college degree,
would still have to pay the credential tax.
Several safeguards should be employed to achieve the necessary and
proper goals of the new tax scheme, with due regard for the rights of
the taxpayers.
Safeguard 1:
A special board should determine the top schools every year in order to
maintain fair tax assessments. At this writing, reasonably valid
rankings of colleges and universities over the past several years can be
found in the U.S. News and World Report.
Safeguard 2:
A special code of conduct would be needed for government employees
administering the tax code, because employment practices in the
government, including the judiciary, are predominantly predicated upon
academic and professional ideology insofar as having degree requirements
and licensing requirements. Without a special code of conduct in this
area, government employees generally perform the role of "lesser
credentialed servants" of their more influentially credentialed "masters".
One result of this conflict of interest, between public duty and private
credentials of persons occupying government job positions, usually amounts
to abuse of power. The "safety net" for the poor turned out to be a
safety net for the relatively rich by creating fraudulent, stigmatizing
dossiers against the credential-poor through the welfare departments,
unemployment departments, and the court system. The result has been
unlawful favoritism for the credential-rich.
Safeguard 3:
Elective, equitable exemptions or deductions should be made available.
For example, people who might best qualify are those who have been
substantially and chronically injured into poverty over a period of many
years, for not having appropriate post secondary credentials because of
academic or professional corruption. Even if they are given a college
degree later in life, their cost-benefit ratio from the degree would still
be much lower than if they had been able to get their degree at a younger
age. Of course, people who freely choose marriage or gainful employment
above the poverty level during their younger years instead of completing
college should not be qualified for this type of exemption or deduction.
Other exemptions or deductions would be feasible because of the new
tax. Tuition tax credits could be equitably retained, and
possible deductions for public service by younger taxpayers who earn under
a certain amount is also conceivable.
Safeguard 4:
Penalties for discriminatory wages and benefits to evade the tax should
be pursued. Suppose a college graduate complains to his employer that the
tax is unfair and discriminatory. The employer would then be pressured
to raise his or her salary or benefit package. This means that if the
tax originally amounted to $50 against the graduate, the employer might
be pressured to give a raise of, suppose $500. If the added tax over
$50 is $25, then the graduate makes a profit of $425 dollars merely
because of complaining about the tax. This is likely to be paid off
the salaries of lesser credentialed employees. Therefore, this type of
discriminatory salary, wage, and benefit increases should be vigorously
prosecuted and penalized. If this safeguard turns out to be
unenforceable, then the whole tax scheme would fail.
For the first several years of this new tax scheme, the total
amount of revenue generated should not be increased from the current
income tax scheme. This might otherwise result in increased fiscal
mismanagement and special interest self-dealing with the increased
revenues. Colleges and universities which created the problems which the
tax scheme is trying to remedy would undoubtedly be the first in line
to claim its proceeds. Graduates would claim a "greater stake" in the
income derived from their degrees and licenses for paying more because of
them, and would also indirectly lay claim to the proceeds. These special
interests must be made to understand that it is they who must pay for the
social and economic damages they cause. For this reason, a similar
credential tax scheme may be necessary for separate inheritance and
gift taxes, and for other potentially abusive tax shelter mechanisms. But
eventually, if the credential tax does its job, everyone's tax rate might
become lowered, including the upper tax brackets.
Table-1, Possible Tax Rates
Table-2, Tax Percentages for Undergraduate
Schools
Table 3 - Tax Percentages for Graduate Schools (not included here)
Table-4, Surtax Percentages for Professional
Schools
Schedule ED - Tax on Post-Secondary Academic
Degrees, Occupational and Drivers' Licenses
Two years of college
completed.....................................................3%
Baccalaureate degree:
If from top 50................................................7%
If from top schools ranked 51-100.............................6%
If from all other schools ....................................5%
Plus, for advanced degrees:
Master's degree ..............................................1%
Doctorate:
If from top 50 ranked schools.................................4%
If from all other schools.....................................3%
Professional school degrees, such as J.D., M.D., M.B.A.:
If from top 50 schools........................................5%
If from all others............................................4%
Post-professional school degrees (such as J.S.D.).............1%
Non-matriculated enrollment to evade tax...................1%
per year enrolled
Occupational license, depending on type..................1% - 5%
Current Driver's License......................................1%
Note: The following Schedule ED is not an official taxform of the
Department of the Treasury - Internal Revenue Service. However, you might wantto send a copy
with a protest to the House Ways and Means Committee, or to the Senate Finance Committee. If
you feel generous, you can send the amount of the tax to the author of this commentary :)
On Line 2 of Schedule ED enter 5% if
you possess an
undergraduate degree from any school except the ones listed below:
Enter 7% on line 2 of Schedule ED if you possess an undergraduate
degree from any of the following schools:
Amherst College (MA)
Enter 6% on line 2 of Schedule ED if you possess an undergraduate
degree from any of the following schools:
Barnard College (NY)
On Line 3 of Schedule ED, enter 3% if you
possess a professional
school degree from any institution except the ones listed below:
Enter 4%
if you possess a professional school degree as follows:
Law (J.D. or equivalent):
Yale, Harvard, Stanford, University of Chicago, Columbia, U. Mich., NYU,
U. Virginia, Duke, U. Penn., Georgetown, UC Berkeley, Cornell,
Northwestern, UT Austin, USC, Vanderbilt, UCLA, U. Iowa, Hastings (U.Ca.),
U. Wisconsin, Geo. Wash.U. (D.C.), Univ. Minn., Notre Dame, Univ N.C.
(Chapel Hill).
Medicine (M.D.):
Harvard, John Hopkins, Duke, UCSF, Yale, Wash. U. (Mo.), U. Penn.,
Stanford, UCLA, Cornell, U. Mich., Columbia, U of Washington, Univ of
Chicago, Vanderbilt.
Business (MBA):
Harvard, Stanford, Penn, Northwestern, MIT, Univ Chicago, Duke, Dartmouth,
Virginia, Michigan, Colulmbia, Cornell Carnegie-Mellon, NC Chapel Hill, UC
Berkeley, UCLA, UT Austin, Indiana Univ. at Bloomington, NYU, Purdue, USC,
U. Pittsburgh, Georgetown, U. Maryland, U. Rochester.
Case-Study 2: A person with an undergraduate degree from Yale receives
$25,000 per year as a freelance writer for magazines, receives royalties
for a book, and receives honoraria for speaking engagements. How would
she be taxed under the credential tax scheme (Hint: If she didn't have the
Yale degree, she would not have those sources of income)
Answer: Referring to the tables above...
Taxing the College Graduates
on incomes,
from whatever source derived, without
apportionment among the several
States,
and without regard to any census or enumeration.
States Constitution, enacted in 1913:
Two year college degree, terminal or post-baccalaureate.......3%
Bates College (ME)
Bowdoin College (ME)
Brown University (RI)
Bryn Mawr College (PA)
California Institute of Technology
Carleton College (MN)
Carnegie Mellon University
Claremont McKenna College (CA)
Colby College (ME)
Colgate University (NY)
Columbia University (NY)
Cornell University (NY)
Dartmouth College (NH)
Davidson College (NC)
Duke University (NC)
Emory University (GA)
Georgetown University (DC)
Grinnell College (IA)
Hamilton College (NY)
Harvard University (MA)
Harvey Mudd College (CA)
Haverford College (PA)
Johns Hopkins University (MD)
Massachusetts Inst. of Technology
Middlebury College (VT)
Mount Holyoke College (MA)
Northwestern University (IL)
Oberlin College (OH)
Pomona College (CA)
Princeton University (NJ)
Rice University (TX)
Smith College (MA)
Stanford University (CA)
Swarthmore College (PA)
Trinity College (CT)
University of California - Berkeley
University of Chicago
University of Michigan - Ann Arbor
University of Notre Dame (IN)
University of Pennsylvania
University of Virginia
Vanderbilt University (TN)
Vassar College
Washington and Lee University
Washington University in St. Louis
Wellesley College (MA)
Wesleyan University (CT)
Williams College (MA)
Yale University (CT)
Bard College (NY)
Beloit College (WI)
Boston College
Brandeis University (MA)
Bucknell University (PA)
Case Western Reserve Univ. (OH)
Centre College (KY)
College of the Holy Cross (MA)
College of William and Mary (VA)
Colorado College
Connecticut College
DePauw University (IN)
Dickinson College (PA)
Franklin and Marshall College (PA)
Furman University (SC)
Georgia Institute of Technology
Gettysburg College (PA)
Kenyon College (OH)
Lafayette College (PA)
Lawrence University (WI)
Lehigh University (PA)
Macalester College (MN)
New York University
Occidental College (CA)
Pennsylvania State U. University Park
Pepperdine University (CA)
Rensselaer Polytechnic Inst. (NY
Rhodes College (TN)
Sarah Lawrence College (NY)
Scripps College (CA)
Skidmore College (NY)
Texas A&M Univ. College Station
Tufts University (MA)
Tulane University (LA)
U. of Illinois Urbana-Champaign
U. of North Carolina Chapel Hill
Union College (NY)
Univ. of California Los Angeles
Univ. of California San Diego
Univ. of California Santa Barbara
Univ. of Southern California
Univ. of Wisconsin Madison
University of California Davis
University of California Irvine
University of Rochester (NY)
University of Texas - Austin
University of the South (TN)
University of Washington
Wabash College
Wake Forest University (NC)
Whitman College
Yeshiva University (NY)
Case-Study 1: A person received a two year degree from a community
college, but also received a baccalaureate from the University of
Wisconsin, became a Certified Public Accountant, and later graduated law
school at Harvard. He currently works as a licensed attorney with a gross
income of $350,000 per year. How would he be taxed under the credential
tax scheme?