During his campaign for the Democratic presidential nominee, Senator Bernie Sanders outlined a plan to combat the rising cost of higher education and student loan debt by making all college tuition-free. Sanders proposed paying for this program through certain tax changes that would only affect the very rich.
Ultimately, he was edged out in the Democratic race and Clinton received the nomination. Clinton’s outlined policy shied away from creating a new entitlement and focused instead on ways to crack down on “scam colleges” and help the middle class become robust enough to afford college again.
With Clinton’s loss, education shifts out of Democratic control and into Republican hands, catapulting the narrative a very long way from free college for all Americans. Additionally, Republicans oppose the tax changes Sanders suggested, and are very unlikely to raise taxes to pay for a new entitlement program.
Even if we first assume that Sanders' plan would have worked without raising taxes in the immediate future, it’s hard to imagine a scenario where free college for all would not include raising taxes at some point. Just like Social Security seemed to make so much sense 50 years ago, a new entitlement program would be likely to balloon taxes or fail.
But some countries like Denmark are able to offer their citizens free college. Denmark’s income tax rate is somewhere around 58%, which seems like an outrageous number to most Americans.
In addition to free college, citizens of Denmark have access to free health care, five weeks of paid holiday leave a year, and generous options for things like unemployment. According to coverage in 2010, NPR reported that buying a car carries a 200% tax. Buying a $20,000 vehicle, for example, would cost $60,000.
Despite the high tax rate, by many rates of measure, the people living in Denmark are among the happiest in the world. Could a higher rate of tax in the United States lead to a happier, healthier, and more educated society here?
Sanders' plan didn’t say that it would avoid raising taxes, period. It simply promised to avoid raising taxes on the middle and lower class. Instead, the cost would be levied to the very wealthy via loopholes that help them avoid paying taxes on the whole of their incomes.
Proponents of the plan say that over time, a more educated work force earning higher salaries will offset the cost of a program built to withstand the coming generations. This line of reasoning often invokes Germany, another country offering college tuition-free. In fact, Germany called tuition a “social injustice” and offers free schooling not just for its own citizens but for any students who wish to study within the country.
Germany’s reasons for offering free college may include social justice reasons, but it’s also no secret that Germany had to find a way to attract skilled workers within their borders.
Critics of Sanders' plan echo the critics of Germany’s plan: namely, higher taxes on the wealthiest individuals will eventually drive them to live in another country. Those with high incomes have the greatest means to move to another country, and could easily choose another place to live where taxes would be less.
When those high earning individuals leave, taxes will begin to slowly increase in the middle class and wealthy until the burden is too great to bear. If the economy were to collapse, all those higher skilled workers would leave. In their place would be the same problems as before, in addition to a hemorrhaging social entitlement program.
In answering those critics, the logic circles back to countries like Denmark, Finland, Norway, and Sweden who heavily tax their citizens, even the middle class. If those populations are gladly paying their taxes, maybe we could model what they are doing.
Additionally, if the people are happy, healthy, and living in an area where the economy is strong and incomes are robust, then the criticisms don’t seem routed in reality. Would our wealthiest citizens flee, despite having access to all the entitlements that higher taxes come with?
This may possibly work, especially in the early years of a system. But when we look to Nordic examples, we have no reason to believe that this would be the case here.