Money

National sales tax

Privatization's economic impact promises to be at least, if not more, far-reaching than the actual reorganization itself. The sheer scale is daunting, but not unprecedented:

11.1 Taking the figure of 55 million students and funding levels ranging from $10-15,000, the potential costs range from $550-$825 billion dollars, or at most 6.3% of the nation's $13 trillion economy. This compares to the current figure of 7.3% for both public and private education.[1]
11.2 Centralization of funding would account for a 36% increase in federal government expenditures – assuming a $2.3 trillion budget.
11.3 The policy offsets this increase by implementing a national sales tax exclusive to funding the education system. Assuming $9 trillion in consumer spending[2], as estimated by the Americans for Fair Taxation group, which supports a national sales tax, up to a 9.1% sales tax would be necessary; 6.1% is the minimum. For comparison, California's current sales tax is 8.75% and Maryland's 6% (as of January 2008).

11.4 A national sales tax, offset by a reduction in state sales taxes, is the most direct and transparent means of raising the necessary revenues. In states that depend heavily on lottery earnings, nationalized funding would open up this revenue stream for other expenditures

The scale would not be dissimilar to the government's absorption of social welfare expenditures. The similarities diverge where the education program's full impact on the budget, as planned, would be immediate, instead of gradual. The five-year interim session, however, could be used to phase in batches of states to appease those who would oppose such a significant, immediate increase.

11.5 Demographics and inflation would be the most significant variables in future funding expenditures. Population growth is pegged at .91%[3]; inflation in the year 2006 was 3.2%.[4] Overall funding is subject to both factors; the caps depend solely on inflation. Under pr ogressive standards the sales tax would increase in accordance with these trends.

Shuffling – more or less – is what all of it amounts to; shuffling, more or less, is the most sure-footed way to go about it.

[1] Expenditure on educational institutions as a percentage of GDP for all levels of education. Education at a Glance 2004. OECD. http://tinyurl.com/2w7z5k.
[2] Taxing Sales Under Fair Tax: What Rate Works? Paul Bachman, Jonathan Haughton Laurence J. Kotlikoff, Alfonso Sanchez-Penalver, Deavid G.Tuerck. Tax Analysts Special Report. Americans for Fair Taxation. FairTax.org.
[3] The United States. World Factbook. Central Intelligence Agency. http://tinyurl.com/ynm7tm.
[4] Consumer Price Index – All Urban Consumers. U.S. City Average. All items. U.S. Department of Labor. Bureau of Labor Statistics. ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt.