by Lorenzo Burgio
College graduates that work and live in the same state as the institution upon graduation are undeniably beneficial to that state’s economy.
Connecticut lawmakers, particularly House Democrats, have recently noticed this and are proposing a tax break that would apply to students who graduate after January 2018.
Students who obtain a job and live in the state after graduation will receive the tax break for five consecutive years. If the graduate attends an out-of-state school, they are still eligible as long as they return and begin working within two years of graduation.
The amount of the tax breaks would vary per graduate and be based on income. An estimated 50,000 to 60,000 graduates would be eligible and the first-year cost of the plan would be $6 million, according to the Hartford Courant.
Two highly debated issues are tackled by this bill; making higher education more appealing to upcoming generations and improving the state’s economy.
A study conducted by the Pew Research Center found that individuals born after 1980 with a college education have lower unemployment and poverty rates than those without one. They are also more likely to rent or own their own home and not be living with their parents; factors that benefit the economy.
“Since the 1970s, education increasingly tends to demarcate the more economically successful from the less economically successful,” PRC stated in the study.
Arizona State University also conducted a study that gauged the societal benefits from a college-educated population.
“Social benefits of a workforce with greater educational attainment and skills can be traced to the enhanced worker productivity associated with greater educational attainment. These productivity gains translate into higher output and incomes for the economy,” the ASU study concluded.
The enhanced productivity then starts a chain reaction that improves not only the state’s economy, but the country’s as well, explained the ASU study.
“Higher education influences economic well-being in three ways,” the ASU study stated. “First, the direct expenditures by the institutions, their employees and their students impact the local economy. This spending multiplies through the local economy until the monies are used to purchase goods and services from outside the local area.”
The fact that a college-educated population is beneficial to both the educated citizens and the economy where they live and work, is the most important aspect of the ASU study.
“The benefit stream contains the private benefits that accrue to the individual plus the social benefits that the employment of the individual generates for the rest of the economy,” the ASU study stated.
This means the entire state benefits when tax breaks are used as incentives to increase the size of the college-educated population that remains in Connecticut upon graduation; as the the proposed bill aims to do.
The tax break will make higher education more appealing for upcoming generations and these studies are reason enough for it to be enacted, so Connecticut residents — whether students or not — can benefit from the economical boost that will follow.