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Tax the Smart

Tax the Smart

Tuition fees at German universities could be replaced by a lifetime or multi-year additional tax on those who have received higher education

With the abolition of semester fees, German universities lose a serious source of funding – for example, the state of North Rhine-Westphalia alone will lose up to 250 million euros from the abolition. Economists and education experts are searching for new financing schemes for universities.

One such specialist – Dieter Dohmen, founder and director of the Research Institute for Social Economics and Economics of Education in Berlin – recommends that statesmen consider introducing a "tax on smart people": those who have graduated from a university and earn a good income, from the expert's point of view, could well share with future generations – not so much experience as money.

According to Dohmen's calculations, in the coming years the state will have to create 450,000 new study places. Improving the quality of existing ones requires a billion euros per year – together with the new ones, the higher education sector's need for funds amounts to 3.25 billion euros annually. The Berlin expert sees the only alternative to finding additional funding sources in the pockets of former students as limiting the number of future ones. If the money cannot be found, potential students of German universities will have to learn what competition and entrance exams are – even those who choose far from the most popular faculties.

In the United Kingdom, a discussion is currently actively underway about a lifetime fee for university graduates: if the plans of Liberal Democrat Minister for Business, Innovation and Skills Vince Cable are to become reality, the income of British university graduates will be subject to an additional five percent tax in favor of their alma mater throughout the entire working life of the payer.

Dieter Dohmen is confident that in Germany, former students will also have to be brought in to finance new students. The expert proposes differentiating the system depending on graduates' income and obligations: those raising children or supporting relatives pay nothing or very little, while wealthy singles should be asked to share.

Dohmen's scheme is more lenient than the British one: the director of the Institute for Economics of Education proposes replacing the lifetime fee with a seven-year one – over this period, a former student can fully pay for the state higher education they received. For someone earning 2,000 euros, they will have to part with 120 euros monthly; from five thousand, payments will reach 300 euros. Accordingly, over seven years, the ex-student will pay between 10,000 and 25,000 euros for their education.

It is hard to expect that Dohmen's recommendations will cause universal delight among former students. For example, a well-earning graduate of a technical faculty will have to finance a "useless," from the "techie's" point of view, future historian. However, in such redistribution of funds, the Berlin expert sees more fairness than in the system of semester fees: everyone pays them, regardless of future professional success.

Dieter Dohmen's "tax on the smart" is socially fairer – it takes into account the interests of those who failed to succeed despite having received a higher education. And those who have taken everything from life should show solidarity with other members of society. After all, each student costs the state 115,000 euros, while someone with only vocational training cost only 60,000. Why shouldn't expensive graduates take care of future colleagues?

Maxim SMIRNOV.