Forbes is great at telling the truth about thecosts of college, The Tyranny of the Diploma wasan excellent article.http://www.forbes.com/global/1998/1228/0120082a.htmlIt is so damn frustrating that Libertarians andRepublicans alike haven't figured out thestrategy which best attacks the progressiveincome tax. Both Democrats and Republicans spew thepropoganda that secondary education is thepanacea which makes all things "fair". But it'sthe policy of the "progressive income tax" thatthe DEMOCRATS promote, which takes away much ofthe financial benefit of secondary education. Itin essence punishes those who are rewarded withextra compensation for their education efforts. When will the Libertarians and Republicans informthe public that the "progressive income tax" isreally a huge "tax on education?" It is anargument that would probably actually bring abouta flat tax.Forbes failed to calculate their assessment correctly,had they, the evidence against going to college would be morecompelling. That's because Forbes failed to calculate:1. The effects of the progressive income tax.This tax penalizes the benefit of education(supposedly higher income) to redistribute moneyto those who don't seek education (call it theDemocratic "ignorance is bliss benefit program"). None of your articles have ever taken thiscalculation into consideration. If you investmoney into tax deferred instruments that youwould have spent on college, you get compoundingof the investment until you sell at retirement. Whereas, if you achieve a higher salary there isno compounding of the investment tax deferredbecause you are taxed every payday for theinvestment (the tyranny of the progressive income tax). Avoiding college then, is a sound way to provide forretirement through tax deferment.>2. Calculate the lost wage that those who aresmart enough to go to college, can earn in theworkforce. An hour in class or spent studyingis an hour not spent in the workforce. Yourarticle titled The Tyranny of the Diploma did notcalculate this effect, but your articleconcerning the MBA does. For argument sake,we'll consider 4 years in college spent studyingand in class, to have a 1 to 1 ratio for timelost that one could have worked (when in realitythat is a favorable ratio tilted in favor ofcollege. The time spent in class and studyingfor four years may be equivalent to the timespent working full time 5.5 years).>I'd estimate going to college four yearssacrifices about $80,000 lost income (what ahigh school grad with skills enough to get intocollege, can earn immediately from graduationfrom high school. Let's presume at18 a kid leaves high school to make $20,000 ayear. His parents invest the $120,000 (the cost for room and board, tuition, meals, and other expenses-the average cost for a college educationaccording to the Forbes article) into governmentbonds paying 5% instead. By age 62 the value of that benefit will be in excess of $1 million ($1,078,062.90 to be exact).http://www.interest.com/hugh/calc/savings.cgi?amt=120000&dep=0&cmp=Monthly&int=5&yrs=44Let's presume the AVERAGE working wage for those42 years for the high school grad, was $25,000.The non college graduate will have earned $1million in their working career, most of whichwill be under the effective tax rate of 15%($1,050,000 less the .15% tax paid on income).His total working career benefit then is:>In savings bonds at age 62 $1,078,062.90>Earned income $1,050,000/15%>tax consequence (-$157,500) $ 892,500.00> ------------- $1,970,562.90>Without consideration of taxes, to compensatefor the $2 million above, a person would have tostart making $5,975.50 a month salaryimmediately upon graduation from college at age22 (taking from age 18-22 to get their bachelorsdegree), to EQUAL the benefit described above byage 62 (I used 2.5% continuing return on the $1.9million, because wages were not saved and wouldnot be compounded, while the bond values were,which were roughly half of the derived benefit).>>http://www.interest.com/hugh/calc/rdur.cgi?A=1970562&I=2&O=L&V=40&F=0&X=Show+Summary+OnlyHowever, most of the $5,975.50 will be taxed atthe effective progressive rate of about 30%.So, to become equivalent benefit, you have toreally earn:>>$5,975.50 x 30% (to overcome the progressiveeducation tax) or an additional $1,792.65 permonth.>What this means, put simply, is that the breakeven wage for a college graduate, relative tothat of a high school graduate who goes to workmaking $20,000 a year, and whose parents investmoney they'd otherwise have spent on college in agovernmentretirement bond fund, is $7,768.15 permonth which MUST begin at age 22.>In that article titled The Tyranny of theDiploma, Forbes calculates that 30% of allcollege graduates are earning equivalent to highschool wages. It would be interesting to knowwhat percentage of college graduates by age 22are making less than $93,217 per year. My guess would be that 99% of college graduatesmakes less than that entering the workforce, mostprobably never make that in their working career.>Be honest, be bold, just come to the conclusionthat college has become so expensive, and thetaxes so high for the few degree plans that payadequately to compensate for the time, effort andexpense of going, that for almost everyonecollege is a terrible investment.
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