Coase Theorem in Practice

Mark J. Perry explains.

Taxing College Tuition

Looks like the minimum tuition bill is dead. However, I found this interesting.

Kavanagh said, though, that ignores the other problem he wants to address: some students subsidizing others.

Written policy of the Board of Regents requires that at least 14 percent of what students pay in tuition be set aside for need-based financial aid. But the regents have currently set that figure at 17 percent.

“It’s the middle and upper-income students who pay full or almost full tuition, part of which is being diverted for the more needy students,” Kavanagh said.

I knew this was happening, but I didn't know it was a specific Board of Regents policy.

From an economic perspective, this is a tax. It is a tax on students used to subsidize other students.

What surprises me is that from a political perspective we allow an appointed board to levy a tax and engage in income redistribution.