Letter to the Senate Budget Committee on Education and the Economy
May 22, 2013
On behalf of the more than 3 million members of the National Education Association (NEA), we offer our views on investment in education and economic growth in regards to the May 22 Senate Budget Committee hearing, “Supporting Broad-Based Economic Growth and Fiscal Responsibility through Tax Reform.”
We firmly believe that sustainable tax reform should be broad based, transparent and fair. These goals can be achieved by prudently closing loopholes, reducing unnecessary expenditures and ensuring everyone is paying their fair share. Individuals at the upper-end of the income scale have been the overwhelming beneficiaries of the nation’s economic growth over the last several years while earnings of middle- and lower- income workers have stagnated. Nobel Prize winner Joseph Stiglitz notes that there is growing evidence looking across countries over time that suggests a link between equality, growth and economic stability. For example, the US grew far faster in the decades after the Second World War, when inequality was far lower, than it did after 1980, when the gains went disproportionately to the top.
Making the individual income tax structure more progressive would make the system fairer by recognizing this rising disparity in ability-to-pay, and would at the same time make the system more growth-oriented by increasing the reliance on the part of the tax base that has grown, and continues to grow, most rapidly.
We also note that the driving force of economic growth is investment in human capital — skills and ideas —and policies that affect investment here can have a sustained impact on economic growth. Economists have long found that education produces significant long-term growth effects, including the fact that the more educated the workforce, the better and more rapidly it is able to implement technological advances.
Education permeates every aspect of the economic environment
. A growing economy requires a capable and innovative workforce able to drive the country forward. The future of that workforce is dependent on investment in our student’s education today. Increases in educational attainment in the United States labor force from 1915-99 directly resulted in at least 23 percent of the overall growth in productivity, or around 10 percent of growth in gross domestic product (see attachment “Education and the Economy”).
Government spending at all levels has been cut dramatically, leaving many vital public services, such as education and the nation’s infrastructure, drastically underfunded. This underfunding will inevitably lead to a decrease in economic competitiveness and lower standards of living for future generations.
We urge you to consider these important factors as you move forward with tax reform discussions. Sustainable growth in the economy is achievable through an investment in our students and commenters.
Director, Government Relations