The world, especially China, is closing the gap on the US research and technology advantage.
The quality of US K-12 Education has declined precipitously and the Obama Administration has some high quality initiatives on this.
On higher education, the US no longer leads the world in the percentage of college graduates. The Obama Administration also has some fine initiatives here, particularly with the substantial increase in both Pell grants and Education Tax Credits.
On the positive side, the overall quality of US higher education still is unparalleled. The two authoritative sources in evaluating the world’s universities are the London Times Higher Education World University Rankings and the Shanghai Jiaotong University’s Academic Rankings of World Universities. Both of these rankings are done annually.
In the 2010 rankings, the US universities did extremely well. In the 2010 London Times rankings, 7 of the top 10 universities were in the US, 15 of the top 20 were in the US, and 53 of the top 100 were in the US. In comparison, in the 2004 London Times rankings, a much lower 35 of the top 100 were in the US.
In the Shanghai Jiaotong’s 2010 rankings, 8 of the top 10 world universities were in the US, 17 of the top 20 were in the US, and 54 of the top 100 were in the US. In comparison, in the 2004 Shanghai Jiaotong’s rankings, 51 of the top 100 were in the US.
With the substantial decline of the US economy in the 2000s decade, it is particularly important that the US retain this prestige world university status. Thus, I think there should be a big push to keep, and even add to, this US competitive advantage.
I think by far the most effective way for the US to retain, and hopefully even better, this research education advantage is to offer very attractive incentives for the very best young, creative US minds to enter the very best US research universities, objectively measured.
Thus, I think the country should consider a Bonus College Research Tax Credit initiative. Thus, US taxpayers would be granted, for individual federal income tax purposes, an additional education tax credit each year as a certain percentage of tuition paid, not funded by grants, scholarships or fellowships, above some minimum amount, such as in excess of $10,000. But this Bonus Tax Credit would only be for this tuition above $10,000 paid to the finest US research universities.
In determining which US research universities qualify, I would use the two premier worldwide ranking organizations mentioned earlier, the London Times and the Shanghai Jiaotong University.
These Bonus Tax Credits for a given year would only be given to taxpayers paying this tuition above $10,000 to a world class US research university ranked in the top 100 in the most recent year by both the London Times and by the Shanghai Jiaotong University.
So clearly, US universities will be highly motivated to step up their education quality even more and be ranked in the top 100, because they will then get even better quality students, whose related US taxpayers paying the tuition will be awarded nice Bonus Tax Credits.
And to make it even more of an attractive incentive in this Race to the US Higher Education Research Top, I would have the tax credit percentages granted be much higher for the higher ranked US universities ranked in the top 100. Thus there is a highly-charged incentive to move up the ranks by improving the education quality of the US research university.
I would consider tax credit percentages something like this:
Average of Two Rankings….Tax Credit %
Top 1-5………..........................15%
5.5-10……………………………......14%
10.5-15……………………………....13%
15.5-20……………………………....12%
20.5-25……………………………....11%
25.5-30……………………………....10%
30.5-35……………………………......9%
35.5-40……………………………......8%
40.5-45……………………………......7%
45.5-50……………………………......6%
50.5-60……………………………......5%
60.5-70……………………………......4%
70.5-80……………………………......3%
80.5-90……………………………......2%
90.5-100……………………………....1%
Thus, say a Seattle, Las Vegas, or Denver area student decides to attend the cream of the research crop on the West Coast like Cal-Berkeley, Stanford, or Caltech, which all are in the top 5 rankings. Then assume this student and/or his parents pay out-of-state tuition to Cal-Berkeley, or private tuition to Stanford or Caltech, of say $40,000. This taxpayer would be get a Bonus Research College Tax Credit of $4,500, or ($40,000 – $10,000) X 15%, in the current year.
Then, say a Chicago area student decides to attend the prestigious, private University of Chicago, which has an average ranking of 10.5. Let's assume this student or his parents pay $40,000 of tuition. This taxpayer would get a Bonus Tax Credit of $3,900, or ($40,000 - $10,000) X 13%. Likewise, a Chicago area student could decide to attend the pretty close-by, exceptionally-strong University of Wisconsin. Even though this Chicago student pays out-of-state tuition here, this will be softened some by a very nice Bonus Tax Credit. Also, a Chicago area student or a Milwaukee area student could also benefit from the Bonus Tax Credit by attending the nearby, very high quality Northwestern University.
And then just like the Chicago area student going to the University of Chicago above, if a Philly area student, New York area student, or Boston area student decides to attend close-by superb private universities like the University of Penn, Columbia, Cornell, Princeton, Yale, MIT or Harvard, a very healthy Bonus Tax Credit will result.
Also, in the case of the University of Chicago and Yale, these schools, both at an average ranking of 10.5, are just missing a higher ranking, with the resultant higher Bonus Tax Credits for many students. Thus, they are highly energized to bump up their 10.5 average ranking to at least 10.0.
And if you wanted to make it even more of an incentive, you just increase the tax credit percentages. Frankly, I would...and markedly so....the long-term payback to the country will be off the charts.
There are 40 world-class US universities that are ranked in the top 100 in 2010 by both the London Times and by the Shanghai Jiaotong University. Here are the average rankings of these 40:
Harvard………….....1.0
MIT………………......3.5
Stanford………….....3.5
Caltech…………......4.0
Cal-Berkeley……....5.0
Princeton……….....6.0
Chicago…………....10.5
Yale……………......10.5
UCLA………….......12.0
Columbia………....13.0
Cornell………….....13.0
Johns Hopkins…..15.5
Penn……………......17.0
Michigan………......18.5
U of Washington...19.5
Cal-San Diego…....23.0
Northwestern…...27.0
Illinois…………......29.0
Duke……………......29.5
Wisconsin……......30.0
Cal-Santa Barbara.30.5
Wash U -St Louis..34.0
North Carolina…..35.5
Carnegie Mellon...39.0
Minnesota………...40.0
NYU…………….......45.5
Cal-Irvine………....47.5
Cal-Davis………......50.0
Colorado………......50.0
Vanderbilt………...52.0
Southern Cal........59.5
Pittsburgh………....60.0
Brown………….......60.0
Ohio State…….......62.5
Maryland……….....67.0
Boston U………......68.0
Rice……………........73.0
Case Western….....81.0
Virginia……….......84.0
Arizona……….......86.5
To make these world class research universities even better, I also would not let any university be eligible unless both its legacy percentages are below a certain minimum percentage, and its minority group percentages are above a certain minimum percentage.
Making the Business Research Tax Credit permanent will make US businesses much more competitive in the world economy. I think by adding this Bonus College Research Tax Credit, the permanent Business Research Tax Credit will be substantially more effective, in the long run, in giving US businesses a clear edge in competing in the world economy. But this Bonus College Research Tax Credit will also do something much more….it will substantially improve the standard of living and health of all peoples around the world.
And in the long run, I say Bonus College Research Tax Credit will be monumentally more effective to the US economy than Bonus Tax Depreciation for Big US Corps.
