42 Chapter 3: Methodology From the taxpayer perspective, the pivotal step is to determine the public benefits that specifically accrue to state government. For example, benefits resulting from earnings growth are limited to increased state tax payments. Similarly, savings related to improved health, reduced crime, and fewer welfare and unemployment claims, discussed below, are limited to those received strictly by state government. In all instances, benefits to private residents, local businesses, or the federal government are excluded. Growth in state tax revenues As a result of their time in SUNYWCC’s Business program, students earn more because of the skills they learned while attending the college, and businesses earn more because student skills make capital more productive (buildings, machinery, and everything else). This in turn raises profits and other business property income. Together, increases in labor and non-labor (i.e., capital) income are considered the effect of a skilled workforce. These in turn increase tax revenues since the state government is able to apply tax rates to higher earnings. Estimating the effect of SUNY WCC’s Business program on increased tax revenues begins with the present value of the students’ future earnings stream, which is displayed in Column 4 of Table 3.4. To these net higher earnings, we apply a multiplier derived from Lightcast’s MR-SAM model to estimate the added labor income created in the state as students and businesses spend their higher earnings.42 As labor income increases, so does non-labor income, which consists of monies gained through investments. To calculate the growth in non-labor income, we multiply the increase in labor income by a ratio of the New York gross state product to total labor income in the state. Not all of these tax revenues may be counted as benefits to the state, however. Some students leave the state during the course of their careers, and the higher earnings they receive as a result of their education leave the state with them. To account for this dynamic, we combine student settlement data from the college with data on migration 42 For a full description of the Lightcast MR-SAM model, see Appendix 6. Taxpayer benefits analysis Taxpayer benefits Increased tax revenue Avoided costs to state/local government
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