Egalitarian-minded economists are pushing for a ‘GDP 2.0’ — and getting some lawmaker help.
Getty Images/Kevin Cox
University of Alabama football coach Nick Saban will take home at least $11.1 million this year. He makes more than the president of the University of Alabama — and so, amazingly, do three of his assistant coaches.
University of Alabama president Stuart Bell currently pockets $755,000 annually. The coach for Alabama’s outside linebackers, by contrast, will this year collect $950,000 worth of paychecks. And the team’s defensive and offensive coordinators will walk off with $1.3 and $1.2 million.
None of these numbers phase — in the least — Alabama’s movers and shakers. West Alabama Chamber of Commerce chief Jim Page speaks for them all. Coach Saban and his staff, Page gushes, deserve “every penny.”
The logic of Saban fans like Jim Page? Some of them just can’t get over Alabama’s spectacularly successful football record in the decade since Saban took the coaching reins. Roll, Tide, roll!
But other Saban boosters have a much more sophisticated case to make, and their sophistication offers the rest of us a revealing window into just how much the chore of trying to justify inequality can distort how we see our world.
In Alabama, taxpayers in the lofty eight-digit world of Nick Saban pay state income taxes at a lower effective rate than average Alabama families making $37,000 a year.
The “sophisticated” case for Nick Saban’s millions starts with the budget cuts that have ravaged Alabama higher education over recent years. The state has cut postsecondary funding by 36 percent — $4,337 per student — since 2008.
In this environment, institutions of higher education in Alabama need to scramble for every dollar they can raise, and Saban’s football success, the argument goes, is helping that scramble. Record numbers of out-of-state students — who pay much higher tuition than in-state students — are flocking Alabama’s way to root the football team on.
Those extra tuition dollars are offsetting budget cuts. And local businesses, Saban’s pals like to note, are benefiting as well. New developments abound in Tuscaloosa, the city that hosts the University of Alabama. In one new complex, buyers of condos that run over $2 million can watch the football team practice from their patios.
Nick Saban, his fans crow, is raining dollars on Alabama, on campus and off! All true. But this defense of Saban’s millions has to conveniently ignore some much bigger truths.
Let’s start with the official mission of the University of Alabama. The university, that mission reads, will endeavor to “advance the intellectual and social condition of the people of the state, the nation and the world through the creation, translation and dissemination of knowledge.”
Unfortunately, Alabama’s flagship university is now sharing knowledge with fewer students from the state of Alabama. The university had 2,900 students from inside Alabama the year before the Saban era began in 2007. By 2015, that in-state student population had shrunk to 2,500.
Over that same time span, the university’s out-of-state student population has nearly tripled, from 1,500 to 4,400. The university has become a much more welcoming place — but only for out-of-state students who can afford to pay high tuition.
Let’s not forget those state budget cuts that justify both this shift to out-of-state students and the generous rewards for Saban and his staff. Why has Alabama been experiencing such chronic budget shortfalls? The state has one of the nation’s least progressive tax systems. Alabama’s affluent don’t pay anything near their fair share of state taxes.
One national study from the Institute on Taxation and Economic Policy calls Alabama “a good example of a state with nominally graduated income tax rates that don’t mean much in practice.” The state’s effective income tax rate, the study notes, “actually declines slightly at upper income levels.”
An Alabama couple making $800,000, about the average for 1 percenters in the state, has an effective state tax rate of 3.3 percent. A couple earning $37,000, about the average income in the Alabama’s bottom 99 percent, will pay state income taxes at an effective 4.05 percent rate.
And taxpayers in the lofty eight-digit world of Nick Saban? They pay the lowest effective rate of all. A household with a $10 million income in Alabama figures to face a mere 3.01 percent effective state income tax rate.
All children in Alabama, not just would-be University of Alabama students, suffer from the relentless underfunding that this rich people-friendly tax system perpetuates.
Earlier this month, WalletHub released a national analysis of “2017’s best and worst places to raise a family.” WalletHub’s researchers looked at the 150 most populated U.S. cities. The worst of these 150 cities for raising a family? Birmingham, Alabama’s largest city. Montgomery and Mobile, the state’s second- and third-largest cities, ranked a lowly 132nd and 133rd.
The University of Alabama aims to be, proclaims the school’s official vision statement, “an academic community united in its commitment to enhance the quality of life for all Alabamians.”
Who knew that commitment only applies on football Saturdays?
Sam Pizzigati, an Institute for Policy Studies associate fellow, co-edits Inequality.org. His latest book — The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970 — traces how average Americans ended the nation’s original Gilded Age. Follow him at @Too_Much_Online.