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GOP tax bill would tax tuition waivers for grad students
- kchoudhu 9y agoI'd be okay with this -- if they made universities pay into FICA for the taxable amount.
- joelrunyon 9y ago"Waivers"
- deleted 9y ago[deleted]
- stochastic_monk 9y agoThanks! Corrected.
- leggomylibro 9y agoSlice those without money to the bone, and give more to those who have it. Typical, really. Grad students really get a raw deal already, and rarely receive more than a stipend for the crazy hours they put in trying to further education and the sum total of human knowledge. But let's make life harder on them; shame, shame, shame...
- nostromo 9y agoIf you ever wonder, "why is the tax code so complicated?" this is the answer. Every time there is a proposal to eliminate a specific deduction, credit, or loophole, special interest groups crawl out of the woodwork to fight it tooth and nail.
- leggomylibro 9y agoHow about the estate tax loophole? We've got better places to go looking.
- ensignavenger 9y agoIt is my understanding that the tax proposal deals with that, too.
- jdavis703 9y agoEveryone thinks someone else's loopholes are better places to go looking. Even I succumb to this thinking, at first I was pretty pissed at the retirement saving plan elimination. But all us voters need to grow up and vote in people who have spines and will make us drink our spinach juice. It'd be really nice to have a tax code so simple it puts TurboTax and their ilk out of business.
- blackbagboys 9y agoWhy do we - ordinary workers and students - have to drink the “spinach juice”? Why not the people who have amassed utterly unprecedented amounts of wealth and power?
- conanbatt 9y agoTaxes are that fantastic thing that does good to everyone, specially when other people pay it.
- pishpash 9y agoBecause ordinary workers and students don't or aren't able to effectively exercise political power, ceding the polity to those who do so.
- JonFish85 9y agoBecause there is so much more money in the “ordinary workers and students” subset of society than there is in the top 0.x%.
- sidlls 9y agoNot on an individual basis.
- topspin 9y agoI've never wondered this. The complexity and growth of tax law is a proxy for corruption.
- kristopolous 9y agoOk, but it's far simpler elsewhere. In many places (such as Japan), doing your taxes takes a few minutes and you don't need to pay someone hundreds of dollars to someone who has made a career out of the tax system.
- chimeracoder 9y ago> Ok, but it's far simpler elsewhere. In many places (such as Japan), doing your taxes takes a few minutes and you don't need to pay someone hundreds of dollars to someone who has made a career out of the tax system. The process of filing taxes is separate from how complicated the tax code itself is. And to be honest, you don't need to pay hundreds of dollars to anyone in order to file taxes in the US. In fact, you can file your taxes using a form that fits on a single sheet of paper. You may want to opt for one of the other methods of filing, if you qualify for special deductions that might significantly reduce your tax burden, but most people already qualify for the option that takes "a few minutes".
- seanmcdirmid 9y agoI had absolutely zero tax obligation in the USA for 9 years, and I still had to file more than a few sheets of paper, taking around a day or so to prepare.
- xellisx 9y agoWell the IRS could do your taxes for you and send you a bill/confirmation for you to correct, but companies have lobbied to get an agreement put in place that this will never happen.
- chimeracoder 9y ago> Well the IRS could do your taxes for you and send you a bill/confirmation for you to correct, but companies have lobbied to get an agreement put in place that this will never happen. The difference between that and filling out a 1040EZ is negligible. It takes as long to write out a 1040EZ as it would to properly verify the information on one that's already filled out for you. For people who want to utilize the more complex deductions available - there's no way that the IRS could do that for you. Contrary to popular belief, they don't have sufficient information to do that until you give it to them, and quite frankly you wouldn't want them to have access automatically to all of that.
- jdavis703 9y agoLet me preface this by seeing I'm usually against tax cuts, and every single California tax increase proposition that I've come across I've voted for. That said, I'd be all in favor of eliminating all these special tax deductions in favor of reducing taxes if it streamlines the federal tax code and prevents tax dodging and cheating. The idea of using taxes as a stick and carrot just leads to abuses (at least the carrot side of things). Taxes should mainly be used to fund the government, and ensure that things with huge negative externalities (e.g. smoking, environmental pollution, etc) are paid for. Taxes themselves shouldn't be part of a giveaway. If we need to direct funds to a certain part of the economy the government should just do it in a transparent way, such as offering grants to graduate students.
- WalterBright 9y agoIn the 80's, Reagan's tax cut deal with Congress was trading reductions in marginal tax rates for elimination of a long set of deductions, predominantly tax shelters. Everyone remembers the former and not the latter :-) Part of the economic growth after that was surely the shift in investment from tax shelters to much more productive investments.
- comicjk 9y agoThere are simpler factors to explain the good economic growth 1982-1988: a big drop in inflation (engineered by Fed chair Paul Volcker) and a drop in the price of oil (mainly just luck). There was also a lot of deficit spending. Reforms in the 1981 and 1986 tax bills may have been helpful on the margin, but they're small compared to economic fundamentals.
- maxxxxx 9y agoIf they also had eliminated the carried interest loophole for hedge fund people and VCs I would actually be on board. I am also a little skeptical of the 25% for pass through entities.
- jdavis703 9y agoThe 25% is going to be abused really bad... There's major problems with the bill, but every special interest (retirement savers, home owners, grad students, R&D corporations, etc) coming out for their pet tax exemption is part of the problem.
- pishpash 9y ago"The plan would also tax the tuition waivers that many graduate students receive when they work as teaching assistants or researchers." This is f-ed up, graduate students don't ever see a red cent from tuition payment from RA and TA grants, which is an accounting manipulation by universities.
- harmlessposter 9y agoThis is great. We need to destroy the academia scam.
- Fomite 9y agoBy penalizing the people in academia who are the most vulnerable.
- harmlessposter 9y agoDestroy the pyramid scheme by ripping out the base of the pyramid. Sounds good to me.
- Fomite 9y agoIt sounds cruel, petty, and ultimately pointless to me.
- deleted 9y ago[deleted]
- lovich 9y agoWhile I agree with you on who has the lack of power here, it's unfortunate that government garuntee of loans has let the academic industry grow so out of control. It means that any way of changing this status quo is going to hurt students when it happens, but it's necessary to prevent greater pain down the road. At this point it's a band aid that needs to be ripped off
- Fomite 9y agoThis has nothing to do with addressing that problem. Literally zero. It's an obscure bit of accounting for an administrative process, that's being used because many people (like you) will nod sagely about "Academia being out of control" without understanding what the mechanisms actually in place are.
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- WalterBright 9y agoMy brilliant proposal is to reduce taxes on productive activities like investments and working, and increase taxes on counter-productive activities like emitting pollution.
- jostmey 9y agoUniversities are abusing this tax waiver and treating graduate student has employees. It is high time this waiver be removed
- pishpash 9y agoThen make universities pay this tax, not graduate students.
- mattkrause 9y agoThe universities also don't pay many of the grad students, particularly in the sciences. Instead, the students are funded by training grants (to the department or program), and as RAs on grants to individual faculty members. These overwhelmingly come from federal sources, so the net impact on the budget is likely to be zero: these grants would need to increase to cover the taxes, which would then go right back to the feds. I could get behind funding fewer grad students and using that money to actually do some research instead, but I think asking grad students to absorb a $3,000 pay cut on a $20-30k salary is pretty harsh, especially since many of the "tuition" payments don't cover an actual class.
- civilian 9y agoIs there that much of a difference? If the graduate students need to pay the tax, then new grad students will take that into account when comparing stipends.
- Fomite 9y agoThe waivers are meant to acknowledge that while graduate students must technically be enrolled in classes while working on the research portion of their degrees, they are not taking up the resources tuition is supposed to be paying for. So tuition gets waived, and they don't get taxed on a "gift" that's entirely for handling an administrative process.
- mattkrause 9y agoExactly! At least 50% of graduate classes are something like "preparing for qualifying exams" or "dissertation research in progress" and meet zero times a week for zero hours.
- Fomite 9y agoWhy these exist: These are indeed waivers - generally speaking, they're used for three things: 1. To prevent the state from paying the state to educate a graduate student by waiving tuition that would be paid from a stipend, etc. 2. To acknowledge that graduate students must remain enrolled in a program for several years while working on research, but aren't taking classes and probably shouldn't be paying tuition. reply 3. To partially adjust graduate students who have no chance of getting in-state tuition (i.e. foreign students) to the in-state rate so that it's possible to recruit grad students.
- matt_wulfeck 9y agoAny time you hear about some new deduction going away (such as this), ask "Does doubling the standard deduction create a net positive affect for person X?" Almost always the answer will be yes. We need a simpler tax system. This is coming from someone who will be net-negative from these changes. I can't help but support it.
- pishpash 9y agoThe proposals that have so far come out are not substantially simpler. It's a little redistribution here and there but not nearly dramatic enough to be called a "simpler tax system."
- matt_wulfeck 9y agoI agree in part, mostly because I think calling it "tax cuts" is misleading since what is really being cut? That being said, it's easy to predict the number of people taking the standard deduction is going to go way up.
- deleted 9y ago[deleted]
- throwawayjava 9y agoNo, not even close. We're taking about mid four figures decrease in take home pay for people making 30k. It's a double digit tax hike on grad students.
- darawk 9y agoGood. If you want to subsidize education (or any activity), write a check, don't complicate the tax code.
- Fomite 9y agoThis isn't a subsidy. It's a correction for a required administrative process.
- darawk 9y ago> In broad terms, the bill would eliminate or consolidate a number of tax deductions meant to offset the costs of higher education for individuals and companies, including the Lifetime Learning Credit, which provides a tax deduction of up to $2,000 for tuition, a credit for student-loan interest, and a $5,250 corporate deduction for education-assistance plans. Sounds like a subsidy to me.
- geebee 9y agoThis is interesting. Universities with extremely large endowments (Stanford, Harvard, quite a few others) don't really need to charge tuition, even at the undergrad level. And as far as I can cell, most PhD students don't pay tuition. So, what stops Harvard from setting a zero tuition for graduate PhD students? In many fields, STEM especially, grad students are really valuable for the extremely inexpensive labor they provide, not for tuition checks. Public universities typically charge lower tuitions, and even then (well, at Berkeley at least), my experience was that it isn't hard to get a tuition waiver and become a TA or RA. So, just do away with graduate tuition for PhD students. The big casualty, I suppose, would be academic masters students, since those degrees actually are tuition based cash cows for universities, including Stanford. Corporations typically underwrite the tuition, and the students are pretty low maintenance. But I suppose they could create an M.Eng for the corporate students, and an M.S. for the academic students, and charge higher tuition for the corporate program. Another factor, I suppose, is law, MBA, or Med students who get tuition waivers. Not sure what they'd do about that. Just a couple of thoughts, but my guess is that the top privates will find a way around this.
- throwawayjava 9y ago> And as far as I can cell, most PhD students don't pay tuition. Yes, they do. But they receive a full waiver, and that waiver is not taxed. The proposed tax bill amounts to a several thousand dollar / year increase in the tax load on graduate students, who typically make less than 30k/year. > So, what stops Harvard from setting a zero tuition for graduate PhD students? We'll see what clever accounting universities come up with, if any. But indeed: a $Nk pay-cut could end up having a pretty devastating impact on academia.
- geebee 9y agoRight - so my question is, why not just set a PhD student tuition of zero? They don't make any money off this, so why charge it and always waive it? Why not just get rid of it. That would remove the option to occasionally charge the tuition, but research PhD programs, especially in STEM at elite universities? Tuition from PhD programs must be close to irrelevant.
- chiefalchemist 9y agoThe irony is that all these efforts to make higher edu more affordable actually drive up the price. Yes higher edu should be accessable. However, that doesn't mean everyone is higher edu material. Again, prices increase along with demand. Perhaps I missed it but the article doesn't mention the quality of higher edu, just the quantity. Less students means lower revenue, lower alumi fund, etc. All that said, it's only a matter of time before the higher edu system is (pardon me) disrupted. In ten years time these deductions are likely to be close to meaningless anyway.
- Fomite 9y agoThese are not about subsidizing higher education. These are entirely about correcting an administrative issue where grad students need to be enrolled in classes, but are not taking up the resources that tuition is supposed to cover.
- deleted 9y ago[deleted]
- chiefalchemist 9y agoCan you elaborate? I don't understand the problem. Also, if these goes to students for edu, how is that not a form of subsidy? I'm not being snarky. I just don't - yet? - follow your reasoning.
- mattkrause 9y agoMost PhD courses are essentially book-keeping exercises like "Preparing for Qualifying Exams" or "Dissertation Research." These classes, which have no instructor and never actually meet; they exist to maintain the students' "student status" so they can get a degree, remain on health insurance, etc. They're worth much closer to $4/yr than $40k/yr. That said, I do (slightly) disagree with @Fomite. These high (nominal) tuition rates do subsidize the university because they can be charged to outside funders, but this is very, very different from subsidizing the students directly. The idea that graduate students are receiving too much largesse at the tax payer expense, though, would be hilarious if it weren't so scary.
- geebee 9y agoI wonder if this is the first salvo in a renewed attack on universities from the right. Sentiment toward universities shifted very recently, with a majority of republicans now saying that universities are, on the balance, bad for America. http://www.newsweek.com/republicans-believe-college-education-bad-america-donald-trump-media-fake-news-634474 http://www.newsweek.com/republicans-believe-college-educatio... This is interesting, in part, because universities have been left leaning places for some time, and republicans until recently still saw them as a net positive. Universities are a net positive, of course - the research at universities is amazingly valuable. UCSF has a negative effect on America? Woah. Do they actually know what goes on in the chemistry, CS, or physics department at Berkeley? Unfortunately, I believe that there is some merit to the notion that universities are becoming intolerant and actively hostile places toward conservatives and republicans, though I am neither, myself. And that stuff makes for great headlines - I can believe that something has been blown out of proportion on Fox News while agreeing that it is a legitimate concern.
- jfnixon 9y agoMajor universities are basically investment funds that maintain a side business in education for the tax break. Sure, exempt actual research (the PI, the lab, the grad students) and actual education (professors, classroom physical plant) but tax the endowment, the administration, the sports facilities, and so forth.
- ineedasername 9y agoSo they get a waiver for $40k in tuition, get taxed at 15% for a $6,000 hit. Maybe make $10k in actual money from a job, if they work at all, for a total tax burden of $7500 against a tangible income of $10k. Lovely.
- jfnixon 9y agoPut the universities on the hook for that $6K. Universities make a killing off grad student labor. Make the university pay the piper.
- gervase 9y agoJust to put this into perspective, as a graduate student with 2 kids, this would shift my effective tax rate from 8.4% to 37.0%. As graduate student stipends are already minimal, this would make remaining in my program financially impossible; I assume many other students would be in the same position. It's also important to note that this would only affect in-demand programs who can afford to pay stipends and provide waivers (engineering, computer science, etc); we're not talking about disincentivizing future history professors (who generally pay their own way with loans), but high-performing engineers working on challenging topics. This change will absolutely not increase tax revenue; it might incentivize schools to reduce tuition costs (a laudable goal). More likely, it will drive citizens out of graduate programs (where we already make up a single-digit percent), and further promote graduate school as a pathway towards citizenship (as this latter group is extremely price-insensitive).
- Fomite 9y agoI want to hear exactly zero people who vote for this complain about the STEM shortage, America losing ground, etc. But that won't happen at all.
- masonic 9y agothis would shift my effective tax rate from 8.4% to 37.0% Do you understand the difference between marginal tax rate and overall tax rate?
- throwawayjava 9y agoAs far as I can tell, parent's use of "effective tax rate" is correct (the tuition waiver is not income in any meaningful sense -- especially for phd students who aren't even taking courses). So I'm not really sure what your point is?
- masonic 9y agoAssuming his numbers were accurate, that tax rate is on each additional dollar of income, not on the total.
- kapauldo 9y agoThey don't believe education should be incentivized. Bizarre that smart people voted for him.
- crb002 9y agoShould be for undergrads too then; even student athletes. Right now rich schools like Harvard have legacy students massively subsidized with all the tax waivers. Seeing the sticker shock will drive down obscene professor pay over $100k, make University much more affordable.