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Just 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 ar

Just 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 ago
I 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 ago
this 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 ago
  As 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 ago
    Assuming his numbers were accurate, that tax rate is on each additional dollar of income, not on the total.
- mattkrause 9y ago
  Apparently he does. I'm neither the OP nor do I know about his particular situation, but assuming a fairly generous stipend of $30,000 - Standard deduction is $6,350 - Personal exemption $4,050 x 3 (self + 2 kids) = $12,150 - Taxable income is $11,500 - Of that, it's 10% on the first $9,325 + 15% on the rest (up to $37,950), for a total of $1259. That's about 5%, not including state taxes. Now, add in $40,000 of "benefits", most of which are not actually beneficial. Taxable income is now $51,500 and the total federal tax is about $8,614, which is a pretty substantial chunk of the 30,000 actual dollars he gets. (Numbers from here: https://www.forbes.com/sites/kellyphillipserb/2016/10/25/irs-announces-2017-tax-rates-standard-deductions-exemption-amounts-and-more/#53f019785701 https://www.forbes.com/sites/kellyphillipserb/2016/10/25/irs...) To make matters worse, a taxable income of $51,500 would make OP ineligible for some credits/deductions. For example, it's well past the EITC phase-out.
Balgair 9y ago
My sibling is a Grad Student too, their response: Bring on the whiskey and the tax. Yeah, it is going to hurt grad programs, but no current student is going to have their already pitiful stipend get lessened (think 30k/year in Boston, after 'tuition' takes it's cut), the programs will take the hit for the current students. But the tax is a good thing, as it'll finally reveal the shit that is grad life. If it goes through, grad programs are about to be a LOT more competitive. Whatever the increase is in tax, that is how many less students get taken in (averaged over all states, things get complicated). Things at UCLA, MIT, and other big metros are already very tight for grad students, 4 to a 1 bedroom, and barely any $ for needed beer on Friday. It's unlikely the funding will improve at all to begin with, so future students will still be haggard, but there will be less of them. In talking with them, if the schools don't pick up the costs, it's time to unionize, as they have no other options. Yeah, it'll nuke their careers, get them kicked out, but it's that or quit as it. What do they have to loose?
- stochastic_monk 9y ago
  Under the situation, the student is responsible for taxes on the extra $TUITION_COST. That means that students whose stipend is already only ~$30K in rather expensive areas will owe taxes per year close to that stipend. Keep in mind also that these degrees typically go on for 6 or 7 years. (The average at my [generally well-regarded] institution is creeping up from 6.5 to 7.) Taking on $200k of debt to finish a PhD is going to make quite a big difference ten years down the road. (If your school's tuition is $50,000 a year, that's what you're looking at.) As for me, if this happened and my school didn't make up the difference, I'd finish elsewhere.
conanbatt 9y ago
I feel very little sympathy for college programs that dont support themselves. The problem with any tax deduction is that it devotes more capital to it than it would otherwise, and taking it out will always leave some out. Its basic microeconomics.
- neuronexmachina 9y ago
  What percent of their income do you think a grad student on a $20K stipend should owe in taxes?
  - conanbatt 9y ago
    Whatever anyone with any job position with a 20k$ stipend would owe in taxes.

Fomite 9y ago

I 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 ago

this 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 ago
As 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 ago
  Assuming his numbers were accurate, that tax rate is on each additional dollar of income, not on the total.
mattkrause 9y ago
Apparently he does. I'm neither the OP nor do I know about his particular situation, but assuming a fairly generous stipend of $30,000 - Standard deduction is $6,350 - Personal exemption $4,050 x 3 (self + 2 kids) = $12,150 - Taxable income is $11,500 - Of that, it's 10% on the first $9,325 + 15% on the rest (up to $37,950), for a total of $1259. That's about 5%, not including state taxes. Now, add in $40,000 of "benefits", most of which are not actually beneficial. Taxable income is now $51,500 and the total federal tax is about $8,614, which is a pretty substantial chunk of the 30,000 actual dollars he gets. (Numbers from here: https://www.forbes.com/sites/kellyphillipserb/2016/10/25/irs-announces-2017-tax-rates-standard-deductions-exemption-amounts-and-more/#53f019785701 https://www.forbes.com/sites/kellyphillipserb/2016/10/25/irs...) To make matters worse, a taxable income of $51,500 would make OP ineligible for some credits/deductions. For example, it's well past the EITC phase-out.

Balgair 9y ago

My sibling is a Grad Student too, their response: Bring on the whiskey and the tax. Yeah, it is going to hurt grad programs, but no current student is going to have their already pitiful stipend get lessened (think 30k/year in Boston, after 'tuition' takes it's cut), the programs will take the hit for the current students. But the tax is a good thing, as it'll finally reveal the shit that is grad life. If it goes through, grad programs are about to be a LOT more competitive. Whatever the increase is in tax, that is how many less students get taken in (averaged over all states, things get complicated). Things at UCLA, MIT, and other big metros are already very tight for grad students, 4 to a 1 bedroom, and barely any $ for needed beer on Friday. It's unlikely the funding will improve at all to begin with, so future students will still be haggard, but there will be less of them. In talking with them, if the schools don't pick up the costs, it's time to unionize, as they have no other options. Yeah, it'll nuke their careers, get them kicked out, but it's that or quit as it. What do they have to loose?

stochastic_monk 9y ago
Under the situation, the student is responsible for taxes on the extra $TUITION_COST. That means that students whose stipend is already only ~$30K in rather expensive areas will owe taxes per year close to that stipend. Keep in mind also that these degrees typically go on for 6 or 7 years. (The average at my [generally well-regarded] institution is creeping up from 6.5 to 7.) Taking on $200k of debt to finish a PhD is going to make quite a big difference ten years down the road. (If your school's tuition is $50,000 a year, that's what you're looking at.) As for me, if this happened and my school didn't make up the difference, I'd finish elsewhere.

conanbatt 9y ago

I feel very little sympathy for college programs that dont support themselves. The problem with any tax deduction is that it devotes more capital to it than it would otherwise, and taking it out will always leave some out. Its basic microeconomics.

neuronexmachina 9y ago
What percent of their income do you think a grad student on a $20K stipend should owe in taxes?
- conanbatt 9y ago
  Whatever anyone with any job position with a 20k$ stipend would owe in taxes.