5 ms·

So the plan is... >> Under the new GOP tax plan, however, those tuition waivers would be taxed as regular income... Sensationalist headlines aside... Why is t

So the plan is... >> Under the new GOP tax plan, however, those tuition waivers would be taxed as regular income... Sensationalist headlines aside... Why is this being targeted in the new tax plan? Usually I can find something with a quote from someone that explains.

theli0nheart 9y ago
From my brief assessment, it seems like tuition waivers are a form of barter. Other forms of bartering are taxable, so they're eliminating this exception.
- derekp7 9y ago
  As for bartering being taxable, I wonder how employee-only discounts at retail establishments work? Is the discount amount taxable (or should it be taxable)? From my understanding of research tuition waivers, the PhD student is working for the university, and as an employee is getting a steep discount on the product (education) they normally sell.
  - theli0nheart 9y ago
    > As for bartering being taxable, I wonder how employee-only discounts at retail establishments work? Is the discount amount taxable (or should it be taxable)? I just looked this up on the IRS Employer's Tax Guide to Fringe Benefits [1], and it looks like only discounts on products that are less than gross profit margin are income tax exempt. E.g, if you sell a Widget for $10 and make $2 profit on every sale, you can provide a $2 discount to the employee, and then deduct that $2 from the employee's wages. Furthermore, employees that are 5% owners or that make more than $120,000 are unable to claim any employee discount deduction. [1]: https://www.irs.gov/pub/irs-pdf/p15b.pdf https://www.irs.gov/pub/irs-pdf/p15b.pdf (p10)
kurthr 9y ago
Well, if you have to ask... because Education, the Elite (not the rich, those are fine), and Science are bad. They interfere with accumulation of stagnant wealth and power.. along with election prospects. https://www.nytimes.com/2017/09/09/opinion/sunday/trump-epa-pruitt-science.html https://www.nytimes.com/2017/09/09/opinion/sunday/trump-epa-... Also, they cause people to question biblical authority.
Armisael16 9y ago
Simple tax plans are economically efficient; deductions increase the overall tax rate and distort the market. This is being taken out as one of many deductions; it isn't being targeted in any real sense. Broad-based low-rate tax codes are widely accepted to be the best kinds of tax codes.
awinder 9y ago
The reason is to balance rate decreases at the top percentile, to decrease the corporate tax rate, and to finance lost revenues from dropping the estate tax. The rest of the reasons people state are needlessly obtuse or purposefully deceptive. There’s one mathematical reason, it’s because this bill can not increase deficit past a certain amount, and so to balance giveaways to the rich we must demand more of every other income quintile.
- hcknwscommenter 9y ago
  Bingo. I think you hit the nail on the head here. To offset the decrease in revenues expected from the upper quintiles (and the corporate tax), they need to raise revenues elsewhere. This is not a change that can be addressed by a simple accounting trick.
- harryh 9y ago
  Getting rid of deductions of these types is also almost universally favored by economists.
shats 9y ago
International students earn more than 50% of graduate STEM degrees. If this made it harder for internationals to secure funding this would result in fewer overall grad students while increasing the ratio of natives. At the same time grad students will need more student loans which works nicely for the banks and/or shifts more control to government run loans. Sounds like a win/win for Trump's base.
- hcknwscommenter 9y ago
  Except it will likely have the exact opposite effect. International students often (sometimes?) do not qualify for tuition waivers, or they qualify for a reduced amount of waiver. Therefore, the bill makes it more burdensome on domestic talent and levels the playing field for international students. Expect fewer domestic graduate STEM students and more international. Is that good or bad? I have no opinion on the matter.
harryh 9y ago
Why is this being targeted in the new tax plan? It's not really being targeted. It's just part of an across the board change to get rid of or reduce tax deductions of all kinds.
eli_gottlieb 9y ago
Because the vast supermajority of academics vote for Democrats, and because the Republican base has a cultural preference for basing the economy on physical labor in heavy industries. Basically, it comes down to what the Congresscritters passing this consider a "real job". Tax subsidies will be used to transfer money to "real work", and tax penalties to take it away from "fake work". If you have a graduate degree (spoilers: I do), Congress is now labeling your education and your job as fake work.

theli0nheart 9y ago

From my brief assessment, it seems like tuition waivers are a form of barter. Other forms of bartering are taxable, so they're eliminating this exception.

derekp7 9y ago
As for bartering being taxable, I wonder how employee-only discounts at retail establishments work? Is the discount amount taxable (or should it be taxable)? From my understanding of research tuition waivers, the PhD student is working for the university, and as an employee is getting a steep discount on the product (education) they normally sell.
- theli0nheart 9y ago
  > As for bartering being taxable, I wonder how employee-only discounts at retail establishments work? Is the discount amount taxable (or should it be taxable)? I just looked this up on the IRS Employer's Tax Guide to Fringe Benefits [1], and it looks like only discounts on products that are less than gross profit margin are income tax exempt. E.g, if you sell a Widget for $10 and make $2 profit on every sale, you can provide a $2 discount to the employee, and then deduct that $2 from the employee's wages. Furthermore, employees that are 5% owners or that make more than $120,000 are unable to claim any employee discount deduction. [1]: https://www.irs.gov/pub/irs-pdf/p15b.pdf https://www.irs.gov/pub/irs-pdf/p15b.pdf (p10)

kurthr 9y ago

Well, if you have to ask... because Education, the Elite (not the rich, those are fine), and Science are bad. They interfere with accumulation of stagnant wealth and power.. along with election prospects. https://www.nytimes.com/2017/09/09/opinion/sunday/trump-epa-pruitt-science.html https://www.nytimes.com/2017/09/09/opinion/sunday/trump-epa-... Also, they cause people to question biblical authority.

Armisael16 9y ago

Simple tax plans are economically efficient; deductions increase the overall tax rate and distort the market. This is being taken out as one of many deductions; it isn't being targeted in any real sense. Broad-based low-rate tax codes are widely accepted to be the best kinds of tax codes.

awinder 9y ago

The reason is to balance rate decreases at the top percentile, to decrease the corporate tax rate, and to finance lost revenues from dropping the estate tax. The rest of the reasons people state are needlessly obtuse or purposefully deceptive. There’s one mathematical reason, it’s because this bill can not increase deficit past a certain amount, and so to balance giveaways to the rich we must demand more of every other income quintile.

hcknwscommenter 9y ago
Bingo. I think you hit the nail on the head here. To offset the decrease in revenues expected from the upper quintiles (and the corporate tax), they need to raise revenues elsewhere. This is not a change that can be addressed by a simple accounting trick.
harryh 9y ago
Getting rid of deductions of these types is also almost universally favored by economists.

shats 9y ago

International students earn more than 50% of graduate STEM degrees. If this made it harder for internationals to secure funding this would result in fewer overall grad students while increasing the ratio of natives. At the same time grad students will need more student loans which works nicely for the banks and/or shifts more control to government run loans. Sounds like a win/win for Trump's base.

hcknwscommenter 9y ago
Except it will likely have the exact opposite effect. International students often (sometimes?) do not qualify for tuition waivers, or they qualify for a reduced amount of waiver. Therefore, the bill makes it more burdensome on domestic talent and levels the playing field for international students. Expect fewer domestic graduate STEM students and more international. Is that good or bad? I have no opinion on the matter.

harryh 9y ago

Why is this being targeted in the new tax plan? It's not really being targeted. It's just part of an across the board change to get rid of or reduce tax deductions of all kinds.

eli_gottlieb 9y ago

Because the vast supermajority of academics vote for Democrats, and because the Republican base has a cultural preference for basing the economy on physical labor in heavy industries. Basically, it comes down to what the Congresscritters passing this consider a "real job". Tax subsidies will be used to transfer money to "real work", and tax penalties to take it away from "fake work". If you have a graduate degree (spoilers: I do), Congress is now labeling your education and your job as fake work.