Other way around. It's not that tuition grants are being treated specially if they're taxed. All grants and material benefits of this nature are considered taxable by the IRS. Graduate tuition happens to have been given a special exemption from being taxable, and this bill is aimed at eliminating that special exemption, treating it like all other grants and material employment benefits.
> Or tax the universites, not the students.
There are two problems with this. First, the incidence of the tax (who actually ends up paying) is completely unrelated to who the IRS collects the tax from. This is why, even though employers are required to pay half of taxes for Social Security and Medicare, employees are the ones who bear the tax burden: 95% of any increases in FICA taxes are paid for by employees (via adjustments to wages and salaries), and vice versa.
What evidence indicates it's 95% and not 20% or 80% or 99%?
I'm not sure I understand your question. If you're asking the method by which this is done, it's a pretty straightforward econometric analysis problem - any graduate student probably does something similar in their first year.
If you're asking what the exact percentage is, I don't know. I remember it's in the range of 90% or 95%, but not the exact number. (It also varies slightly with economic cycles anyway, because the main determinant is the relative elasticities of supply and demand for labor).
I'm asking for a citation.
Do you have any links for further reading on this point? I'm not familiar with this argument, but could well believe it.
Or tax the universites, not the students.