If this happens, this will be a huge failure on their institution part. The only reason their tax bill might be affected is due to creative accounting practices of universities, who use the tuition waiver as a way to skim more money from the grants. Universities will just start offering education for free instead of waiving the tuition, and will find a new accounting trick to take money from federal science grants in "overhead".
2) "creative accounting" and "skim more money" are pretty ridiculous ways to describe how research grants work. It's a system like any other. Disrupting it for no particular reason is anything but conservative.
For 2), "creative accounting" is exactly what it is. Research grants are for research. The money can be spent on various things, which include salaries of researchers, the cost of lab equipment and supplies, and there's even a special category for "overhead", which is the money that goes straight to the mother institution to keep the lights on. The trick is to allocate $55k per grad student in the grant, and instantly take $20k from it to pay for the "tuition". In practice, the science labs, and the grad students are bringing income to the universities through the grants they get, and the universities additionally charge them for the privilege to do so.
It's because the tax bill needed to pass through reconciliation (which has special rules related to the deficit). Generating artificial savings on paper allowed the GOP to increase the size of the tax cut on paper.
- A publicly searchable database, showing projects that derive as a result of public grants.
- Non-profit universities disclose administrative and faculty salaries like the UC and other states systems do, even if anonymized.
- Provide an explanation of why the size of their student bodies have stayed the same over the years while their endowments and operating income have ballooned, assuming their mission is to provide education as a public good [2].
[2] http://www.slate.com/articles/business/moneybox/2015/09/harv...
Aren't you supposed to be taxed on the value of a good/service/gift received even if it was given to you for free? What is the "true value" of tuition?
I don't think waiving tuition will work, assuming tuition is taxed like most other things.
Also, what was the point of the tax bill if you expect everyone to just rearrange the deck chairs so they don't have to pay any new taxes?
If they keep charging everyone else and make education free for employees, the tuition they would have paid becomes taxable income.
Contrariwise if no one is really paying these tens of thousands of dollars in tuition, with the university just eating the "tuition bill" in the case of e.g. an English grad student, then why should a grantor have to pay that tuition bill for a microbiologist grad student on top of her stipend?
I get that this sucks for people caught up in it but I don't see a lot of stepping back and thinking about what makes sense.
So why should it be any different for a university as the employer? This is just a loophole being closed. Just get rid of the damned "dissertation credits" and problem solved.
Is this really true though? Some universities charge in-state and out-of-state students different tuition rates, but the in-state students aren't liable for paying taxes on the difference between the tuition rates. It seems like those are just different degrees of the same thing so the same rules should apply. Perhaps the distinction is that the schools who differentiate between in-state and out-of-state students are state schools and thus play by slightly different rules?
Currently, these students are paid a small salary to attend these programs ($20-$30k per year), and their tuition is waived. Under the new tax rules, the tuition waiver counts as income. So for example, a student at MIT who makes ~28k/yr is going to be taxed like they earn $80k/yr.
This requires a change to grant structure and cannot be done unilaterally by universities.
How many graduate students (outside of a few par time programs) make more than $25k a year? It doesn't make sense to consider parents income since graduate students are generally considered independent (even if they are being financially supported by their parents).
How do you stop everyone from qualifying for tuition waiver? Even rich parents will just make sure their kids don't have any assets if they plan on going to grad school.
>it should be taxed
We tax what we want to tax, and we offer deductions to encourage behavior that we think is beneficial. Scholarship income used for tuition isn't taxed. We tax capital gains differently from ordinary income. We offer mortgage interest deductions.
Should is subjective. There is no inherent reason to tax tuition waivers the same as employment income, apart from that's the way the IRS does it now (absent this specific deduction).
As will people with estates in the 11 plus million range, large corporations, and pass through entities. It's very easy to cherry pick to set one struggling group (grad students) against another (people making 20-30k), but that ignores who the primary beneficiaries of the bill are.
The outrage about rich people getting taxes breaks is uninteresting because it's impossible to give a tax break to someone who doesn't pay taxes. As the US has a fairly progressive tax structure, any changes to the system will primarily affect the rich.
That's, of course, completely untrue in a world where refundable credits are a thing. Tax bills are not limited to non-negative numbers.
(Also, lots of non-rich people pay taxes, even if you only mean personal income tax.)
I'm pretty sure that is actually the case in the US tax system. A US taxpayer's tax burden cannot be less than 0. It doesn't have to be that way, but to make it so requires a more fundamental change to the US tax system.
https://www.irs.com/articles/refundable-vs-non-refundable-ta...
Tax breaks and one's total tax obligation are two different things.
>(Also, lots of non-rich people pay taxes, even if you only mean personal income tax.)
A lot of people think they pay taxes, but they don't. And we'd need to define rich to really reach an agreement on the truthfulness of that statement. According to the CBO [1] (table 1 on page 31), households in the lower three quintiles of income are not net tax payers at the federal level. The gap in what they pay and what they receive in services is large enough that it offsets state and local taxes.
Reviewing the table I referenced above, I would agree that lots of non-rich people pay taxes. But the majority of non-rich people do not.
[1] https://www.cbo.gov/sites/default/files/114th-congress-2015-...
What about the value the owner of a retail store gets from the interstate system?
Only counting direct benefits in this calculation is absurd.
In a country where 47-50% of tax returns have zero income tax liability, and 60% are not net tax payers, a new policy that lowers the tax rates across the board, but has a floor of zero, will obviously only affect those who have actually pay taxes.
Another question I would be interested in hearing an answer to is why is everyone so concerned about tax breaks for the rich? Since the federal government doesn't operate on a balanced budget, the only motivations I can see are greed or spite. Greed because people are afraid they will not get services paid for by someone else, or spite because they think it's unfair that someone has more than them.
Friedman was really into negative income taxes.
> Only a small minority of lower class people ever go to grad school.
But so is this one (mine):
> A vast majority of graduate students are from low-income backgrounds.
However, this statement is totally false (yours):
> it’s a tax break that benefits the kids of upper middle class and wealthy families.
Many graduate students, especially those in STEM fields (80 - 90%), are poor international students. Their families are already taking on generations of debt in order to give their children a mere chance to emigrate to this country.
The schools don't want to/won't pay the higher stipends required to offset the tuition waiver taxes (for the minority of graduate students who get them), and they don't want to/won't give up the massive cash infusion coming from these students (who don't have waivers) already.
Given the choice between the two, they'll choose the latter (the cash cow) and throw the former (the best and brightest) out with the bathwater, if you'll permit me to mix my metaphors. In the long run, this outcome will be bad for the schools, and bad for the businesses who hire these students once they graduate.
Sources:
https://www.insidehighered.com/news/2013/07/12/new-report-sh...
https://www.insidehighered.com/quicktakes/2017/10/11/foreign...
https://www.nytimes.com/2017/11/03/education/edlife/american...
> The percentage of students enrolling in graduate school increases with family income. Among dependent 2007–08 four-year college graduates, 39 percent of those from families in the lowest income quartile, 42 percent from middle-income families, and 45 percent from the highest income quartile had enrolled in graduate school within four years of college graduation. [0]
It's also misleading for you to look only at figures for STEM fields, in which international students are much more highly represented than other fields. I'm not sure why you're using looking at STEM only and using that to prove your point. The NYTimes article you linked says it best:
> "in arts and humanities, the figure [of students which are international] was about 16 percent; in business, a little more than 18 percent."
Providing tax breaks for graduate school does disproportionately benefit the upper middle class and the wealthy.
[0] https://www.urban.org/sites/default/files/publication/86981/...
I’m sure this is what the Trumpists were really after. He is not very friendly to immigrants, after all. And STEM doesn’t really mesh with make America great again mantra of bringing back low skilled manufacturing jobs.
By ignoring STEM students, you're overlooking the people who would primarily be affected.
The other commenter's unsourced "overwhelmingly" claim is silly but so is yours.
Sure, my taxes will go down, but I have grad student friends that may have to drop out because they now have to treat waived tuition as income, and pay ~10k tax on it somehow with their 20k-30k stipend they get. And I've got friends with kids that are going to see their tax burden go up by thousands.
Meanwhile with all of this 'simplification' and 'getting rid of subsidies', we're not doing the same for corporate or high income 'subsidies'.