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The House's Tax Bill Levies a Tax On Graduate Student Tuition Waivers (nytimes.com)
Camel Pilot writes: The new GOP tax plan -- which just passed the House -- will tax tuition waivers as income. Graduate students working as research assistants on meager stipends would have to declare tuition waivers as income on the order of $80,000 income. This will force many graduate students of modest means to quit their career paths and walk away from their research. These are the next generation of scientists, engineers, inventors, educators, medical miracle workers and market makers. As Prof Claus Wilke points out: "This would be a disaster for U.S. STEM Ph.D. education." Slashdot reader Camel Pilot references a report via The New York Times, where Erin Rousseau explains how the House of Representatives' recently passed tax bill affects graduate research in the United States. Rousseau is a graduate student at M.I.T. who studies the neurological basis of mental health disorders. "My peers and I work between 40 and 80 hours a week as classroom teachers and laboratory researchers, and in return, our universities provide us with a tuition waiver for school. For M.I.T. students, this waiver keeps us from having to pay a tuition bill of about $50,000 every year -- a staggering amount, but one that is similar to the fees at many other colleges and universities," he writes. "No money from the tuition waivers actually ends up in our pockets, so under Section 117(d)(5), it isn't counted as taxable income." Rousseau continues by saying his tuition waivers will be taxed under the House's tax bill. "This means that M.I.T. graduate students would be responsible for paying taxes on an $80,000 annual salary, when we actually earn $33,000 a year. That's an increase of our tax burden by at least $10,000 annually."
Good, the universities' system of indentured servitude needs to be called out. Either the tuition is part of their pay, in which case it needs to be handed over to the student, or it's not, in which case, they're working for less than minimum wage and need to be paid appropriately. This shit was unethical when coal companies did it in the Appalachians, it's just as wrong now when the ivory tower does it.
A tuition waiver has a value. You are trading work for a reduction in your tuition costs. The summary says these students may be receiving 80K in tuition waivers in addition to 33K in compensation. If those same students were working at a job that paid them $113,000 per year, everyone would be saying they need to "pay their fare share".
That said, I think that tuition should probably be tax deductible - which would make the tax on tuition waivers a moot point.
If they taxed the scholarships of football player, that would get a lot of people's attention.
When you're in graduate school for a doctorate it lasts 4 years plus. Typically, you're only taking actual classes for the first 1.5 to 3 years. After that, it's more like an apprenticeship than school. You're signed up for "classes" that don't have lectures, tests, writing assignments, or etc. It's a way to give you academic credit, on paper, for the process of conducting research that the university makes money on. That, and a way to claim people who are acting in every way as apprentice employees are students.
So: an institution pays itself money to cover the privilege or working for it, and you expect people to pay taxes on that? And we're supposed to trust the institution's assessment of what it provides is worth, considering that almost nobody pays for it out of pocket? You realize that the entire reason for nominal tuition being as high as it is is because it allows the schools to enact Price Discrimination, so they can get more money from students who they assess to have more, right?
Actually, while I agree with you in principle, the "value" in "something of value" isn't value-to-you, it's value-to-others. That is to say it needs to be something that you could, in theory, sell/transfer/profit-from or otherwise be able to spend.
If I paint your walls, it ain't income because there's no way for you to create money from that paint. (with myriad exceptions of course, but most of the time there ain't).
So "value", in this case, would need to be the work experience, or the degree, or the work product. But it likely can't be the general education itself, which is a good example of something that has a lot of worth, but no value.
And really, here's a better example. A library is a sheltered comfortable place where you can read a book. If I let you come into my building, even my office building, so you can read a book in piece, every day during lunch, it ain't "value" in terms of rent, income, or otherwise, Neither is my free wifi.
All of my opinions being what they are, I think your country and this bill is a whole lot of craziness. It clearly doesn't support the actual objectives that you seem to have, nor does it accomplish anything of significance. It doesn't create more STEM people for sure. And just how many of these $10K taxes are you actually going to get out of this? Is it at all worthwhile?
And you need to enforce it. And you need to collect it. And you need to track it. And in the end, they'll just change it to a volunteer position and an award instead of a degree, and they'll easily dodge the tax definition. Blood from a stone is really easy to do, but you don't get very much blood, and you're not left with much of a stone. So what's the point?
CA and NY pay much more (average, per resident) into DC than they get back. They're subsidizing red states. Frankly, CA would be better off being independent -- economically speaking, they don't need the other 49 states.
Maybe the homegrown ones wouldn't be flipping burgers for a living if we didn't. But hey, it's more fun to look down on them because you're angry they went to grad school than it is to address the problem. Nothing like getting the working class to fight among themselves to keep those profits maximized.
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Government directly backing universities does not cause this problem. The money goes straight to the school, so there is no incentive for them to raise prices for students. Quite the opposite in fact, since they're now getting additional money from another source and thus can lower tuition.
Supply-side government incentives and demand-side government incentives have these different effects on the market. Politicians should really think about these effects (or in many cases learn about them since they seem completely ignorant) before implementing government subsidies.
The U.S. college and university economics are so screwed up right now because of these student loans, grants, and scholarships, that the only solution I can see now is to aggressively shift money away from those programs and into public universities (with the stipulation that the public university keep tuitions reasonable). If you're poor, you'll still be able to go to college, but it'll be a public university, not a private ivy league college. Then wait for that additional funding to increase the reputation and competitiveness of public universities. That increased competition plus funds drying up for private colleges will force them to go on a diet, shedding those unnecessary administrators and reducing other costs, so they can lower tuition.
I'm also pretty close to decided that loans for students are a really bad idea. Loans basically allow you to time-shift money from your future into the present. Since students have their entire future earnings potential ahead of them, this is a massive amount of money that loans allow schools to tap into. Without any loans (or at least publicly funded or supported loans), students will only be able to pay what they can currently afford, and tuitions will fall to match their ability to pay out of pocket.
This would be a disaster for U.S. STEM Ph.D. education.
No, it already is. Maybe this will flush these students out of the programs and universities will start having to actually fucking PAY their """students""" for the 90+ hour workweeks, under shitty advisory, that they're expected to work. STEM Phd education in this country isn't education...it's taking our best and brightest, and hazing them into depression and suicide with next to zero compensation.