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Education Government Republicans The Almighty Buck United States Science

The House's Tax Bill Levies a Tax On Graduate Student Tuition Waivers (nytimes.com) 578

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."
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The House's Tax Bill Levies a Tax On Graduate Student Tuition Waivers

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  • by boudie2 ( 1134233 ) on Friday November 17, 2017 @10:37PM (#55574493)
    It's not a complete loss. You can still research new ways to flip hamburgers at McDonalds. They called this "trickle down economics" in the 80s. You've just been trickled on.
  • Indentured Servitude (Score:5, Interesting)

    by Anonymous Coward on Friday November 17, 2017 @10:41PM (#55574517)

    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.

  • Lets be honest (Score:5, Insightful)

    by Snotnose ( 212196 ) on Friday November 17, 2017 @10:45PM (#55574543)
    This "tax cut" 10 years out fucks the 99% to help out the 1%. Everything I hear about it is wrong. It's truly amazing how the R's can't avoid putting the booger hook on the bang switch, taking off some tootsies in the process.
    • by pots ( 5047349 )

      It's truly amazing how the R's can't avoid putting the booger hook on the bang switch, taking off some tootsies in the process.

      ... Can't stop shooting themselves in the foot?

      I have never described a finger as a booger hook, but I don't have your way with words Snotnose. Nice one.

    • Re:Lets be honest (Score:5, Insightful)

      by PolygamousRanchKid ( 1290638 ) on Friday November 17, 2017 @11:16PM (#55574733)

      The Economist had an article on taxes many moons ago . . . they stated that taxing is like plucking a goose for pillow feathers. You want to get a maximum of feathers, with a minimal amount of fuss.

      University graduate students are not very high up on the list of favored Republican supporters . . . actually they are probably not even high up on the list of favored Democrat supporters either.

      Graduate students are not going to go out on the streets with violent "Graduate Student Lives Matter!" protests.

      So Congress says, tax 'em, and let them whine.

      Fair? Who cares . . . taxes are not about being fair. Taxes need to bring in revenue.

      That's just tough shit . . . the government just needs to pick out the right group to tax. Cigarette smokers get the hell taxed out of them, but can't pull off a political coup. Graduate students won't be able to push any political pressure points either.

      • Re:Lets be honest (Score:5, Insightful)

        by whoever57 ( 658626 ) on Friday November 17, 2017 @11:47PM (#55574903) Journal

        What this really shows is that the Republicans and their wealthy donors don't give a shit about the USA. This assault on education will impact the long term success of the USA in many ways.

        That's right: the very people who benefit from a strong economy (the top 0.1%) don't give a shit about the long term future of the USA. They plan to milk it then (mixing metaphors) abandon ship.

        I don't know what is the next country they plan to milk and screw over -- perhaps China? This is what is going on in Brazil right now and the result is large numbers of people living in the hovels they call favellas.

    • booger hook?

      (username checks out, lol)

      never heard that phrase before. kinda funny, actually.

    • Nonsense. The 99% don't need to wait 10 years out. The first part of the fuckery happens now, to something like half of them (but sprinkled through the 99% based on deductions, etc.)

  • So anyone who doesn't work for the university but goes there has to earn $80,000 a year and pay taxes on it. Really, there should just be a tax deduction for paying tuition instead. I thought there was already, but I could be wrong, so they still shouldn't need to pay taxes on that. Depends how they write that.
    • There are tax deductions (and credits) for tuition. One expired last year, and the others (with the exception of the American Opportunity Tax Credit and the deduction from Schedule C income for education expenses that also happen to be ordinary and necessary business expenses in the exact same trade, business, or profession) are being stripped away by this bill. The only way to win is to go 1099, which I guess the Big Corporations would prefer, since all the labor laws and liabilities go out the window.
  • Tax Scholarships (Score:5, Interesting)

    by Anonymous Coward on Friday November 17, 2017 @10:50PM (#55574567)

    If they taxed the scholarships of football player, that would get a lot of people's attention.

    • Probably not: NFL players are payed so much no one cares, and College Football players are already treated like indentured servant crap and the only ones you hear complaining about it occasionally are kind of libertarians.

      Seriously, we're talking about people who are sacrificing their bodies for our entertainment (including up to death at times). People don't actually care about the players' taxes.
    • and open a big can of worms by makeing them W2 employees.

  • by Orgasmatron ( 8103 ) on Friday November 17, 2017 @10:51PM (#55574573)

    Just FYI, any time you are given something of value, it is income. Someone lets you live in their house for free? Income. Someone writes off a debt instead of collecting it? Income. Someone waives a fee they normally charge? Income. A friend gives you an interest-free loan, or even just at below-market interest rates? The IRS has tables to calculate how much income you are required to report. I'm kinda astonished that these tuition waivers weren't always taxed, since everything else is.

    There is an exemption for gifts, up to $13,000 per person per person per year. (not a typo) They must be bona fide gifts with no strings or conditions.

    • by chrylis ( 262281 )

      Just FYI, any time you are given something of value, it is income.

      This is nonsense. You realize taxable income only on items of value (including in-kind) when part of an economic transaction.

      Let a friend live in your house? Not income. Write off a debt? Potentially income, depending on the specifics of the debt. Fee waivers? Not income, simply a reduction in price. (Newsflash: Coupons aren't income.) Interest-free loans? Not an issue unless connected to some other transaction and in reality away of compensa

    • by holophrastic ( 221104 ) on Friday November 17, 2017 @11:52PM (#55574929)

      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?

      • by kenh ( 9056 )

        And you need to enforce it.

        We have a mechanism for that, called the IRS.

        And you need to collect it.

        See above.

        And you need to track it.

        See above.

        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.

        Until the "award" now has a defined value in the marketplace, which it will as soon as employers treat them as equal to a degree from the same institution.

        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.

        The issue is that universities sit on millions if not billions of dollars in endowments, pay no taxes, and hand out $50K tuition wavers in exchange for labor they would otherwise have to pay a market salary for.

        So what's the point?

        If this were done by any other employer it would incur a tax bill for the employe

    • forces you live in their house for free to work there is more like what is going on and the list cost of that free room is just as much or more then your pay rate.

      The list cost needs to come down to be in line with the pay or it's like the old company store days.

    • In Germany living for free in a house is only income if the house is property of your employer or if your employer is involved in paying for it.
      I can life for free everywhere else, regardless if it is my GFs flat, my fathers or the second house of my father.

      What is next? You own the house you live in and get taxed for the rent you safe by not paying it to yourself?

      • You own the house you live in and get taxed for the rent you safe by not paying it to yourself?

        You've never heard of imputed rent? It's not that common but some countries do indeed have it.

  • by Anonymous Coward on Friday November 17, 2017 @11:06PM (#55574659)

    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?

  • must pay tuition to work = Minimum wage violation.

    What about that angel or taxing at the employee rate tuition rate.

  • by MangoCats ( 2757129 ) on Friday November 17, 2017 @11:10PM (#55574695)

    In the early 1990s this tax on tuition waivers as income was proposed, I believe it never passed back then.

    I had just finished my masters' but I remember being incensed at the economics of it. With tuition waivers, I was living on $1200/month as a teaching assistant and getting my degree. Without tuition waivers, I would have been paying tax on $3000/month total "income" which would have taken away about half of my actual cash income - turning my situation from independent and sustainable to one of dependence on my parents to continue to foot the bills for my education. Other majors' TA salaries were much lower, and it would have turned them from earning small pocket money while getting a degree into paying out of pocket to cover the taxes.

    Face value of tuition is a farce, so many students are given tuition waivers, scholarships, reduced rates, etc. Taxing it at face value would be like paying sales tax on the sticker price of a car, regardless of what you negotiated it down to; but worse, cars are only marked up 20%, I'd put average tuition markup closer to 60% at many of the "higher priced" institutions.

  • by quantaman ( 517394 ) on Friday November 17, 2017 @11:11PM (#55574701)

    The House GOP members are simply delivering what their constituents want.

    And by "constituents" I of course mean their rich donors [twitter.com].

    • Re: (Score:2, Insightful)

      all I am reading from social media (a total mix of red, blue and non-US folks) is that the conservatives are SO into 'stigginit' ('sticking it', as in sticking it to the liberals; fucking them over, basically) that they'll spite themselves just so that the other sides suffers.

      I cannot ever remember hearing a liberal WISH that conservatives suffer or experience pain or a bad life. NEVER in my life have I heard any liberal say that. but I'm always hearing about how conservatives HATE liberals (that word is

  • Some day, hopefully soon, we're going to have a Harvey Weinstein moment about these tuition costs and the criminal cabal that is the university employees, administrators, and loan companies. Because someone is spending that $50k income from that student's tuition.

    I'm glad the tax exempt status is going away. The only way this college crime syndicate is going to fall is when it hurts everyone everywhere.

    Then we'll all have the Weinstein Effect: "Hey that college rap$d me!" "You too, huh? They rap$d me too bu

  • student athletes and unforeseen consequences with this.

    I can see Minimum wage violations
    laws about Company scrip (must live on site and must take classes) you get them for free but are locked in and taxed at the full retail rate.
    Being forced to pay for stuff (IRS sees as income) you can't really make full use of (you must miss class for teams games / other needs)
    disability employment discrimination / disability employment accommodations issues (under IRS rules student athletes seen as employees getting an income)
    workers comp issues (under IRS rules student athletes can be seen as employees getting an income)
    they are seen as employees by the IRS and they use that to make unionize pass the northwestern case was close but what the IRS says may push it over the edge

  • by jonwil ( 467024 ) on Saturday November 18, 2017 @12:04AM (#55574995)

    If an employer gives an employee $20,000 in salary as actual money, the employee has to declare that as income and pay applicable tax on that. If the employer gives the employee a car worth $20,000 the employee has to declare that as income and pay the same tax on it. If the employer (the university in this case) gives the employee x amount of free tuition that they would otherwise have to pay for, why shouldn't that be taxed?

    • A lot of the university "goods" are intangibles at fake, overhyped suggested retail prices, instead of the actual, highly discounted prices that most students pay after "scholarships" or other aid. Some sort of national cap price should apply. Or simply wait for the market to re-arrange the student choices of preferred "good" schools' tuition policies.

      Most universities are greatly overpriced and featherbedded, IMHO.
  • ""No money from the tuition waivers actually ends up in our pockets" (so it shouldn't be taxed).

    Pretty sure if you get something of commercial value, it should be taxed.

    If I give you a trip to Tahiti, that's not something in your POCKET, but most certainly it's taxable, particularly if it's compensatory.

    Sounds like people are sad that loopholes are being closed.

  • by kenh ( 9056 ) on Saturday November 18, 2017 @01:18AM (#55575255) Homepage Journal

    I've worked out a deal with Tesla, wherein I will work in the Tesla plant assembling cars for 9 months, in exchange for a brand new, $100K Tesla automobile... Should I pay taxes on that $100K Tesla?

    That's exactly what universities are doing with graduate students, but somehow their graduate school tuition is tax-exempt.

    Are the two really that different?

    The issue isn't the value of the waived tuition, it's the low compensation the schools pay the graduate students.

  • by hyades1 ( 1149581 ) <hyades1@hotmail.com> on Saturday November 18, 2017 @01:43AM (#55575323)

    Ignore the small-souled bean counters who are entirely convinced you will never wind up making a contribution to a cure for cancer, or the first workable fusion reactor, or add a small piece of the puzzle to the problems of aging or perhaps limb regeneration.

    These are conservatives. They know the cost of everything and the value of nothing. As far as they're concerned, you aren't an investment. You're nothing but an up-scale counter clerk, worth not one cent more than the hours you worked yesterday.

    Come on up to Canada, or maybe move to the EU. The US is already falling behind in cutting edge research. The so-called "god particle" was discovered at CERN because these bean-counting half wits yanked funding from the planned US particle accelerator that would have relegated CERN's large hadron collider to the dustbin. And China has just built a hyper-sonic wind tunnel that blows the doors off anything in the US.

    Even if the current crop of envious, anti-intellectual cretins is swept from power, the damage they have already done will take a decade to fix, maybe longer. If you want to win a Nobel Prize some day, you would do better to come to a country where "research" isn't defined as "can you write software to cut a millisecond off e-trades and make Goldman Sachs even richer".

  • by Camel Pilot ( 78781 ) on Saturday November 18, 2017 @02:28AM (#55575409) Homepage Journal

    People are trying to argue that all income should be taxed.

    Estate Tax is being repealed in this very same GOP plan. How can anyone argue that inheritance isn't income? And the assets in an inheritance (property, stocks, bonds) have their basis (original cost) magically stepped up to present value and thereby dodging the normal Capital Gains tax.

    It appears the Republicans favor old money, the idle rich and trust fund babies than they do scientists, doctors, educators, engineers - you know the people that actually make American Great.

  • by Wrath0fb0b ( 302444 ) on Saturday November 18, 2017 @03:51AM (#55575565)

    If they are going to tax the tuition waiver, set graduate tuition at $1 and let the student pay $0.20 or whatever to the IRS.

    Universities don't want to do this, of course, because it's a way of siphoning money from research grants into the general fund. Which is kind of hilarious (at least it was to me when I was a grad student) because the university already takes 'overhead' that is meant to cover mundane things infrastructure, grounds, offices, keeping the lights on. And it's not a small take, most overhead is calculated at 50% or so of the grant (that is, if the grant is $100K to do research, the NIH will kick in another $50K to the university, 1/3rd being overhead).

    So even after taking overhead, the university then wants to take the grant money and use it to pay itself a tuition waiver.

    A few notes before someone actually believes I'm a right wing troll: I think we should be increasing funding on research, I think we should better support grad students. Universities do provide a needed structure for all this, but are woefully inefficient and mismanaged, which in the end means less money for actual research and teaching. To be against this is not to be against the university, it's to be for the university's ultimate mission.

  • by golodh ( 893453 ) on Saturday November 18, 2017 @05:23AM (#55575767)
    No need to stress the point really.

    Republicans, in their current composition, don't like education, don't like people who aren't millionares, and don't like people to be upwardly mobile. We got it.

    So, that's one less avenue to university education. The remaining ones are: (a) be frightfully good and get a full scholarship, (b) have rich parents, (c) join the army and try to qualify for a paid-for education.

    Everyone else leave for Canada, the UK, or Europe. Don't worry, we'll make good the shortfall with Indians, Chinese, and Europeans in the software and engineering R&D jobs and PhD. classes.

  • by Jim Sadler ( 3430529 ) on Saturday November 18, 2017 @07:15AM (#55575993)
    That is exactly what America needs. We need to drive out or discourage anyone capable of creating progress in society. That explains why the House and Senate are the way they are. Those guys get big bucks in exchange for either doing nothing at all or doing exactly what America does not need. Maybe if we are really lucky everyone involved in advanced science or technology will go work for Russia or Turkey or Saudi Arabia. That way they will have all the tools required to put America out of our misery. So what chunk of this pie goes to trump?
  • by volodymyrbiryuk ( 4780959 ) on Saturday November 18, 2017 @12:57PM (#55577301)
    After the war on drugs and the war on terror comes the war on science. Congratulations.

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