That is why the capital gains taxes apply only to the gains, not the amount used to buy the asset (the basis). The gains are additional income beyond the already-taxed basis amount.
In your scenario, a $75 investment would grow to $570.92 in 30 years at 7%. Because $75 is the basis, $495.92 is the gain, so the 25% capital gain tax on the gain would be $123.98.
Actually, my wife’s PhD program at a private Ivy only charged 1 credit hour for dissertation students. That was $500 back then per semester and something even we could afford back then.
I never taught as a PhD student. I was “just” an RA. Meaning doing my own darn research and collaborating with my advisors. So in a sense, my stipend was my salary (which is taxable). I never replaced a “real” employee. (This was Stanford, BTW). I really don’t think it’s all that different from a merit or need scholarship to encourage a student to attend who would not otherwise be able to.
Sorry if these were mentioned earlier in this thread, but a few more items affecting education:
I find the last one unbelievably hypocritical given how C suite executives are paid in companies today – which in fact makes it harder for colleges to attract highly qualified people for top university positions. Why ding higher ed for this with a tax, yet have no penalty for corporate executives? The mind boggles…
Already been doing that for quite a few years now:
Section 162(m) of the tax code limits the amount of deductible compensation that a company can pay to the CEO and top four other most highly paid officers to $1 million annually.
So to turn your question around: why should the higher ed industry get a tax break that Corporations do not receive?
A similar question for TA’s: why should colleges/universities be able to work their grad students to the bone and not pay a living wage?
At my public school, you must always be enrolled at least half time. This is so you can be eligible for their insurance and it’s why my undergrad loans don’t have to be paid.
No matter if you’re researching or teaching.
By the way, I understand and appreciate part of why we have to teach. Yes, I understand we’re cheap labor but this is also a type of apprenticing. I want to teach at a college level when i get my PhD. To do that, I need experience and reviews.
And I’ll reiterate: I don’t have parents to fall back on. I make more than they do. This will be yet one more way of forcing and keeping poor students out of colleges.
From the NACUBO tax reform resource page:
Section 117d: Qualified Tuition Reductions. Qualified tuition reductions or tuition remission provided by educational institutions to employees and their spouses or dependents would no longer be excluded from income. Currently Section 117(d)5 allows institutions to offer graduate research and teaching assistants a reduced or waived tuition without tax consequences. The House bill would eliminate Section 117(d), which includes 117(d)5.
The key is that there is an employer/employee relationship. You can’t just call it a scholarship & pretend the employer/employee relationship does not exist, for a variety of reasons.
I know that most of you want to avoid political entanglements, but this tax bill is not about reform, it is not about fairness. It is about one political party trying to satisfy the demands of the political donors for a return on their investment. That is why they are willing to add $1.5 trillion to the National Debt.
Yes, but that will get our thread shut down per the TOS. 
Let’s assume that all doctoral students are financially independent.
Bingo.
Yes, let’s stipulate that too. But again, shouldn’t public policy be such that your labor not be “cheap”, that it be a living wage?
I understand and I shall refrain from any further comments.
At the macro level, we need to be shifting funding from humanities and social science departments to STEM departments.
^^Better yet, if the DoD need such folks, why doesn’t DoD offer some/more fellowships?
Just heard a story about this on Marketplace.
Not up on their website yet, I think… but I’m watching for it. More press is good.
Yes, let’s stipulate that too. But again, shouldn’t public policy be such that your labor not be “cheap”, that it be a living wage?
^This sounds wonderful to me. I like how you think.
However, I could post a dozen links on graduate students trying to unionize during the last decades. Overall, not too successful. Here’s one.
Universities can hire cheaper labor than graduate students:
Adjuncts are the future of higher education unless something changes.
romani makes a good point about teaching requirements for Ph.D. students being a kind of apprenticeship. I’d only add that there’s not only an apprenticeship in teaching, there’s also an apprenticeship on the academic side, to bring their professional competence in the field up to truly professional, marketable standards.
For those who think it’s a good idea to tax TAs and RAs for the value of the tuition waiver they receive (and I’m not one), why isn’t it also a good idea to tax other apprentices, e.g., an apprentice plumber or electrician, for the value of the training they receive, over and above their wages? They’re receiving something of value on top of their wages as part of the work relationship. The only difference is that it’s a barter relationship, with no visible price tag attached to the value of the apprenticeship, but it’s essentially the same relationship—and as others have pointed out, other kinds of bartered exchanges are taxable as income.
Why not tax medical interns, on the same theory? They’re receiving incredibly valuable training that they’re not paying for and they’re not taxed on. They’re obligated to do the work in order to get the training. Their cash earnings are taxable, but the training isn’t, again because it’s a barter relationship.
Or how about junior associates in big law firms, who are essentially in an apprenticeship program?
Or for that matter, how about my D2 who is spending her first year post-undergrad in a social justice internship operated by a social justice-oriented religious institution. She receives a small stipend (possibly taxable, though I don’t think so) and room and board (I’m quite certain non-taxable); in exchange she works full-time with a local non-profit with which she was “matched” based on her interests and the particular talents and skills the non-profit needs. It’s a boon to the non-profit but also valuable professional training for my D. Should her stipend, room and board, and the value of that training be taxable?
There could be no end to this if we’re going to go down the road of taxing people for the value of training programs they don’t pay for.
Another article. Maybe someone will eventually hear.
I don’t think this has been mentioned here, but there’s another way universities—and indirectly, their undergraduate students—would be hurt by the tax proposal currently before the House. Many universities (including mine) provide their employees a tuition benefit that waives or reduces tuition if the employee elects to take classes for credit at the university. At my university, it’s a 100% tuition waiver if the employee is seeking a first Bachelors degree, and a 75% tuition reduction for those seeking any other degree, or those enrolled as non-degree students who just want to upgrade their knowledge base or professional skills—or simply take the class for the sheer joy of it, as some do… Under the House proposal, this benefit would become taxable to the employee.
I’ve known only a few faculty who have ever used this benefit, but some do, to get a second Ph.D. or sometimes just a terminal Masters. But many staff (non-faculty employees) take advantage of this benefit. It’s one of the most attractive features of working at the U, along with generous health and retirement benefits. Except for high-level administrators, the U doesn’t pay staff high salaries, but many people choose to work here, at least for a while, for the benefits, and in many cases employees are able to use the tuition benefit to bootstrap themselves into higher-paying private sector careers by upgrading their job skills and professional credentials while working here. And it costs the U almost nothing; most of the costs of higher education are fixed costs, and filling one more seat in a lecture hall is incredibly cheap from the university’s perspective. Taxing that tuition benefit will dramatically reduce its value, and it reduces the attractiveness of a position here. My guess is it will compel the university to raise staff salaries to remain competitive for the kinds of people it wants. And that adds just one more cost pressure that will tend to drive tuition higher.
Let’s use a law firm as an example with a part time paralegal making $25k. The law firm provides tuition assistance so the paralegal can go to law school to become a lawyer. In general, any tuition assistance above $5250 would be counted as taxable income by the IRS. It doesn’t seem logical or fair to tax the paralegal’s free tuition as income but not tax the PhD student’s waived tuition as income, unless your underlying argument is we have too many lawyers and not enough PhDs.