Senate version preserves “Education relief” for graduate students. Not sure of the specifics, but I assume that means they won’t tax tuition waivers.
Also actually lowers my taxes a bit if my calculations are correct to increase the debt burden that our children have to bear. The rest is politics which I will refrain from commenting on.
If it passes, I’m still going to
prepay my property tax to the extent possible in December 2017. I think I can prepay 1/2 of the 2018 bill in December 2017.
make a good faith estimated payment on my 2017 state taxes to deduct at 39.6% and possibly get a taxable refund in the spring taxed at 35%.
make a big donation to a donor advised fund, and make future contributions to charities we like from there taking the deductions now.
payoff my small 2.75% mortgage in January. With the deduction it was costing me 1.63% but since we will probably use the standard deduction it will now really be 2.75% which makes it worth paying off.
@ClassicRockerDad, I thought I read Senate version keeps the mgt deduction but eliminates all state and local taxes (unlike House bill which allowed deduction up to $10k for SALT.)
Yes, but there is a $24,000 standard deduction. Without SALT, for me there is just mortgage and charity. My mortgage deduction is very small, so I won’t be itemizing again until my donor advised fund gets depleted, and by then my mortgage will likely have been paid off anyway.
This is what I think, but frequently I find I’m wrong:
There are too many PhDs for existing tenure and tenure track jobs. This is because those positions are being cut dramatically. As student enrollments increase and tutions increase, the number of permanent faculty is being cut. Graduate programs rely on tenured faculty and grad students. Unless something changes, graduate programs are going to disappear at all but HYPXYZ. This change accelerated in 2008.
When the graduate programs disappear from all but a few universities, over time all this adjunct cheap labor will dry up as well.
Will HYPXYZ educate enough teaching staff for all the universities? It seems unlikely to me. But it also seems to me that the majority of the PhDs at that point will be from very affluent backgrounds. They will not be representative of mainstream, fly-over America. There will only be coastal liberal elites teaching in state schools in fly-over America, unless those state schools decide a BA or BS is adequate to be a college professor.
Already, young PhD scientists I know left cancer research labs because they saw no future in academia. In one case the lab moved overseas. This was a lab at HYPXYZ. Someone, someplace on this board said that the only realistic post-docs offered to them were in overseas labs.
The existing federal income tax, and the proposed bills, still pick winners and losers. One of the most obvious and expensive ($1.2 trillion over 10 years) ways of picking winners and losers is the preferential treatment of capital gains and dividends, which is giving an extra bonus for those who have already accumulated the most wealth. indeed, the upper middle class which relies mostly on labor income includes those most vulnerable to paying higher taxes in the new bills, in order to give even more tax favoritism to the plutocrat-wealthy, estates/inheritors, and big businesses.
Okay, after digging through a bunch of articles about what is different in the Senate version, I find that the Philly Inquirer says:
That doesn’t mean it will be that way in the final bill if it passes, and it doesn’t seem to restore the Lifetime Learning credit that grad students could use to get a tax credit for 20% of the fees they pay the university (not insignificant at some schools, my kid had some schools on her list where there were $1,500 in fees per year, which would be a $300 tax credit).
“In the Senate, Republicans also preserve the adoption tax credit. Unlike the House, they maintain the deduction for medical expenses and provide “education relief” for graduate students.”
“Sam Leitermann, president and CEO of the National Association of Graduate-Professional Students, said the group was happy that the Senate version of tax reform does not include any provisions negatively affecting graduate education.”
Thanks for the details! Getting rid of the Lifetime Learning credit is an impact, but not nearly as much as the tuition taxation. Now it just has to stay in the bill through reconciliation.
Surely as a MD you value medical research. Graduate students are not going to take out loans to do the sort of medical research that has the potential to benefit you and yours. Already many of them do this research because they want to be of service to society, and they could make more money (sometimes a whole lot more money) doing something else. Or they can do the research overseas.
I am not opposed to taxing tuition waivers for graduate students because I feel sorry for individual students. I am supporting the research that enriches all our lives.
In that case, a good compromise would be to keep the tuition waiver non-taxable only for STEM grad students, where STEM is defined to exclude the social sciences.
The primary point in all of this is the sheer combination of numerically small but personally meaningful (even life altering) tax INCREASES that all serve to finance corporate tax cuts. So graduate students suffer. Families with high medical expenses suffer. Those with preexisting conditions and purchase health insurance on the individual health insurance market (with the repeal of the individual mandate). Families with adults suffer (with the loss of personal exemptions). Large families with incomes even below the national median suffer,. ALL of this to finance tax cuts for corporations, on the patently false claim that the corporate tax cut will stimulate enormous growth. Even CEOs themselves are reporting that they would not invest the tax savings. This is a huuuuge tax cut to redistribute money to the very wealthy, all to push our nation to the brink of bankruptcy so that Medicare and Social Security can be dismantled. Yes indeed, I believe this is a “starve the beast” plan.
As an economist, I believe in markets and incentives. The mistake in some of these posts is to assume that those earning, say, 50,000 a year are simply not trying. They just need more incentive to earn more money. Reality is much more complicated. Not everybody is capable of gaining the credentials needed for some higher paying occupations. Not everybody has life circumstances (such as having nobody else to take care of) to take the time to invest solely in oneself. Markets, like any competition, will generate winners and losers and the question for us as a society is, do we care at all about the losers?
Finally, there is growing expert evidence on the relationship between economic growth and inequality. No no this research does not say that everybody ought to have the same exact income! Instead, the evidence is accumulating that societies that having growing percentages of 'have nots" are hurting themselves, hurting economic growth, and making the “pie” smaller.
The part of this tax bill that attacks higher education is just one piece of a shockingly uninformed legislative effort.
@KunjiBoy, it appears that the provision to tax TA and RA tuition waivers is still in the House bill. Vote is supposed to be tomorrow, so today is a good day to speak up to your rep and his rep if you have an opinion.
I posted this on the other tax thread but it should go here too
The university in conjunction with our union did the math for how this would affect us. Those of us on fellowship and GSIs/GSRAs (TAs/RAs) would see our take home pay decrease by an average of $9,000 per year. We only take home about 2k/month between September & April (summer varies from no funding all the way up through 2k/month).
