Here are more documents from the Joint Committee on Taxation:
https://www.jct.gov/
JCX-49-17 may be the one that people are talking about.
There are other ways this tax plan will hurt college students and their families. For example, eliminating the personal exemption but compensating by raising the child tax credit j-- this will not help parents with adult children in college. Our tax bills will go up right at the time we are cash poor (and often otherwise struggling!).
Taxing the tuition benefits for graduate students who work as TAs or RAs is pure nonsense. It gives those students enrolled at private institutions a higher marginal tax rate than millionaires. It is just one of many ways that the tax plan attempts to get blood from a stone, so to speak, to pay for a corporate tax rate cut that few economists believe will “trickle down” to the rest of us via economic growth.
Oh, don’t get me started. How about eliminating the ability deduct personal losses from fire or earthquakes but maintaining the deduction for losses from hurricanes. Seems just tad anti-California to me.
And Pacific Northwest, too.
What happens to undergrad merit scholarships? Are those going to be taxed as well?
Nope. Inconsistently, those (and athletic scholarships) are left as is.
More PhDs, in particular fields or majors, might increase the long-term competitiveness of our national economy. It’s highly doubtful that it would be true for most majors.
Moreover, one really has to question whether a diploma mill that cranks out PhD’s – even in needed majors – is in our national interest. Or, even those PhD programs as podunk directional state college. Are they really adding much value to the academy? To research? Stretching the knowledge base?
The majority of PhDs – something like 60% – are in STEM subjects. I wonder if we will see more students heading overseas for graduate studies if this passes.
@Imurhucklebury, so you see these situations as analogous? Taxing the income that you received versus an institutional internal transfer? Do you also believe that you should pay sales tax on the full price of an item when you buy it 90% off?
I do not.
I think an argument can be made to tax the stipends, as they do today, but I would not.
If the goal is to destroy many research institutions, it will likely succeed.
This policy is so penny-wise pound-foolish it astonishes me.
Perhaps it will not be in any final bill that passes, but many things that astonish me have come to pass.
I see those situations as identical. I fail to see why you think they are different.
@roethlisburger, because the waiver and associated funds were never under the control of the student.
If you are an attorney and your firm bills 5M for your service and gives you 250K for your cash compensation, why are you not taxed on the 5M?
Everyone here should re-examine their assumptions. Just because someone has money does not mean that everyone else is entitled to it. Why should the rich pay more in percentage terms? Why should the poor pay less? They don’t for other things. Cross-subsidies are one of the big drivers of college inflation, and creates all sorts of cut-outs and special programs and special constituencies.
Every taxpayer subsidizes the student loan program and especially the non-profit/ government payment waiver/write off. I have a big problem with that.
Every full-pay family subsidizes students with FA, to a greater or lesser extent. The donors and supporters of Alabama’s football team support Alabama’s NMF scholarships. I don’t have much of a problem with either (he latter, especially), because they are voluntary, but they do create distortions and irrational pricing.
All of the distortions have led to opaque college pricing, which helps colleges keep costs high. A more open and competitive market would drive costs down.
Your analogy makes no sense. The 5M is external revenue to the business(although I doubt many attorneys rack up $5M in billable hours). Free tuition is a perk of being a TA/RA, more like a law firm providing a lawyer with a free leased Mercedes and golf club membership(don’t know if that actually happens).
Because a regressive tax system is unfair. People who make less are spending it on basics to stay alive. They are putting all their money into housing, food, and health care. I’m a top 5%er, and I KNOW I have more of a responsibility and more ability to fund the common things in my community (roads, schools, food safety, military, etc). I also know I didn’t get and stay in that top 5% all by myself. I was educated in public schools and at state universities. I get to my job on public roads and am happy that the public health system keeps me and most people around me healthy enough so I can work and so can my clients. It is selfish to NOT support the community and country we live in, and short sighted to think you got to where you are on your own without common infrastructure and expenditures.
The rich are weighing whether to go to Palm Springs or Mallorca. The poor are trying to figure out whether they should pay their rent for a crappy apartment or pay the electric bill, or fill a prescription they need. It is a pretty cruel viewpoint to say that both groups should pay the same percentage.
@TooOld4School, I appreciate your candor. I also think a rational calm discussion can be had about progressive taxation. For the record, probably no surprise, I support progressive tax rates.
To answer your question:
1.) Because they have the resources and can afford to pay more.
2.) Because they benefit more from society and have more interest in maintaining it.
3;) Because progressive taxation is redistributive and helps to reduce income inequality.
Societies have costs. We can debate how to pay for them.
Getting closer to the higher ed issue and perhaps on track with the thread, do others think we should nudge people away from pursuing a Ph.D. by using tax policy to make it unaffordable?
Hmm, I wonder if bars are in the future for my avatar?
@roethlisburger, registering for credit hours for which tuition is charged and then waived is a requirement of completing most Ph.D. Often, there are no classroom hours at all in the later years. I do not see this a perk providing a benefit to the student the way a car for personal use or golf club membership does.
In most STEM Ph.D. programs you are not accepted if not supported.
Of course, a right leaning person will question the implied assumption that income inequality is bad…
Income inequality is not inherently bad by itself. Indeed, some inequality inevitably exists and provides incentive and motivation to achieve economically. But if it becomes extreme and/or primarily unearned through inheritance instead of earned through personal merit and effort, it may reduce economic growth as well as increase economic and social discontent, possibly tempting those who feel that they have no hope within the capitalist system to embrace false hopes like communism.
Now, income inequality, which is already quite high in the US, is growing, and becoming more of an unearned inheritance than an earned achievement. That may be more due to the fact that capital, which is heavily concentrated among those with the highest incomes, is more flexible and mobile; with respect to taxation, its flexibility and mobility makes it harder to tax (consider an investor choosing whether and when to sell a capital asset for a capital gain or loss, while someone whose income comes from labor has much less choice in producing taxable income). The inheritance aspect not only applies to inheritance of the capital, but also that wealthy parents can purchase many kinds of advantages for their children (e.g. the best K-12 schools, SAT/ACT preparation, financial support for developing extracurricular talents (athletic, music, etc.), college choice without financial constraints, etc.) to give them a considerable head start in life.
So it then becomes whether one thinks this situation with respect to income inequality is desirable, whether it should be pushed one way or the other, and how the income tax system should be used to do so. Obviously, the current proposal, which increases the magnitude that capital is favored over labor and wants to eliminate the estate tax, indicates that its proponents favor more income inequality and having more of it be through inheritance.
It probably makes sense to get rid of PhD programs since we are eliminating tenured professorships. Principal Investigators are moving their labs overseas because of increasing lack of support and funding in this country. Some new science PhDs are going to work for tech or finance at maybe up to 10 times what they would have made for a decade or so as university post-docs, with little guarantee of a tenured position at the end, a position which if it existed would pay a fraction of the industry/business salary, even if you added in tuition benefits for children… It doesn’t seem to me the best use of their talents since I’m in favor of supporting research that helps all of society, even if it isn’t immediately financially profitable, but I am evidently in the minority. I’ve absolutely given up on the idea exposure to literature, art, philosophy, history is valued by society enough to support PhD departments at state universities for very much longer.
For a while now I’ve been resigned to the destruction of the university system available to my generation, enriched by the GI Bill and Sputnik, which allowed working class kids access to higher education in a way never before possible. It is still just profoundly depressing to me to read posts supporting that destruction on the parents forum of a huge college admissions website. HYPXYZ will survive. Some of our kids and grandkids will get in and be able to afford it. Pretty small percentage. Probably mine.
@Imurhucklebury, you moved the bar on me. I assert that a tuition waiver for undergraduate tuition for a professor’s children is not the same thing as a graduate tuition waiver for a student enrolled in a Ph.D. program. The graduate fee waiver applies to tuition that is a condition of employment for the graduate student.