The original House Republican tax bill contained a provision to tax tuition waivers for graduate students. While billed as a way to close a loophole and replace money lost to tax cuts for corporations and individuals, the provision was, in reality, a mean-spirited attack on higher education.
Many graduate students receive tuition waivers in exchange for their work teaching classes and conducting research. The students aren’t actually given any money to pay their tuition. Instead, the waiver is essentially an administrative sleight of hand: The institutions take money from one internal pot (grants, financial aid, etc.) and transfer it into another internal pot for tuition. The students never see a single penny.
The House bill, however, would treat this waiver as taxable “income.” Many graduate students receive modest stipends for their work, which vary from school to school, but are usually less than $30,000. Students currently pay taxes on those stipends.
But under the House bill, in addition to paying tax on the stipend, graduate students would have to pay tax on a $20,000 to $30,000 tuition waiver, nearly doubling their taxable income.
The House bill would have increased the students’ tax bills by thousands of dollars; in some cases, their taxes would be more than 300 percent higher. Unable to pay the new tax, many students would be forced to leave graduate school.
I suspect that is a main motivation behind this misguided proposal.
Many Republicans, especially those in the House, no longer support higher education. A Pew Research Center poll released last July showed a precipitous decline in support for colleges and universities among Republicans. In just two years, Republicans who view college favorably dropped from 54 percent in 2015 to only 36 percent this year. Indeed, 58 percent of Republicans in the poll said higher education has a negative effect on the country. In contrast, 72 percent of Democrats thought higher education has a positive impact.
The bill’s supporters might say, “So what if the tax bill would force students to leave school? Those schools aren’t doing us any good anyway. This’ll show ’em.”
Except it’s graduate students who perform much of the grunt work in medical and scientific research. They’re the ones who, under their advisors’ guidance, conduct experiments over and over again, analyze the results and help make new discoveries.
The majority of the graduate students who receive tuition waivers are in science and engineering programs. If large numbers of them are forced to leave because of the tax bill, the research will not get done. To remain competitive internationally, we need trained researchers. We need those graduate students. If we lose our competitive edge, other countries, especially China, will eagerly take up the slack.
The House tax bill comes in the context of an administration that has appointed people with little training or interest in their departments to positions of authority. Among Trump administration nominees for science-related positions, 60 percent have no advanced degree in science or medicine. By contrast, of the Obama administration appointees who held the same positions, more than 60 percent, have advanced science degrees.
For example, President Donald Trump appointed Rick Perry, who has a bachelor’s degree in animal husbandry, as Secretary of the Department of Energy, the agency responsible for maintaining nuclear weapons. The two previous Energy Secretaries were trained physicists, including one Nobel laureate.
It’s not just that many Trump appointees are ignorant of science and technology. Many seem to revel in their ignorance. EPA Administrator Scott Pruitt has said science should not “dictate” policy at an agency whose policies have always been fundamentally based on scientific research. Not to mention the administration’s embrace of climate change-deniers.
After the tax bill passed the House, graduate students at 40 universities staged rallies and walkouts to protest it. Science-oriented social media sites encouraged people to tell Congress to remove it. Eventually, 31 House Republicans, who had voted for the bill, criticized the proposed tax on tuition waivers. Indeed, the compromise bill that just came out of the House-Senate Conference Committee apparently no longer includes the tuition waiver tax.
But it should never have been proposed. The shortsighted tuition waiver tax proposal was very nearly another triumph for ignorance.
Sally Stephens is an animal, park and neighborhood activist who lives in the West of Twin Peaks area.