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Author: Subject: Grad Student Tuition Waiver Taxation
Metacelsus
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[*] posted on 22-11-2017 at 06:07
Grad Student Tuition Waiver Taxation


I will be in graduate school within a year, and I expect many other Sciencemadness people are also considering grad school in the near future, or are grad students already.

Under the new tax plan currently being discussed in Congress, grad students would see their taxes increase by thousands of dollars because their "tuition waivers" would also be taxed. Grad student stipends are already small, and this would push many students out of graduate school altogether.

https://www.nature.com/articles/d41586-017-05925-6

Universities can't just charge zero tuition and rid of the waivers, because tuition is used to get money from grants. Now, if grants could pay more overhead, this wouldn't be a problem, but currently this is how it works.

I encourage you to sign this petition (although honestly it probably won't be very effective in changing things, and contacting your representatives in Congress would be more useful).

https://petitions.whitehouse.gov/petition/opposition-taxatio...

There are other things bad about the new tax plan, but this is by far the worst for the scientific community.




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The Volatile Chemist
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[*] posted on 22-11-2017 at 11:31


If that's actually true, that's insane. I thought it would be bad for donations, etc. because they talked about removing the 'personalized deductions' or whatever that's called, but apparently donations would still be deductible. But taxed for going to grad school - that's insane...

And I have enough trouble with self employment tax this year...shouldn't have been a contractor...




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clearly_not_atara
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[*] posted on 22-11-2017 at 11:47


There's a law of economics which says that any tax on a transaction is always shared by both sides, regardless of which side it's assessed on. Since the grad stipend is a starvation wage, this means that if a grad student currently gets paid 75k with 50k tuition, and their tax burden increases by 10k, they'll have to be paid 85k with a 50k waiver and kick back 10k to taxes. In other words, you can't squeeze blood from a stone.
Universities will be forced to compensate mostly by accepting fewer grad students, which means less research, but the upside -- there are already too many grad students, relative to postdoctoral employment opportunities. Fewer grad students is better for anyone who still gets into grad school, because they're more likely to get a job afterwards; it might not be much worse for people who didn't, because they might not have otherwise. This is particularly bittersweet for me to be typing, because I have been hoping to go to grad school soon. The downside is that American universities will fall behind in research and international prestige, which is the real downside.
But I think Republicans know this, and they're doing this because they're mad at academia for all of the left-wing cultural upheaval as of late. This reform doesn't accidentally attack universities, it does so intentionally.

[Edited on 22-11-2017 by clearly_not_atara]




[Edited on 04-20-1969 by clearly_not_atara]
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[*] posted on 22-11-2017 at 20:01


Perhaps this is what "everyone should pay their fair share" looks like. Why should a grad student get a tax break while attending school while, say, an apprentice plumber is fully taxed on wages earned. The apprentice plumber is also a student learning a new trade. Is one student more important or valuable than the other and thus entitled to special consideration? This question is very difficult to face.

A similar situation exists for those who have high state and local tax deductions (as I do in California) but will likely lose all or most of them. But again, why should homeowners get a tax break but renters do not? What determines "fair share" ?

Just my thoughts,

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[*] posted on 23-11-2017 at 06:26


Quote: Originally posted by AvBaeyer  
Perhaps this is what "everyone should pay their fair share" looks like. Why should a grad student get a tax break while attending school while, say, an apprentice plumber is fully taxed on wages earned. The apprentice plumber is also a student learning a new trade. Is one student more important or valuable than the other and thus entitled to special consideration?


Grad students still pay tax on their stipend, just as the plumber would pay tax on wages. But under the new plan, the grad student would also have to pay tax on fictitious "tuition," as well as the stipend. This would be different from the situation with the plumber.

I agree with you about the homeowner tax break being unfair - and worse yet, it artificially inflates the housing market. In contrast, scientific research is a public good, meaning that it is proper for the government to subsidize it.




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[*] posted on 23-11-2017 at 12:51


Tuition really is fictitious; waivers and need-based scholarships are largely just a way for colleges to charge different people different amounts of money while making it look like they're doing you a favor as they bleed you dry.





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