Grad students losers in tax reform

In the name of tax reform, the House of Representatives has created a tax package that resembles a gigantic Christmas present. By increasing the federal deficit $1.5 trillion over 10 years, according to the Congressional Budget Office, the plan gives $460, on average, to every person every year. Like real world Christmas presents, however, “some are more equal than others.” For example, the current proposal excludes golf courses from taxation and eliminates the estate tax, which applies to only 0.2 percent of estates. These lucky people get huge Christmas presents in this “tax reform.” But to create such big winners, there are big losers. Among these are graduate students. They will have to pay tax on what was previously not taxed — the tuition grant given to most graduate students.

Consider a typical student in science or engineering at Penn State. At present, this student (if single) is taxed on a $27,000 salary, resulting in a federal tax of about $2,000, or about 7 percent of salary. In the proposed system, the student’s tax will jump to more than $9,000, which is 34 percent of salary. As a result, many potential students will avoid graduate school, while others will study abroad. These consequences will be extremely harmful to scientific research at our universities, which is carried out primarily by graduate students. The proposed increases thus reflect a mean-spirited and shortsighted Congress and administration, which evidently cares little about the future of education in our country ... but does wish to preserve the perks of golf course owners and multimillionaires.

This story was originally published November 22, 2017 at 2:10 PM with the headline "Grad students losers in tax reform."