WASHINGTON – A Fort Lewis College professor says the proposed Republican tax overhaul plan that includes changes to tax deductions for graduate students could have long-term harm to the economy and workforce quality if it remains in the final draft of the bill.
The measure – endorsed by Rep. Scott Tipton, R-Cortez, – would substantially raise taxes on graduate students by changing what qualifies as income for those who receive tuition waivers. The House version of the bill passed Thursday, 227 to 205, along party lines.
“The worst-case scenario would be for America to lose its primacy as the leader in education,” said FLC economics professor Robert Sonora.
The measure could also make graduate school less desirable for American students, as well as for international students who want to study at top U.S. universities, Sonora said. If fewer people pursue graduate educations, Sonora said his main worry is a shortage of highly educated workers, who tend to contribute to the country’s overall economy more than low-skilled ones.
Currently, graduate students are taxed only on the money they receive as a living stipend or salary for research and teaching assistance. The proposed House plan reclassifies tuition waivers as actual income, meaning the value of the tuition waiver will be added to those salaries and taxed.
For example, if a school waives $50,000 in tuition for a student who is also paid $30,000 for working as an assistant, the student will pay the same income tax rate as someone who earns $80,000 a year.
In a prepared statement to sent to The Durango Herald, Tipton’s communications director, Kelsey Mix, wrote that Tipton believes lessening the tax burden on corporations will provide students access to career opportunities that don’t exist in today’s economy, as well as better-paying jobs.
“The Congressman believes there are ways to ensure higher education is achievable for any American who wishes to pursue it,” Mix wrote, “either through encouraging federal agencies to support the future workforce they will need, or decisions higher education institutions may make to restructure today’s tuition-waiver programs.”
A 2016 study from the Council of Graduate Schools showed the international graduate-student population is especially large in technical fields such as math, computer science and engineering. In the fall of 2015, temporary residents made up the majority of students in these fields and about 22 percent of all first-time graduate students overall.
Sonora said taxing tuition waivers could push American students to begin looking outside the country for college.
High costs have already forced some Americans to consider international options, with more than 5,000 students enrolled in Germany as of 2015, according to the German Academic Exchange Service.
Most students, even those from other countries, pay no tuition at public institutions in Germany. This system may become even more enticing if U.S. students face the prospect of higher costs and more debt.
Mitchell Teal, a master’s candidate at James Madison University in Virginia who is studying English, said he was angry the House would consider something so “unjust.”
“I can’t buy food or pay my rent with a tuition waiver,” Teal said. “If this measure were to pass, I and other students I’ve talked to would have to take out loans just to pay our taxes. That’s absurd.”
Ben Chalmers, a doctoral student in economics at the University of Massachusetts, agrees. He called the proposed measure punitive.
“It seems like the only rationale for making grad students’ lives more difficult financially is to dissuade people from entering these programs,” Chalmers said.
The Senate is working on its own version of tax reform and is expected to vote before the end of November. If it passes, both bills will move to the conference committee where changes can be made. Once a single version is agreed on, both chambers will vote again on the final bill.
Samuel Northrop is an intern for The Durango Herald and a graduate student at American University in Washington, D.C.