Opinion: Don’t tax future scientists and engineers out of existence

WASHINGTON, DC – NOVEMBER 28: Protesters demonstrate near the full Senate budget committee markup of the tax reform legislation on Capital Hill today, Nov. 28, in Washington, DC. Republicans in the Senate hope to pass their legislation this week and work with the House of Representatives to get a bill to President Donald Trump before Christmas. (Photo by Tasos Katopodis/Getty Images)

The tax plan approved by the U.S. House earlier this month dramatically raises taxes for graduate students who earn tuition waivers in exchange for teaching or conducting research at their universities. The House plan would tax these waivers.  The Senate version of the bill exempts tuition waivers from taxes.

In my initial piece about this, posters argued the increase in the standard deduction within the House tax plan will offset the increased taxes grad students would face on their tuition waivers. However, that’s not true for most grad students, as this excellent analysis by Carnegie Mellon University grad students shows.

In a guest column today, two Georgia Tech postdoctoral fellows explain why the House plan would lead to disastrous consequences for students, universities and the state of Georgia, which is in midst of pushing more students to earn undergraduate and advanced degrees in STEM disciplines. (See what an Emory grad student wrote about how this would personally affect her.)

Nicole M. Baran and Nastassia V. Patin are both postdoctoral fellows in the School of Biological Sciences at the Georgia Institute of Technology and members of the Atlanta pod of the organization 500 Women Scientists.

By Nicole M. Baran and Nastassia V. Patin

The United States has long led the world in discovery and innovation. Much of this is due to our investment in scientific research, which helps us better understand the world around us. Society benefits from strong, steady investment in science by the federal government, allowing us to do everything from eradicating disease to developing groundbreaking new technologies.

One of the most important ways our government supports science is by investing in the training and education of future scientists and engineers. Last week, the House of Representatives passed the Republican tax bill, which would dramatically increase the tax burden on graduate students — our future scientists, engineers, and innovators. Graduate students take classes, but they also perform independent research in labs, develop new technologies, and teach undergraduate students.

In exchange for all of their work, students are paid a modest stipend by the university — usually just enough to live on — while they pursue their education. In addition, the tuition that they would normally be charged by the university is “waived.” Now, this tuition waiver is not treated as taxable income and students only pay income taxes on their stipend.

However, under the bill passed by the House, this tuition waiver would be taxed, too, even though the students won’t see a penny. What does this mean in practice? A student in her first three years at Emory University making only $24,000 a year would be taxed as if she made $85,000. This student would suddenly owe $12,400 in taxes — more than half of her income. Although Georgia Tech charges lower tuition, an out-of-state student would still see his tax bill double to over $3000 a year.

This tax proposal would prevent everyone except the independently wealthy from pursuing an advanced degree. You can’t squeeze water from a rock. Students may be forced to take a second job just to pay their taxes, which would distract them from their classes, research, and teaching.

It is worth putting this tax “reform” into perspective. The $850 million that the government stands to make by raising taxes on the nation’s 145,000 graduate students is less than half of what one wealthy family — for example, that of Secretary of Education Betsy DeVos — would make from the proposed estate tax cut.

We are both postdoctoral researchers working in the School of Biological Sciences at Georgia Tech. We were able to complete our Ph.D.’s only because of the existing tuition waiver. As a graduate student, Dr. Baran researched the role of hormones in the brain and how they shape social bonds and vocal learning. This work has important implications for understanding illnesses like autism spectrum disorder. In her Ph.D., Dr. Patin studied bacteria that naturally make antibiotics, an important potential source of new drugs to combat the current antibiotic resistance crisis. These are just two examples of the kind of research graduate students perform every day in labs across the country, including Emory University, Georgia State University, and Georgia Tech.

Georgia Sen. Johnny Isakson, who sits on the Senate Finance Committee, is positioned to play an important role in the process of reconciling the House and Senate versions of the tax bills currently under consideration. Although the graduate student tax is not in the current Senate version, it could become part of the final bill.

As scientists at the beginning of our careers, we are deeply concerned that our nation is in danger of losing its place as a global leader in science and innovation. Graduate students already sacrifice several years of earning potential in order to complete their training. The challenges facing our nation are great, and budding scientists — regardless of their background — should be given the chance to contribute their talents.

We urge our Georgia members of Congress to oppose the tax bill and ensure that scientists and engineers can continue to be the engine of American discovery and innovation.

 

Reader Comments 0

19 comments
RoadScholar
RoadScholar

Using this argument let's tax R&D in businesses!  Then we can all go down the drain together when we pay more for items and technology from other countries.

For those below suffering from wealth...er I mean tax deduction envy, why don't you tell your doctor your view and see how quickly you get well.

gapeach101
gapeach101

If students are to be taxed on tuition because they are working for the University, then the University should have to treat them as employees.  Health care coverage, pension plans, FICA, the whole nine yards.

Also, they should be paid a wage commensurate with their abilities.

Graduate students at GT receiving a stipend of $18,000 and tuition of $14,000 are effectively "paid"  $32,000.  Show me someone with an engineering degree who works for $32,000 a year.

dsw2contributor
dsw2contributor

@gapeach101 The Washington Post published a great piece by Yale PhD student Sarah Arveson titled "Universities are also to blame fro the GOP's 'grad student tax'.

Ms. Arveson points out that the University practice of charging grad students tuition, then immediately waiving it, allows the University to define her and her colleagues as students instead of the essential workers they really are.


As a Geophysicist and leader in the graduate employee's union, she has "seen how the Yale administration benefits from pretending that we're students liable for tuition, rather than employees creating value for the institution and our fields of knowledge."

gapeach101
gapeach101

Here's what Universities should be made to do.  They should be required to issue a 1098T for any stipends that are paid to the grad student.  I note that state schools in California do that, but Harvard does not.  It's very easy to not report income that is never reported to the IRS.


gapeach101
gapeach101

Astrogpig,

they will be some of the highest paid,most secure employees in the American workforce

Yes they will.  And they could be some of the highest paid workers with just a 4 year degree.  So why should they spend 5-7 years of their good earning years, and now pay taxes of $12,000 a year to do it?

Are you one of those people who bemoan the lack of Americans with advanced STEM degrees?   It won't get any better with this tax plan.

Astropig
Astropig

This is clearly income-it is a benefit that can be quantified monetarily (indeed,the bursars office can quantify it to the penny),so this is nothing more than a special interest demanding a benefit that the rest of us have to pay for by paying more taxes.I don't care how many reasons they come up with of why they are some special unicorn that deserves this perk,the reality is that they don't want to pay their fair share.


One thing that the above unicorns don't mention is that when they graduate with our tax subsidy behind them,they will be some of the highest paid,most secure employees in the American workforce.I don't have a problem with that(if they can get it,I'd say take it),but mooching off of plumbers and nurses is shameful.


Publishing this nonsense is just one group of connected,insider elites looking out for another.It's what the "good old boy" network looks like when practiced by the (somewhat better) educated.

redweather
redweather

@Astropig  They also probably graduated about $40,000 in debt on average as undergrads.

MaureenDowney
MaureenDowney moderator

@Astropig Tax policies at the state and federal level have long been designed to align with national interests, to spur people and corporations to act in ways that benefit the prosperity and security of the country as a whole. 

It makes no sense to discourage smart people from getting advanced degrees, especially in the sciences.

As an MIT grad student wrote: 

Graduate students are part of the hidden work force that drives some of the most important scientific and sociological advancements in the country. The American public benefits from it. Every dollar of basic research funded by the National Institutes of Health, for example, leads to a $1.70 output from biotechnology industries. The N.I.H. reports that the average American life span has increased by 30 years, in part, because of a better understanding of human health. I’d say that’s a pretty good return on investment for United States taxpayers.

https://www.nytimes.com/2017/11/16/opinion/house-tax-bill-graduate-students.html?_r=0

redweather
redweather

@MaureenDowney @Astropig  This is really another aspect of the "STEM major shortage."  And if we really have such a shortage, this tax decision makes no sense. Granted, however, that not all grad students are pursuing STEM majors.

DawgDadII
DawgDadII

@MaureenDowney @Astropig Why do you want to discriminate against people who are not "smart"? Perhaps they need and deserve at least equitable educational benefits (if not more).

Astropig
Astropig

@MaureenDowney @Astropig


Again-Nonsense.If they let tax policy determine their life path and the level of education that they will pursue,instead of following their natural talent where it leads,then they are doing it for the wrong reasons.


All of this subsidy jiggery-pokery is designed to benefit the few at the expense of the many.Their costs are subsidized by the public but their reward is privatized,which is the essence of why people outside the establishment of both sides of the political spectrum are unhappy and rebellious.


People work longer and harder at more challenging jobs these days just to hold their place in the economic firmament,and here comes yet another elite group that feels entitled to their tax money.I'm not at all surprised that they do it (human nature),but it is fundamentally unjust to people that find that government policies no longer honor their different,but still very important work. 

Astropig
Astropig

@redweather @Astropig


"They also probably graduated about $40,000 in debt on average as undergrads."


So? What is $40,000 over a lifetime to a person that is an engineer or scientist ? It's not uncommon for some entry level engineering jobs to pay upper 80's/low 90's these days.$40-50 K is no big hurdle in that strata of income,especially when their income will rise over time.

DawgDadII
DawgDadII

Just wondering, for the sake of intellectual argument, why one person's tax aversion loophole is more sacred than another's? The current treatment of tuition as cited is effectively akin to corporate (institutional) welfare. Surely there are other industries and individuals who believe their tax-exempt claims are equally worthy, or more so?

Fairness, or equality under the law, can appear quite unfair depending on your current perspective. I have been paying taxes on imputed income for years, as have many workers. Young liberals especially should embrace paying their fair share of taxes, or perhaps reconsider their views, or simply get a job that pays better (welcome to the real world). Keep in mind, if government spends less it won't need to tax you as much.

DawgDadII
DawgDadII

Ah, please note I meant tax avoidance loophole, not aversion.

Margaret Master
Margaret Master

This is one of many things that makes me so perplexed. Why go after this? Why put barriers to excellence in academic pursuits? Why collapse inquiry? I

gapeach101
gapeach101

posters argued the increase in the standard deduction within the House tax plan will offset the increased taxes grad students would face on their tuition waivers.

Let me explain this in simple terms.  Under current tax law, the first $10,000 of income is tax free.  The next chunk of income is taxed at 10%.   Under the proposed new law , the first $12,000 is tax free, the next chunk is taxed at 12%.  Anyone who thinks students won't be hit with a massive tax bill is not paying attention.


thkent
thkent

@gapeach101 Are university employees who take free/discounted classes as a "perk"  also subject to the same proposed rules? I'm not an HR or tax expert, but could the university change the status of the grad students? I'm sure someone out there could figure out a possible workaround. 

Robert Muzzillo
Robert Muzzillo

From my understanding, any tuition waiver that these graduate students in science/engineering receive will be taxed as income. So, for many graduate science students, that would require them to pay income taxes on $10,000 to maybe $30,000 of waived graduate school fees per year depending on where they are going to school and the price of tuition and fees at that institution. Not sure if this is totally correct but its the understanding that I have.

Jill Keirsey Waldon
Jill Keirsey Waldon

This Administration dings : Anything to cut funding of ....any support of....any reflection in, any acknowledgement of....Science.