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Comment by rayiner | Hacker News Reader

Under the logic of the tax code, tuition waivers should obviously be taxable. The University is basically paying for graduate student labor with a vastly below-minimum wage stipend, along with a very valuable free education. "In kind" benefits (such as the use of an apartment) provided by an employer are generally taxable. That doesn't mean tuition waivers should be taxed. It just means you have to be intellectually honest and call them what they are: a tax break.

But viewed in that light, maybe they're not so defensible. While a small minority of graduate students may come from the lowest income backgrounds, on average they're highly educated and privileged. So in essence, it's a tax break for among the most advantaged people. Why is that "fair?"

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People in graduate programs tend to come from privileged backgrounds but themselves are not privileged in terms of wealth. I fail to see how taxing somebody making 25k in pre-tax income with a 15k bill is sticking it to the wealthy. The proposed changes also do not care at all what background you come from. They hurt the kid who came from nothing to go to grad school just as much.

The question is whether you really derive ~50k/yr of value in tuition that these waivers cover as a PhD student. I think I took like five classes my entire career in grad school. Hardly seems worth the ~250k that I was "granted" by the university.

The tuition waivers are mostly government funds. This tax would force universities to pay students significantly more so that they can afford basic living expenses, thus drastically reducing the amount of science that can be done at present funding levels. If goverment caps the stipends, it would prevent many students from pursuing graduate degrees in the US. Those most affected would be those privileged graduate students -- those likely to have beaten the odds purely on merit. These factors would tend to drive top faculty and students to other countries. If science funding levels were boosted to compensate (hah), it would all be a meaningless accounting trick.

You assume that tuition is actually an "in kind" benefit. Most of that tuition money is not an in kind benefit at all. Rather, it is a way for the university to siphon off overhead from grant money. If you think of graduate students as apprentice workers, which is far closer to the truth than students, then taxing overhead costs is a ridiculous idea. We don't tax business expenses, why would we tax educational institution business expenses?

At the same time, repealing the tax break hurts those least privileged the most. Why is that making things more "fair"?

Graduate students, as a class, are not the "least privileged." Most are from families that are pretty educated and well-off to begin with.

That is true, and is unrelated to my comment. I was referring to the least privileged members as a subset of that class. I know plenty of PhD students who were the first in their family to attend college, or graduate high school.

It depends on what you do with the extra revenue after you repeal. Repealing it and using the revenue to lower corporate taxes may or may not be fair (maybe it creates more jobs for lower-income people, who knows). Repealing it to increase the earned-income tax credit would almost certainly be fair. You'd be getting rid of a tax break that disproportionately benefits more privileged people, and expanding a tax break that disproportionately benefits less advantaged people.

> Repealing it to increase the earned-income tax credit would almost certainly be fair.

False. The IRS states that the EITC only applies to those over age 25 if you do not have a qualifying child (many graduate students fail both). Also, some graduate students fail the most basic tests for EITC-eligibility since they do not have "earned income" despite having taxable income.

Another thing is that the tuition being added to AGI means every single graduate student will be ineligible for the EITC just on AGI grounds.

Anyway the plan uses it to fund corporate tax cuts so your hypotheticals don't really apply -- we have a concrete bill to discuss.

See: https://www.irs.gov/credits-deductions/individuals/earned-in...

https://www.irs.gov/credits-deductions/individuals/earned-in...

The fact that graduate students may not be eligible for the EITC is irrelevant. The point is that the people who are eligible for the EITC are statistically much more likely to be underprivileged than graduate students are (as a group).

As to the plan to use the tax break to fund corporate tax cuts, it depends on economic conclusions that are beyond my understanding. I tend to be of the mind that we shouldn't tax corporations at all, and focus on taxing individuals.

Since you acknowledge the increases in the EITC are unhelpful to these underprivileged students you are then saying it is acceptable to raise taxes on the underprivileged portion of a largely privileged group because it's statistically hard to tease out the difference. That's...heartless?

Balancing it out in other members of the lower income class doesn't really help, IMO. You are penalizing people who are underprivileged for trying to improve their lot in life and move into a higher class with one of the best means possible: higher educational attainment.

It's obscene.

P.S. your point about taxation of corporations is interesting too: corporates shouldn't be considered people for purposes of taxation but can participate in political activity and speech (political donations) using rights of individuals. Nice deal, if you can get it.

> Since you acknowledge the increases in the EITC are unhelpful to these underprivileged students you are then saying it is acceptable to raise taxes on the underprivileged portion of a largely privileged group because it's statistically hard to tease out the difference. That's...heartless?

No, it's utilitarianism. A tax break that disproportionately benefits the educated and well-off shouldn't be preserved just because a small minority of the people it benefits are not well off. Better to eliminate it in favor of a tax break that primarily goes to disadvantaged people.

> You are penalizing people who are underprivileged for trying to improve their lot in life and move into a higher class with one of the best means possible: higher educational attainment.

Someone who has gotten into graduate school necessarily has an undergraduate degree, and probably can make a decent living. At that point, it's better to focus government money on people who aren't so lucky.

> corporates shouldn't be considered people for purposes of taxation but can participate in political activity and speech (political donations) using rights of individuals.

The "people" thing is a red herring. "People" shouldn't lose their free speech rights just because they act in concert through a corporation. That has no bearing on whether "people" are more appropriately taxed at the corporate level or the individual one. The latter is a purely utilitarian concern. I don't think there is anything morally wrong with taxing corporations, I just think it's not worth the hassle given how easy it is for corporations to move to low-tax countries.

Okay, I think I understand your position now and I agree it's self-consistent, even though I disagree.

Still, good luck to the US remaining a scientific leader with this change.

Is your logic here that major research universities would maintain the same fee structure and allow less qualified wealthy students to assume the spots lost by students who can't afford the tax change?

Universities compete for research talent. Won't they simply adjust their fee and stipend structures to accommodate this change?

I assume stasis in the rest of the ecosystem, yes. It's hard to predict exactly what the repercussions would be. Yes, it's unrealistic. What else can we do? Also, the GOP wouldn't have repealed this exemption in the bill if it didn't mean increased tax revenue, so the money has to come from somewhere. In the end it's a reduction in funding for higher education.

Universities compete with each other for research talent, but they also compete with private industry for graduating BS/BA students. If the amount of money flowing to higher education in general is reduced, it may be harder for graduate schools to compete for the best students against private industry, even though they continue to compete as best they can with each other.

Here here. As a first in the family to attend college Ph.D. graduate, this tax bill seems terrible to me. Luckily, I finished my Ph.D. two decades ago. Thus, America continues its long decline by older generations pulling the ladder up against the youngers.

I want to provide a different view on tax policy here, which is that it is not logical and consistent, nor should it be.

I know the idea it should be is a popular perception among tax lawyers and economists, but our system of government does not put tax lawyers and economists in charge, and that's on purpose.

The reality is that tax policy exists to create specific outcomes in society--either by funding public expenditures, or by creating incentives to shape private expenditures. Politics is how we set and prioritize social outcomes. Tax policy comes out of a political process.

So as you evaluate a change in tax policy, you need to start with what you like and want in society. There's a lot to recommend graduate education, and in particular STEM graduate education (which tends to get the most tuition reimbursement). You don't detect gravity waves, find a vaccine for cervical cancer, or increase solar panel efficiencies without a lot of highly educated people. You don't attract the world's greatest minds without a prestigious, well-funded, and diverse higher education system.

Outcome-oriented thinking helps avoid unnecessary blinders about the scope of the tax system. We don't have to choose between STEM grad students and the EITC. There's a whole huge world of other tax policies out there we can think about.

Exactly. If you raise taxes on graduate students, regardless of how precisely the money gets shuffled around, the net result is going to be less money available for research and the necessary labor, and therefore lower research productivity. This tax increase is really a back-door way of cutting federal investment in research (and training researchers).

> While a small minority of graduate students may come from the lowest income backgrounds, on average they're highly educated and privileged.

It's somewhat difficult to find high-quality statistics on graduate students in the United States, but I tried to look up some information for context. The following is not an random collection:

It appears that more than a third of doctoral students in the United States are not US citizens (compared to 7% of the overall population). Perhaps a slight majority (~52--53%) of doctoral students are female. Graduate students are also slightly more likely to be non-white than the general population. The majority are under 32 (of course).

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