Let's face it - this is a dubious tactic adopted by schools. The latest leaks show universities stashing money offshore. Just clean up your act - Phds are free labor, don't swallow federal grants for exploiting them
In fact PhD's are merely a collateral damage in ending tution tax exemption which affects all students (and represents a much larger chunk when you account for number of undergrads). It's just that in other cases "per-student" effects are much lower, since either the student has no income or the lack of exemption mere dissuades parents from filling jointly.
This is a dubious tactic adopted by a sleazy political party to ram a bill through congress by taxing literally everything they can in order to make their other tax cuts look revenue neutral.
Actually - Not merely slashing. Money should actually flow, but in the opposite direction.
If these tuition charges are merely overhead, then universities need to dispense with this accounting fiction and re-negotiate their overhead rates with the granting agency, who may decide they get better value at other institutions.
If tuition is really a charge to cover some services a graduate student directly receives from the university, then the waiver is income to the graduate student and ought to be taxed the same way tuition remission is taxed for other university employees.
Say a company is paying Bob $40k to build a better mouse trap. He pays tax on the full $40k.
Then, there's a national mouse problem, so the government gives the company $20k to stimulate research into better mouse traps.
The company takes that money and offers to pay $20k worth of Bob's housing, food, and commute every year, but now only pays Bob $20k a year in salary.
Bob doesn't mind this because he has the same disposable income after all is said and done. Except now, Bob only has to pay taxes on $20k.
The only thing they get "tax free" is tuition, which they shouldn't be paying because in most cases they aren't even taking any classes.
That's my point. If you swap the $20k in my example to tuition, the economics is exactly the same. They're being charged it either way. The fact that the university is giving it "for free" allows them to pay the grad student that much less. As a result, taxable income vanishes.
(1) shitty programs make the student pay for everything; these programs are irrelevant to the conversation.
Some universities, not universities in general.