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Comment by xyzzyz | Hacker News Reader

I have grad student friends that may have to drop out because they now have to treat waived tuition as income

If this happens, this will be a huge failure on their institution part. The only reason their tax bill might be affected is due to creative accounting practices of universities, who use the tuition waiver as a way to skim more money from the grants. Universities will just start offering education for free instead of waiving the tuition, and will find a new accounting trick to take money from federal science grants in "overhead".

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1) Why does the tax bill assume that treating waived tuition as income will raise revenue, then, if all universities will just switch to different accounting methods? Or is this one of the many parts of the tax bill that will actually increase the deficit but needs some kind of plausible cover until the buck can be passed?

2) "creative accounting" and "skim more money" are pretty ridiculous ways to describe how research grants work. It's a system like any other. Disrupting it for no particular reason is anything but conservative.

As for 1), I don't think it's about raising revenue. Even if accounting methods didn't change, and grad students actually had to pay a few extra grands in taxes, this would be minuscule amounts of money in the grand scheme of things anyway. It's rather about making more money from the grants be spend on doing actual science. See e.g.: https://www.sciencemag.org/news/2017/03/trump-wants-2018-nih...

For 2), "creative accounting" is exactly what it is. Research grants are for research. The money can be spent on various things, which include salaries of researchers, the cost of lab equipment and supplies, and there's even a special category for "overhead", which is the money that goes straight to the mother institution to keep the lights on. The trick is to allocate $55k per grad student in the grant, and instantly take $20k from it to pay for the "tuition". In practice, the science labs, and the grad students are bringing income to the universities through the grants they get, and the universities additionally charge them for the privilege to do so.

Oh. The answer here is actually straightforward.

It's because the tax bill needed to pass through reconciliation (which has special rules related to the deficit). Generating artificial savings on paper allowed the GOP to increase the size of the tax cut on paper.

Because that’s how the game is played. When scoring the effect of a tax bill, you were not allowed to take into consideration changes in behavior

Didn't they get $500 billion worth of new revenue credit in the JCT score exactly by taking into account changes in behavior (aka dynamic scoring)?

This is completely wrong. The JCT takes into account dynamic effects when scoring all tax bills. I'm not sure why you would think this?

Largely agree. Part of the problem is the murkiness in which wealthy, private universities operate. We need much more transparency to justify institutions like Stanford to continue receiving a taxpayer subsidy of $63,000 per student compared to only $10,000 at UC-Berkeley and $4,000 at CSU-Fullerton [1]. Where is the federal grant money going and how is it divvied up? Maybe a graduate degree in dentistry provides a greater public good, even if there isn't a lot of ongoing research funding in that field. Here are some suggestions:

- A publicly searchable database, showing projects that derive as a result of public grants.

- Non-profit universities disclose administrative and faculty salaries like the UC and other states systems do, even if anonymized.

- Provide an explanation of why the size of their student bodies have stayed the same over the years while their endowments and operating income have ballooned, assuming their mission is to provide education as a public good [2].

[1] http://nexusresearch.org/

[2] http://www.slate.com/articles/business/moneybox/2015/09/harv...

> Universities will just start offering education for free instead of waiving the tuition

Aren't you supposed to be taxed on the value of a good/service/gift received even if it was given to you for free? What is the "true value" of tuition?

I don't think waiving tuition will work, assuming tuition is taxed like most other things.

As with anything in a market system, the true value is what the seller is willing to part with it for.

There's an enormous bureaucracy in play here, and you can't just turn it on a dime.

Also, what was the point of the tax bill if you expect everyone to just rearrange the deck chairs so they don't have to pay any new taxes?

Many institutions make a lot of money from charging foreign, and out of state grad students the full price for tuition.

If they keep charging everyone else and make education free for employees, the tuition they would have paid becomes taxable income.

If a university is charging tens of thousands of dollars to some students and waiving those charges for other students because of the work they are doing for the university then that's a value being provided in trade for work. Why shouldn't it be taxed?

Contrariwise if no one is really paying these tens of thousands of dollars in tuition, with the university just eating the "tuition bill" in the case of e.g. an English grad student, then why should a grantor have to pay that tuition bill for a microbiologist grad student on top of her stipend?

I get that this sucks for people caught up in it but I don't see a lot of stepping back and thinking about what makes sense.

Yep, I was down voted in another thread for pointing out the the same thing. 20 years ago, I had to pay tax on all my employer provided tuition assistance for graduate level classes. Even if my employer cuts a check directly to the university, it's still counted as my income.

So why should it be any different for a university as the employer? This is just a loophole being closed. Just get rid of the damned "dissertation credits" and problem solved.

> If they keep charging everyone else and make education free for employees, the tuition they would have paid becomes taxable income.

Is this really true though? Some universities charge in-state and out-of-state students different tuition rates, but the in-state students aren't liable for paying taxes on the difference between the tuition rates. It seems like those are just different degrees of the same thing so the same rules should apply. Perhaps the distinction is that the schools who differentiate between in-state and out-of-state students are state schools and thus play by slightly different rules?

The difference is that graduate students are employees, and the tuition waiver is a benefit of their employment.

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