Impact Of GOP Tax Plan On Students (By Jenny C. Bledsoe)
The House GOP tax bill makes graduate school inaccessible for anyone who is not independently wealthy, and it will likely cause current graduate students to drop out of doctoral programs and/or declare bankruptcy.
A single line in the 429-page bill effects this change: 26 U.S. tax code Sec. 117(d) allows students conducting research or teaching for a university (usually Ph.D. students on fellowship) to receive tuition waivers tax free. Any stipends are taxed.
The House “Tax Cuts and Jobs Act,” however, will repeal this provision, meaning that a Ph.D. student making a stipend of $24,000 will be taxed as if they are making $85,200. This would have been my situation two years ago. During the first three years of Emory’s Ph.D. program, a student currently receives a tuition waiver amounting to $61,200. Once you reach “tuition-paid” status after your third year, the annual tuition is $30,600.
Tax experts hired by The New York Times estimated that my husband’s and my tax bill would increase by $7,194–despite the increase in the standard deduction–because of the newly taxable tuition waiver. Tuition amounts vary widely depending on the institution, and the situation may be worse (or better) for some individuals, depending on tuition rates and stipend amounts.
At Georgia Tech, full-time graduate student tuition for one semester is $6,894 in-state and $14,284 out-of-state. Georgia State’s tuition is $4,680 in-state and $15,012 out-of-state for one semester. Graduate students will clearly owe much larger federal income tax bills, and in some states, including Georgia, they will also have to pay more due to the proposed changes to the federal tax credit for state and local income taxes. Those at private colleges and universities will be responsible for larger taxable amounts (given the higher tuition at private institutions).
Those at public universities will pay the taxes on their relatively lower tuition waiver amounts, but they will have to do so with already significantly smaller stipends than Ph.D. students receive at private universities.
This is an issue across the disciplines. It will affect any graduate student pursuing a Ph.D. on a research or teaching fellowship, which common for those pursuing doctorates in STEM, the social sciences, and the humanities. In addition to graduate students suffering personally, universities will experience the effects of their graduate students’ tax burdens in multiple ways (in addition to the bill’s other deleterious effects on higher education).
Graduate students will have less time for research because they will have to work additional jobs. Humanities Ph.D. students, who provide essential labor as instructors, will have less time to devote to the classes they teach to undergraduates.
Long-term effects are difficult to measure, but surely many lower-income students will no longer attend. It’s unlikely that international students will be able to maintain a decent standard of living since they are often forbidden from takinon additional work.
The House GOP tax bill will lead to a “brain drain” with international students and Americans alike seeking graduate study elsewhere or not all. In terms of personal finance, it will be extremely challenging (if not impossible) to meet one’s basic needs–food, shelter–while pursuing a higher degree.
Unless . . . you’re independently wealthy. This single line in a massive tax bill destroys lower- and middle-class young Americans’ ability to pursue a professional career in academia, industry, or government. The bill reduces other education tax credits, which will adversely affect access to undergraduate as well as graduate education. The GOP will effectively end class mobility, return the academy fully to the so-called one percent, and reduce charitable donations to universities by de-incentivizing itemized deductions.
Even if you don’t believe in the value of academic study, eliminating section 117(d) of the U.S. tax code would be bad for the economy. Those who were not independently wealthy and who chose to pursue graduate studies anyway would have to do so with the help of student loans. Student loans are with you forever; student loan debt is not forgiven even when bankruptcy is declared. Young Americans are already saddled with too much debt, causing many opinion pieces to complain about the latest store or product that ‘millennials have killed” by not spending enough money.
Eliminating this line of tax code effectively condemns those who pursue higher education to a life of debt servitude. How is our economy, our country, our world to progress with these barriers against access to education, an essential asset in our dynamic world?
Mr. LEWIS of Georgia. Mr. Speaker, also, I include in the Record letters of opposition from the ACLU, Baptist Joint Committee, and Americans United for Separation of Church and State.
ACLU, Washington, DC, November 3, 2017.
Hon. Kevin Brady, Chairman, Committee on Ways and Means, House of Representatives, Washington, DC.
Hon. Richard Neal, Ranking Member, Committee on Ways and Means, House of Representatives, Washington, DC.
Dear Chairman Brady, Ranking Member Neal, and Members of
the Committee on Ways and Means:
ACLU Strongly Opposes Unconstitutional Religious Favoritism Provision The American Civil Liberties Union (ACLU) is strongly opposed to Sec. 5201 in H.R. 1, the so-called Tax Cuts and Jobs Act. This provision is designed–in violation of the Constitution–to give religious organizations special tax benefits and privileges that are unavailable to all other, non-religious 501(c)(3) organizations. Accordingly, we urge that this unconstitutional provision be removed from the bill.
Sec. 5201 would allow a house of worship to endorse one or more candidates in all of its statements, presentations, and teachings made during “religious services or gatherings.” While current law applies to all tax-exempt nonprofit organizations, this provision would apply only to churches.
The Establishment Clause of the First Amendment to the U.S. Constitution was designed to prevent exactly this kind of religious favoritism. See, e.g. Texas Monthly v. Bullock, 489 U.S. 1 (1989) (striking down tax exemption that applied only to religious periodicals). Moreover, the Free Speech Clause of the First Amendment prohibits laws that engage in this type of viewpoint discrimination. See Rosenberger v. Rector & Visitors of the Univ. of Va., 515 U.S. 819 (1995) (invalidating a subsidy program that distinguished between religious and nonreligious viewpoints)
Sec. 5201 includes a vague and undefined test that would open up houses of worship to extensive government entanglement. To determine whether a house of worship is complying with the law, the IRS would have to determine whether an endorsement (1) occurred during the “ordinary course” of the organization’s regular and customary activities” in carrying out its “tax-exempt purpose;” (2) whether it amounted to a “de minimis incremental expense,” and (3) whether it took place during “religious services or gatherings.” To determine whether a house of worship meets this test, the IRS would have to investigate the house of worship’s books, activities, sermons, and correspondence. The IRS would also have to judge whether an event is “religious” and part of a house of worship’s “exempt purpose.”
By inviting this type of invasive government scrutiny of church documents and judgment about religion, this provision actually threatens, rather than upholds, the autonomy and independence of houses of worship. Churches and religious leaders are already able to exercise their free speech–free from fear of sanction by the IRS–by speaking out on political and social issues. Church leaders are also completely free to support or endorse political candidates as private citizens. As an organization deeply committed since our founding nearly 100 years ago to protecting the free speech rights of all people, the ACLU would vigorously oppose any effort to chill the ability of houses of worship and religious leaders to speak out on what they see as the important issues of the day.
That does not mean, however, that religious organizations are entitled to receive special tax benefits and privileges that are unavailable to all other 501(c)(3) organizations. The ACLU strongly opposes Sec. 5201 and urges the removal of this unconstitutional provision from the so-called Tax Cuts and Jobs Act (H.R. 1).
Please feel free to contact Ian Thompson, legislative representative, with any questions.
Faiz Shakir, National Political Director.
Ian Thompson, Legislative Representative.
(Congressional Record – Tax Cuts And Jobs Act Part 1)
(Congressional Record – Tax Cuts And Jobs Act Part 2)
(Congressional Record – Tax Cuts And Jobs Act Part 3)
(Congressional Record – Tax Cuts And Jobs Act Part 4)
(Congressional Record – Tax Cuts And Jobs Act Part 5)
(Congressional Record – Tax Cuts And Jobs Act Part 6)
(Congressional Record – Tax Cuts And Jobs Act Part 7)
(Congressional Record – Tax Cuts And Jobs Act Part 8)
(Congressional Record – Tax Cuts And Jobs Act Part 9)
(Congressional Record – Tax Cuts And Jobs Act (Part 10)
(Congressional Record – Tax Cuts And Jobs Act Part 11)
(Congressional Record –Tax Cuts And Jobs Act Part 12)