Most of us at the University of Minnesota don’t pay large amounts of taxes. We aren’t making enough money to be taxed much, and we are “broke” college kids dedicated to our education. We aren’t worrying about U.S. House Speaker Paul Ryan’s new tax bill. He’s an earnest guy with Midwestern values, and the podium from which he unveiled the bill read “MORE jobs | FAIRER taxes | BIGGER paychecks,” so that means we should believe him and keep quiet, right?
Wrong. The bill is terrible for a lot of Americans, such as the middle class, people with high medical costs, residents of states with income taxes — and good for others — the wealthy, owners of private jets, heirs and heiresses of estates over $5.5 million. However, it is sneakily a knife to the heart of higher education: graduate students.
Ryan’s tax bill in its present form is a repeal of Section 117(d)(5) of the U.S. Tax Codes, effectively taxing tuition waivers that graduate students receive for working at universities.
Graduate students often labor 40 plus hours a week for their university in labs, classrooms and offices in exchange for having their tuition waived. Unfortunately, the salary they receive for these jobs isn’t usually high paying, either.
The U.S. House’s new tax bill would begin to tax the tuition waiver. As Erin Rousseau, a Ph.D. student at MIT, described in the New York Times, the government would count the tuition waived as income, rocketing up her taxable income from $30,000 to $80,000. For an estimated 145,000 grad students across the country, their taxes could rise anywhere from 300 to 400 percent.
Though their numbers are small, graduate students play an extremely important role in our economy. They spend at least five years of their life dedicated to learning. The Milken Institute found that for every dollar spent in bioscience research there was an external benefit of $1.70. Grad students play a large role in the expanding the boundaries of our cultural frontiers. They generate new thought and push society forward.
How is this fair? This a regressive tax on some of the lowest paid and hardest working members of society. Ryan’s podium promised us “FAIRER taxes,” yet owners of private jets are finding that the tax bill solidifies the removal of a 7.5 percent tax they once had to pay on air travel. This tax bill is clearly made for the people who pay for our politician's campaigns.
As a university, we must push back against such a brazen attack on our graduate students. They play critical roles in our education system, and also drive much of the innovation that happens in our economy. Instead of sitting aside and watching the axe fall, the University should make sure to financially protect its graduate students if this tax bill passes. They matter at the University, so the administration should prove it.