I like the endowment tax being proposed in this bill.
There’s a tax on some megarich private universities’ endowment.
It doesn’t solve most people’s main problem with college costs, which is PUBLIC university costs.
I have no opinion as of yet regarding the endowment tax, although since endowment pays for financial aid, I think families currently getting financial aid (especially those in the 200-300k bracket,) would end up being hurt.
However I also don’t think it’ll pass. These universities have such powerful alumni, including a lot of Republicans, that I doubt this aspect of the law will go through.
But there IS also a tax on student loan deductions and student stipends, which hurts students directly.
And that section is likely to pass, since the ones targeted don’t have organizations and lobbies to fight it.
When an independent group says 80% of the tax cuts will go to the top 1%, it means 20% will go to everybody else, hence, that those tax cuts won’t amount to much if anything for middle class families. I’ve come to trust the independent groups because they’re far from liberal. They’ve never returned such an analysis before - I’ve lived through other tax cuts and I’ve come back from tax cut enthusiasm.
(I’ve been burned by the GWB tax cuts, which were supposed to benefit me but because they resulted in cuts in common goods and services, ended up hurting me and everyone else where I live. So, not an ideological position, but a position I take due to experience. Based on my comparing both plans, this one will be even worse, without even the early appearance of decreasing something that’s then taken back another way. It’s just cut right away AND leads to decreases in something else, at the same time).
When taxes are cut and someone has to pay for these cuts to compensate, I don’t think “students” and “middle class families” should be the ones taking the hit.
http://www.taxpolicycenter.org/publications/preliminary-analysis-unified-framework/full
Since then, details of the plan have exacerbated the flaws outlined above.
There are more but I have no time to look it up - three more analyses have been published, all in the same vein.
The issue here is
1° Should we tax private universities’ endowment? (Which universities/what endowment)
2° What impact will the end of college loan deductions have for you/your family?
3° What would taxing tuition waivers mean for your family?
good questions, myos. I might point out:
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Approximately 150 of the wealthiest Univerisites/colleges would be affected. And, fwiw, this appears to have bipartisan support.
https://www.theatlantic.com/education/archive/2017/10/the-bipartisan-push-for-college-endowment-reform/541140/ -
Some estimates are the impact is approximately $300 per filed return. But of course, YMMV.
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Probably way to early to even guess. In the first place, this will impact grad students. In the second place, any guess assumes that Universities will not react to this future tax. For example, the ~150 in point 1 above clearly have the money to provide every PhD student a tax-free full ride merit scholarship, instead of tuition remission for the grad student working as a TA. Alternatively, they could increase the fellowship amount by say, $1500 per person to help cover the tax. This is not much different than when colleges/Unis had to start offering medical benefits to grad students. Some Unis undoubtedly will spend some of their endowment to do same.
Regardless, these higher ed proposals will definitely hit the for-profit/technical colleges.
I don’t know much about tax issues, but couldn’t the universities issue scholarships instead of the tuition waiver. Scholarships are not taxed, are they?
And yes, I like the tax on big endowments. Universities should use the endowments to help more students with tuition, not to accumulate billions tax free.
Yes, and yes.
The public university my kid attends for her PhD in a reddish state is probably going to have to increase their compensation for PhD students to help them cover the added tax burden of taxing their tuition waivers. These are the students who TA all the intro classes & labs. Where will that compensation come from? Some likely would be tuition increases for undergrads.
I keep thinking of a scene in the West Wing where a guy in a bar says he wishes the government would make it just a little easier for the average family to get their kids a college education. This bill makes it harder – elimination of higher education tax credits, eliminating the student loan interest deduction, and taxing tuition waivers that help offset the pittance grad stuudents are paid, And all to give corporations a break that individuals are really never going to benefit from. These aren’t just hitting top colleges – they hit the state directionals and flagships and private college students alike.
A family who would not get college financial aid anywhere ($200,000+ income probably) would be at the upper part of upper middle class at least. If, like most such families, it gets most of its income from labor (as opposed to capital), it would be most likely to be subject to tax increases to pay for the tax cuts to estates/inheritors, plutocrat-wealthy, and big business.
You probably shouldn’t spew things you know nothing about and are dead wrong on.
I’m out of that conversation. There’s no reasoning with people who argue in memes.
If there’s a simple way around it by calling it a scholarship rather than a tuition waiver, there’s nothing to get excited about.
Not necessarily.
- Public Uni could provide PhD students with a tax-free merit scholarship.
- Public Uni could then require that PhD students take a Teaching course or two every year, as part of thier graduate education and for which they woudl recieve academic credit. Such teaching course could require working the professor and running discussions sections/labs.
Now that might work for doctoral students, but terminal MA students could be on the hook.
The republican tax bill is a real turd for a lot of reasons. It preserves the current progressive tax structure, rather than flattening it out (or making it completely flat, like most state that have income tax). It maintains the current deduction structure. I don’t see a whole lot of simplification, which I think everyone can agree would be a good idea. But I think the tax on endowment incomes is particularly insidious because it opens non-profits to taxation and it uses the same progressive structure where endowments below a certain about are exempt from tax. How about the same for everyone? They are just punishing success, just like the current tax code does.
All that portion of the tax bill does is muddy the waters between profit and non-profit. With taxation on tuition fee waivers, it is going to cause universities to have to pay their Ph.D. students more to cover the cost of the tax, meaning more positions will not be fully funded. So we will have fewer doctoral candidates which is bad for our economy. It’s actually counter-productive, because over their lifetime those students would pay more tax than if they had only a bachelors or masters degree.
Most people wouldn’t rather be poor enough to need financial aid. We talk about that fairly often on this site, and it isn’t very relevant to the current conversation.
I’d assume that universities that just tried to switch all their TA/RA students to having “scholarships” might very well get accused of tax fraud. It isn’t going to be that easy.
Whatever you think of the rest of the tax bill, it never made much sense there was this loophole, which allowed this tiny subset of the workforce(Phd RA/TAs) to have most of their compensation exempt from taxation.
No doubt. But then no one has suggested that.
Example of how it might work: my son just graduated from a top law school that has a large tax practice. (So I assume that they adhere to today’s tax rules.)
In his third year, he was asked to “TA/RA” a first year writing seminar. (Attended class, ran discussion section, on call for student questions, provided comments on assignments – standard TA stuff.) They offered him a taxable cash stipend for the semester, OR, two units of course credit. For the latter, he also had to write a small paper at the end of the semester, which then officially became a RA.
Again… how is this so different from an athletic scholarship for an undergrad? Why wouldn’t they also be taxed for the work they do for the university? Nobody is handing these students a check for the cost of taking a course, and honestly colleges wring FAR more than the “20 hours” a TA position is supposed to take from the student.
And ultimately it is going to be detrimental to the higher education system in this country, much of which is built on the backs of PhD students, especially at research universities. I’d assume increasing undergrad tuition to continue to pay a living wage to TAs/RAs, or increasing the size of the sections they teach so universities can get buy with fewer of them isn’t preferable to anyone sending their kid to college. All to give a tax break to corporations that we individuals will realistically never see any benefit from.
**I haven’t heard of *any kid from a family making more than 280K a year wondering “if college is really worth it anymore”. ***
Families making more than $280k a year are definitely wondering if the amount they pay for college is worth it. Sure, there are a few idiots who inherit money, but most people earning $280k+ annually are fairly intelligent people. Although some families will always believe a college education is a necessity for reasons such as social prestige, tradition, or as an entree into certain professions, other families view college as an investment similar to any other investment. And with an investment of $250k, there are many interesting alternatives.
There’s a reasonable argument that athletic scholarships should be taxable, but that’s a topic for a different thread.
This seems to drive home my point that PhD tuition waivers are fringe benefits of a job, and thus should be taxable.
Could that be the intent?
http://www.people-press.org/2017/07/10/sharp-partisan-divisions-in-views-of-national-institutions/
@roethlisburger the income distribution is worse than it has been in about 75 years in this country. Why do we continue on with this nonsensical theme of taking from the poor to give to the rich? Perhaps this is just more of the anti education bias we see more and more from the people in power