Friday, November 10, 2017

Positive movement on the tuition waiver story

The Senate tax reform proposal released late Thursday night includes an excise tax on large private college endowments that has been strongly opposed by higher ed groups... 
...But the Senate proposal appears to largely leave untouched many education tax credits and tax exemptions eliminated in the House GOP tax bill. 
The House plan released last week eliminated several deductions that benefit both undergraduate and graduate students. Eliminating one of those deductions would mean tuition waived for graduate students is taxed as income. That prompted a campaign by graduate students on social media to push back against the provision....
This is a positive development, but it's not over until the package is all done, I suspect.  

2 comments:

  1. If you're going to tax graduate students and universities, you ought to do it for good reasons; lowering corporate tax rates (see https://www.npr.org/2017/08/07/541797699/fact-check-does-the-u-s-have-the-highest-corporate-tax-rate-in-the-world) likely isn't it. Alternatively, the federal government could more directly change the overhead rates on research grants and the taxability of income from endowments (if they think the current rules are unreasonable or unfair) or put a time delay on tuition taxation for grad students (so that people going to grad school can factor the expected income into their decisions); these issues aren't as important as tax deductions for private jets, apparently.

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    1. I guess it would better to say that lower the corporate tax rates wouldn't be a good reason if you don't change the deductions so that the statutory rate and the effective rates converge; if you lower the statutory rate but keep the deductions as at present, then you're simply transferring taxation from businesses (mostly corporations) to individuals, which probably is not good.

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