The tax reform process has triggered uncertainly and angst while final negotiations are worked out. Many groups, including graduate students, have good reason to be concerned. The proposals that passed by Republicans in both the House and Senate change the tax treatment of employer-provided educational benefits. Scholarships that are now tax-free for employees would be taxable beginning next year.
The issue has big impact for my hometown Philadelphia that is a hotbed of graduate research studies. Local reporter Aubrey Whelan reports “A doctoral student with a $15,000-per-year stipend and a tuition waiver of $40,000 could end up paying as much as $5,000 more in taxes, said Gordon Mermin, a senior research associate at the Tax Policy Center, a Washington think tank”.
The result is that a graduate student on scholarship, typically a person in their 20s partly supported by family and/or loans, will see their federal taxes rise by thousands unless a mitigating measure emerges from the reconcilliation process. Also, from my perspective as a small business adviser, I am concerned with the wider issues of tightening the range of allowable tax-free employee benefits.
It is especially disturbing to see higher education fingered as the leading differentiator in people’s opinions on a wider range of public policy issues as I covered last year. Assertions of a “war on education” may be exaggerated but the demographic differences and shift in public opinion surrounding advanced education are real.
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