Kailey Love | Photo Editor
For anyone that relies on a teaching assistant or research position for graduate level tuition, you may soon pay taxes on money that you never see.
On Nov. 16, the United States House of Representatives passed legislation to overhaul the tax code with a vote of 227-205. Though a version of the $1.5 trillion bill still needs to pass in the Senate before it goes any further, the first step toward this GOP victory has implications for millions of Americans, including students.
According to the Joint Committee on Taxation, the tax bill will affect 13 million lower and middle class families. It also attempts to eliminate the individual healthcare mandate (a piece of the Affordable Care Act that requires citizens to have some kind of health insurance) in an attempt to somehow alter the ACA after the GOP failed to repeal it in July 2017.
In addition to the harm the bill would inflict on working class families, graduate students and those working toward a PhD will also feel the effects of the House bill.
According to the American Council on Education (ACE), 145,000 students at the graduate level rely on qualified tuition reduction in exchange for research or teaching (outlined in the IRS Code, Section 117d). The language in the House tax bill dictates that these tuition waivers would be taxable, counting the assistance as income. In basic terms, this means that students will pay taxes for money that is never actually in their physical possession.
Many lower and middle class students rely on this aid to pay for their tuition, and may not be able to afford to continue their post baccalaureate education without it. This could also cause a decrease in graduate and PhD-level research, or prevent students from furthering their education all together due to the expense. In a letter to the House Ways and Means Committee, the ACE stated that this bill is “not in America’s interest.”
A press release from the Council of Graduate Schools stated that the number of first time graduate programs leading to a master’s degree or graduate certificate was 83.4 percent in the fall of 2016. According to Duquesne’s website for graduate admissions, about 3,500 graduate students are enrolled at Duquesne.
In its letter, the ACE stated that the bill “taken in its entirety, would discourage participation in post-secondary education, make college more expensive for those who do enroll and undermine the financial stability of public and private, two-year and four-year colleges and universities.”
The potential passage of this bill would also affect endowments, college tax credits and consolidation, the forgiveness of student loan debt due to death or disability and more. According to the National Center for Education Statistics, three million U.S. students will have enrolled in a post-baccalaureate program as of this fall, many of whom may be at risk if this measure would make the final version of the tax plan.
The Senate version of the bill, passed 12-11 in the Senate Budget Committee on Nov. 28, is now advancing to the floor for a vote. If it passes in the Senate, it will have to undergo a reconciliation phase with the House passed legislation before any implementation. Though the measures affecting higher education are not included in the Senate bill, there is no promise that they will not be added during the reconciliation phase with the House bill.
Both the House and Senate bills have received wide criticism from Democrats, as well as a few Republicans, after the Congressional Budget Office released its analysis that the substantial cuts and benefits for the upper class would negatively affect the lower and middle classes, as well as add $1.5 trillion to the deficit over the next decade.
Many colleges have already spoken out against the revoking of the tax credit, including Carnegie Mellon University and Penn State University. On Nov. 29, President Gormley also voiced his concerns about the House and Senate bills in an email to students.
“As this proposed legislation has serious potential to negatively impact the Duquesne community and higher education at-large, I have voiced the University’s opposition to specific aspects of this bill to key legislators in Washington,” he said. “As the Senate prepares for an anticipated vote by the end of the week, Duquesne will continue to make its voice heard in favor of responsible legislation that preserves accessibility and affordability for our students.”
All 12 Republican U.S. Representatives from Pennsylvania voted yes on the House tax bill, and the five Democratic Representatives voted no. As the Senate bill moves forward, Sen. Bob Casey (D-PA) has vocalized his rejection of the bill, stating that it is “a thief in the night.”
Sen. Casey expressed his opposition in an email to The Duke via his press secretary.
“It’s clear congressional Republicans believe that massive student debt for our middle class students should just be a way of life,” he said. “With colleges and universities taking a hit to the tune of $110 billion, the cost of obtaining higher education will rise for middle class families. The last thing middle class families need is a tax hike, loss of their health care, and a tuition jump to send their children to schools.”
On the other side of the aisle, Sen. Pat Toomey (R-PA) is expected to be a yes vote when the bill appears before the Senate. On an episode of the popular podcast “Pod Save America,” Sen. Claire McCaskill (D-MO) stated in an interview that Toomey was one of the main authors of the Senate tax bill.
Sen. Toomey’s office explained in an email to The Duke why the Senator supports the legislation.
“Neither the House and Senate plan are finalized. The shared goal of Congressional Republicans and the administration on tax reform remains the same: delivering a direct pay raise to hardworking American families and creating incentives for economic growth with new, well-paying jobs,” the email read.
Toomey’s office said that the plan is more than just a couple changes.
“When looking at a tax reform package, it is important to remember that it extends beyond singular changes and deductions. So while both the House and Senate plans adjust tax treatment for certain entities and eliminate certain deductions, they both also lower rates, double the standard deduction, and increase the child tax credit, resulting in a net tax cut for millions of working-class and middle income Pennsylvanians.”