Statement Against Graduate Student Tax

A Statement from the Campaign to Organize Graduate Students

November 27, 2017

 

House Resolution 1 proposes the elimination of numerous sections of IRS Code, including parts of 26 USC §117. Some sections of tax code targeted for repeal protect students trying to achieve the American Dream: some of them enable graduate students to afford an advanced degree on a meager salary. The U.S. House of Representatives passed this bill on November 16, 2017. Though the Senate bill leaves 26 USC §117 intact, it has yet to pass; and if it does pass, it is uncertain what the outcome of the conference committee process to combine the bills would be.

It is important to be clear about the effects of House Resolution 1 on us. It is not obvious that the repeal of §117(d) would increase our tax liability. Our tuition coverage is not a waiver, but a scholarship. 26 USC §117(a) is what exempts tuition scholarships from counting towards our taxable income, and HR 1 in its current form leaves this section intact.

This is no cause for calm. Graduate students across the country, our fellow workers, will face higher taxes. We could, too, depending on the still-uncertain outcome of the legislative process. Below is a rough indication of how the proposed changes would raise our own taxes if our tuition coverage ceased to be exempt from taxable income (1):

Salary + tuition (2) Current code Under proposed code
50% appointment with 9+ hrs at the Graduate College rate Standard Deduction + Personal Exemption Old Liability Standard Deduction + Personal Exemption New Liability
AY single $19,016 + $10,462 $6,350 + $4,050 $862 (3) $12,200 + $0 $2,073 (4)
FY single $23,233 + $10,462 $6,350 + $4,050 $1,459 $12,200 + $0 $2,579
AY couple $19,016 + $10,462 $12,700 + $9,100 $0 (5) $24,400 + $0 $609
FY couple $23,233 + $10,462 $12,700 + $9,100 $143 $24,400 + $0 $1,115

Our mean and median rent is already more than 30% of our monthly salary (6). We are thus already “cost-burdened” according to our own Department of Housing and Urban Development. Raising our taxes will make basic living expenses more difficult to meet, and thereby push many graduate students into poverty and out of research and education entirely. Under this proposal, graduate education would only be an option for the independently rich. And the uncertainty surrounding this bill, and the targeted attack on those seeking an education, will discourage students at home and abroad from seeking graduate degrees in our schools.

We are opposed to House Resolution 1’s proposed graduate student tax. We ask Iowa’s senators and representatives, Governor Kim Reynolds, the Iowa Board of Regents, the University of Iowa, and the University of Iowa Graduate College to do all that is in their power to defend policies that make higher education a possibility for all instead of a dream for few. We urge them to defend the research and teaching missions of the state’s institutions of higher education and the many public benefits they provide for the good people of the state of Iowa.

We urge our members to take immediate action to fight this bill:

  1. Contact Senators Grassley and Ernst, as well as senators from your home states. Find their contact information and urge them to vote against any bill that increases tax burdens for vulnerable populations, including graduate students, and to prevent House Resolution 1’s changes to 26 USC §117 from being passed in conference committee.
  2. Submit an op-ed about how the proposed graduate student tax would affect you, your career, or your community. Share your story on social media using #SaveGradEd
  3. Attend our Rally Against the Graduate Student Tax on Wednesday, November 29th at 12:30pm on the Pentacrest.

 

Yours Truly,

UE Local 896/COGS Coordinating Committee
20 E Market St, Suite 210
Iowa City, Iowa 52245
cogs@cogs.org

 

Sources:
(1) Example Calculations, Current and Proposed Marginal Tax Rates and Standard Deductions, Current Tuition and Fees Rates, and Current Graduate Student Stipends.

(2)  These figures conservatively exclude summer tuition and fees and also non-mandatory fees.

(3) The current marginal tax rate for incomes up to $9,325 of those filing as single is 10%; up to $37,950 the rate is 15%. The marginal tax rate for incomes up to $18,650 of those filing jointly is 10%, up to $75,900 the rate is 15%.

(4) The proposed marginal tax rate for incomes up to $45,000 of those filing as single is 12%. The marginal tax rate for incomes up to $90,000 of those filing jointly is 12%.

(5)  These calculations conservatively assume that the couple’s only income is the graduate student’s salary.

(6)  Median rent in Iowa City is $865.