On Nov. 16, the House of Representatives passed their version of a tax bill. The bill aims to overhaul many Obama-era tax legislations, including the Obamacare health care mandate aimed at reducing overall health care costs, in order to facilitate tax breaks for the wealthiest Americans. Furthermore, the bill hurts those in higher education by implementing higher taxes on students. This tax bill is incredibly detrimental to students, the general U.S. population and the economy, and we urge the Senate to revise it entirely.
Particularly troubling for students, the GOP tax bill greatly undervalues education. For one, student loan repayment will no longer be tax deductible. Currently, 44 million borrowers owe $1.3 trillion in student loan debt in the U.S. As such, this legislation would make a college education much more unaffordable for the average American.
Graduate education takes a much bigger hit. Under the Section 117 (d)(5) of the House tax plan, graduate school tuition waivers will be considered taxable income, rendering an already meager income unlivable. Given most graduate students receive funding primarily through teaching or research assistantships, taxing these waivers as income may make pursuing graduate education financially difficult for students, particularly students of lower socioeconomic status.
This legislation relies on a misunderstanding of what a graduate level education actually is. Graduate students do not get paid for sitting in classrooms all day; rather, teaching and contributing to research serve as indispensable parts of the graduate education. This work is notoriously time-demanding and deserving of compensation. As such, the United States’s research productivity — particularly in the sciences — will likely take a big hit, because it isn’t unreasonable for prospective graduate students, who conduct much of the research done in the U.S., to look abroad for their graduate degrees or forgo earning one altogether.
The economic justifications for the GOP tax plan reflect a flawed knowledge of the efficacy of economic policies. The tax plan will add anywhere between $1.5 trillion and $1.7 trillion to the deficit and, while many senators argue the added economic activity will make up for the increase, most economists disagree. This, in conjunction with the prioritization of corporations in the plan, illustrates Republicans’ continued adherence to the concept of trickle-down economics. Their support of this economic ideology signifies a disregard for the popular consensus in the economic community of the fallacies of the success of these policies.
Nevertheless, even if we assumed that trickle-down economics were a viable solution, the tax plan is still flawed. The writers of the bill justify trating graduate school tuition waivers as taxable income by saying it is non-spendable and will therefore not contribute to increasing economic activity. However, higher enrollment costs will likely cause graduate school enrollment rates to fall, stalling any potential for trickle down before it can even begin, as fewer people overall will have degrees that will give them more money to spend in the economy.
Additionally, this tax bill fails people outside of higher educational contexts. The reduction in corporate tax rates will prioritize the needs of large corporate interests over the needs of the most vulnerable, including students and people of lower socioeconomic status. Everyday workers will see less economic activity, and will be subject to higher costs in many areas.
For example, teachers and medical professionals will no longer be able to write off expenses for supplies and other expenses they incur at work. Furthermore, the removal of the Individual Health Insurance Mandate, a part of Obamacare, would likely lead to higher insurance prices across the board. This plan will strip Americans of needed health care coverage while funneling savings to the wealthiest corporate interests.
This is a bad tax plan overall and works against our country’s ideals. We urge the Senate to change these to protect not only the interests of graduate students, but also of the general American population.
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