~~ By Ryan Hill ~~
The past few weeks have been an emotional roller coaster for Ryan Hill.
The fourth-year Ph.D. candidate studying economics at MIT has been keeping a close eye on the GOP tax plan, worried that if the bill that passed the House last week becomes law, it could have a dramatic impact on his family’s finances. Hill and his wife rely on his graduate stipend and her part-time work as a photographer to support themselves and their 14-month-old daughter, Norah. But the House tax bill would classify graduate students’ tuition waivers—which they receive in exchange for teaching or conducting research —as taxable income, a measure that Hill estimates would cut his take-home salary nearly in half.
“Before we had our baby, we were about breaking even, I would say — maybe had a little bit extra to save or spend. Once we had our baby, with those expenses, as you can imagine, we’re not even breaking even now,” Hill said. “If this passed, we would either have to take on more student loans or just use all of our savings.”
“Just thinking about what the implications are is somewhat frightening,” he added.
Hill isn’t alone. Graduate students across the country are sounding an alarm on the “devastating” tax increase they could see under the House GOP tax plan. Many are making worst-case-scenario plans to drop out of their Ph.D. programs, alter their career paths, transfer schools or take out more student loans if it becomes law.
“Graduate students and workers attending school part-time could see the largest tax increases,” tax experts Kim Rueben and Gordon Mermin wrote in a recent post for the Urban-Brookings Tax Policy Center. “What you’re doing is increasing the cost of going to graduate school… and ignoring the fact that the government makes much more money if people have more education,” Rueben, a senior fellow at the center, told NPR.
The Senate is currently considering a tax bill that does not include the provision on graduate tuition waivers. If the Senate passes the bill, which could come to a vote after Thanksgiving, Republicans would then need to reconcile the two versions of the tax plan. Graduate students and their advocates are pushing lawmakers to eliminate the tuition provision in that process.
For Hill, the impact of the House GOP tax bill is alarming. He currently takes home about $27,000 a year from his graduate stipend, after taxes. Under the House bill, he estimates that he would take home about $15,000 a year. Graduate tuition at MIT costs about $50,000, and Hill receives a $30,000 stipend; the GOP plan would require him to pay income taxes on that combined $80,000.
Even before expenses like food and diapers, $15,000 would not be enough to pay his family’s $1,800-per-month rent in MIT graduate student housing— their most affordable option in Cambridge, Mass., whose housing market ranks among the most expensive in the country.
While the GOP tax plan includes a provision to expand the child tax credit and would qualify Hill for a lower marginal tax rate, he said “that’s all offset and more by adding my tuition as taxable income.”
“To me, it’s just completely inconsistent politically with the goals of either party,” he said. “And the Republican Party has not offered any kind of justification economically or politically for why they want to pass this provision.”
Republicans have argued that the bill will simplify the tax code and reduce taxes overall, but an analysis by the Urban-Brookings Tax Policy Center found that high-income households would see the largest cuts and that 25 percent of taxpayers would see a tax increase by 2027.