If you’re in the United States, you’ll probably have noticed that there is a bill that is dangerously close to passing that will increase the tax burden on graduate students dramatically. This bill will tax graduate students counting their tuition waiver as part of their income, increasing their taxable income from somewhere in the $30k range to somewhere in the $70-80k range.
Carnegie Mellon and UC Berkeley have recently done calculations to estimate the extra taxes the graduate students will have to pay, and it does not provide happy reading. The Carnegie Mellon document can be found here and the UC Berkeley document can be found here. The UC Berkeley document also calculates the increase in the tax burden for MIT graduate students, as there can be large differences between public and private institutions (private institutions generally charge more for graduate education and have a larger tuition waiver, so graduate students at private institutions will be taxed more).
Most importantly, the document from UC Berkeley states:
An MIT Ph.D. student who is an RA [Research Assistant] for all twelve months in 2017 will get a salary of approximately $37,128, and a health insurance plan valued at $3,000. The cost of a year of tuition at MIT is about $49,580. With these figures, we can estimate the student’s 2017 tax burden. We find that her federal income tax would be $3,993 under current law, and $13,577 under the TCJA [Tax Cuts and Jobs Act], or a 240% increase. We also note that her tax burden is about 37% of her salary.
This is a huge concern for those involved, but I think there are more dire long-term consequences at stake here for the STEM fields.
I chose to pursue a graduate degree in physics in the US partly because it allowed me the pursue a degree without having to accrue student debt and obtain a livable stipend to pay for food and housing (for me it was $20k/year). If I had to apply for graduate school in this current climate, I would probably apply to graduate schools in Canada and Europe to avoid the unpredictability in the current atmosphere and possible cut to my stipend.
That is to say that I am sure that if this bill passes (and the very fact that it could harm graduate students so heavily) will probably have the adverse side-effect of driving away talented graduate students to study in other countries or dissuade them from pursuing those degrees at all. It is important to remember that educated immigrants, especially those in the STEM fields, play a large role in spurring economic growth in the US.
Graduate students may not recognize that if they collectively quit their jobs, the US scientific research enterprise would grind to a quick halt. They are already a relatively hidden and cheap workforce in the US. It bemuses me that these students may about to have their meager stipends for housing and food be taxed further to the point that they may not be able to afford these basic necessities.