Li, like other UW-Madison grad students, makes $18,000 per year. But under the bill, different versions of which passed the House and the Senate, she’d be taxed as if she makes roughly $50,000.
This is because her tuition, which is fully funded, would be taxed as if it was additional income under the bill. It’s a policy change that would dramatically affect “what type of person can go to grad school,” according to Don Moynihan, the director of the La Follette School of Public Affairs.
“When you’re a graduate student, you get paid a small amount of money … but you get the benefit that your tuition is paid,” Moynihan said, speaking as part of a panel alongside Li. “[If the provision becomes law], only the fairly wealthy will be able to afford to take this on.”
Li’s story echoes those of many graduate students around the country who have come out in opposition to the controversial tax. Li acknowledged that although her ability to pay for graduate school would be jeopardized under the bill, her classmates who have spouses and families would be even more affected.
Um, no… she won’t be “taxed as if she makes roughly $50,000.” She does make roughly $50,000 and will be taxed accordingly. The fact that over half of her income is paid in the form of tuition relief is immaterial. She is receiving something of value in exchange for her work. That is compensation. Here’s a handy definition:
(a) The term compensation means any form of payment made to an individual for services rendered as an employee for anemployer; services performed as an employee representative; and any separation or subsistence allowance paid under any benefit schedule provided in conformance with title VII of the Regional Rail Reorganization Act of 1973 and any termination allowance paid under section 702 of that Act. Compensation may be paid as money, a commodity, a service or a privilege.
So what these graduate students are complaining about is the fact that they have been receiving tax-free compensation for years and now it might be taxed like everyone else’s compensation. Boo hoo.