Boots & Sabers

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1945, 08 Dec 17

Grad Students Whine About Real World Taxes


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 anemployerservices 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 ActCompensation 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.


1945, 08 December 2017


  1. jonnyv

    So… are we just doing this for grad students? Why not student athletes who get “paid” in tuition? And if not, WHY NOT? Because if that happens, as it sounds like it SHOULD according to you… I have a feeling you are going to see a student revolution. When suddenly that QB & RB on Texas A&M has to pay taxes on his tuition and room and board, eeeesh.

  2. jonnyv

    Is that what some of the student athletes are fighting for? To be paid?

  3. Paul

    Do you internet, dummy?

  4. jonnyv

    I just want a good reason as to why a grad student is any different than a student athlete? Both are comped tuitions.

  5. billphoto

    Could it be GRAD students are doing the job of teachers and their pay is protected from taxes with special status calling them students?  If I hire an intern, their compensation is taxes.  So maybe I should call them GRAD students and they can work tax free?

  6. Owen

    It’s a valid question, Jonny. Bear in mind in my answer that I’m one who believes that college athletes should be able to be compensated and that the NCAA rules prohibiting it are unjust. But that’s just me…

    That being said, the distinction is that the grad students are doing a job for which they are being compensated. The athletes are participating in a sport where scholarships are being used as incentives. The same is true for academic scholarships and such where students are granted free tuition just to attend the school. For the grad students, they are usually doing grunt work in labs and such that the school would have to pay someone else to do if the grad students weren’t there.

    I grant you that it is something of a distinction that isn’t much of a difference.

  7. Owen

    For the record, I earned my graduate degree while working and being taxed for my entire income the whole time.

  8. jonnyv

    Thanks Owen, that was kinda what I was getting at. There could be some grounds for a discrimination lawsuit. Which in turn could lead to big changes in the NCAA. And frankly, as a bystander, I would LOVE to see that playout one way or another.

    And ultimately the grad student should be able to write off up to 20% due to being an “employee discount”. Anything more than that needs to be taxed on an employees pay. I know there are exemptions for “harsh” tax laws in certain professions called “no additional cost” service. Basically saying that if doesn’t truly COST the employer anything, it wouldn’t be taxed. This may be what was changed with the grad students, I didn’t look that deeply into it.

    Frankly, I hope that they don’t tax it. I am always in favor of helping students further their education at the least cost to them. An educated society is best for us. But I am also a quack that has a plan that says that we look at the most needed professions every 5 or so years and have our taxes cover all the costs associated with those higher education degrees as long as the students can maintain a strict grade level. (AND trade schools).

  9. jjf

    People and governments liked this when it helped grow their universities. Now the GOP don’t need no edumacations.

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