University of Utah graduate student Thomas Brussel paid roughly $1,000 in taxes last year on nearly $17,000 in campus stipends and other income.
But under a new tax plan approved last week by the U.S. House of Representatives, the U. doctoral student said he would likely fall below the federal poverty level, even as his redefined taxable income balloons on paper — along with his tax bill — but without an actual increase in pay.
“My taxes would quintuple and I would make a little bit more than $10,000 for my nine-month work period,” Brussel said Tuesday, as he joined others gathered in opposition to the Republican plan. “I, like many of you, can not live on that kind of salary and would be forced to consider leaving higher education.”
Brussel’s comments came during a rally that drew more than 50 graduate students, faculty members and elected officials to the Utah Capitol to fight the GOP’s federal tax proposals, now pending before Congress.
Along with lowering corporate tax rates and long-term tax hikes on lower- and middle-class incomes, a version of the plan calls for ending the tax-free status of campus tuition waivers. Those waivers, common among graduate students and the children of university employees, would be taxed as income under the House bill, which was supported by all four of Utah’s representatives.
GOP Senators are developing their own tax proposal, which currently does not call for taxes on tuition waivers.
Concern over the issue also led the presidents of the U. and Utah State University to urge Utah Sen. Orrin Hatch to oppose the move, saying that taxing tuition waivers could harm the state’s higher education system and its economy.
Brussel described the Senate’s bill as “comparatively less severe,” but added that either chamber’s plan would put students and the working class residents at a disadvantage while benefiting to the rich.
“The fiscal burden that it may place on the vast majority of Americans is simply unacceptable,” Brussel said. “Both bills represent a clear threat to undermine the viability of higher education in our nation.”
Salt Lake County Mayor Ben McAdams, who is running for Congress against Rep. Mia Love, R-Utah, said there is a need for reform that simplifies and improves the federal tax system. But the actions of elected leaders this week have been “disappointing,” McAdams said, and a setback for the nation.
“The bill that was passed in Congress last week is a mess,” he said.
Love, Rep. Chris Stewart, R-Utah, and Rep. John Curtis, R-Utah, told The Salt Lake Tribune that they support preserving the tax-free status of tuition waivers and expect the Senate’s bill to keep those tuition incentives intact.
They voted for the House bill, they said, as the first step in legislative negotiations between the House and Senate.
“I share the concern about preserving the tuition waiver, which is being addressed in the Senate bill,” Love said via email. “I am anticipating it will be preserved as the process moves forward.”
But if the House’s proposal is not good policy, McAdams asked, why vote for it? He said he agrees with Love that tuition waivers should be protected, but added that his opponent was wrong to support a flawed bill.
“Utahns like you rely on our elected officials to stand up for them on Capitol Hill — that did not happen last week,” McAdams said during Tuesday’s rally. “Instead, the needs of Washington politicians were put ahead of hard-working people and their families in Utah.”
Alla Chernenko, who moved from the Ukraine in 2014 to study at the U., said she was “deeply saddened” the state’s representatives would put her work and the work of other students in jeopardy.
“Under the new tax bill my taxable income would double but my physical income, income that I see, would remain the same,” Chernenko said. “I’m a fiscally responsible person and I don’t know how to make that work.”
Rebecca Richards-Steed, a third-year doctoral student and researcher at Huntsman Cancer Institute, said she has worked full-time to put herself through school. Her budget is tighter now that she is a mother, she said, and her time is spread thin.
“We’re the ones working our tails off to find that cure, to conduct that research, to find answers to questions that have not been answered yet,” she said.
Last week, U. President David Pershing and USU President Noelle Cockett co-wrote a letter to Hatch, R-Utah, and Sen. Ron Wyden, D-Oregon, the ranking member of the Senate Finance Committee. In it, Pershing and Cockett express their support for the Senate’s tax plan while outlining their concerns regarding the House’s proposal to end tax-free tuition waivers.
“The value of graduate education extends well beyond taxes generated due to a corresponding higher income,” they wrote. “Holders of graduate degrees drive innovation and business expansion that benefits Utah and national economies.”
Pershing and Cockett also described the loss of tuition incentives as “counterproductive,” and warned that taxing waivers could result in a drop in undergraduate and graduate enrollment.
“By retaining these tax benefits, the Senate version of H.R. 1 is fiscally responsible,” they wrote, “and is in line with our national priorities of economic competitiveness and development of a high-quality workforce to support our economic growth.”