
Against a Tax Increase on Berkeley Students - moab
https://lucatrevisan.wordpress.com/2017/11/07/against-a-61-tax-increase-on-berkeley-students/
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LusoTycoon
The 2nd comment in the article reveals some interesting things.

Basically tuition is usually not charged for Phd students but is used for
accounting purposes to get money from Federal agencies.

The "tax increase" would stop incentivizing universities to do these
accounting tricks and declare tuiton as 0.

This is a good step in that tax code is simplified and accounting tricks /
loopholes are closed for corporations and universities (and other
public/private entities).

This is what I read, can anyone clarify this?

" But from an outside perspective, the current rules look like a money
laundering scheme. Universities use an accounting gimmick of setting an
arbitrary dollar amount for PhD student tuition, and then waive it. At least
in STEM fields, essentially no PhD student actually pays tuition. Why not just
set tuition to 0? The reason is because “tuition” can be charged to funding
agencies, and so this accounting trick of setting and then waiving tuition
allows universities to extract more overhead from the NSF, NIH, etc.

Of course, this accounting trick represents a non-trivial fraction of
government support for academic research. It seems natural to simplify the tax
code by disallowing this trick, but unless the goal is to de-fund academia
(maybe it is), it should be countered with an increase in direct funding to
universities from funding bodies. "

~~~
klipt
It seems like the Republicans are applying double standards here to
universities vs regular businesses. Businesses can reimburse employee
expenses, deduct those from taxable revenue as a business expense, and the
employee doesn't have to pay tax on the reimbursement.

Grad students are essentially employees of the university, if they're being
reimbursed tuition costs why should they have to pay taxes on a reimbursed
expense when other employees don't?

~~~
CWuestefeld
We're not talking about expense reimbursements, though. They needed to be able
to show that we have some number of certified AWS architects, so I paid $150
for an AWS certification test, and my employer is reimbursing me. They get the
credentials they want, and I was made whole.

In this case, it's not that the grad student is getting to take classes (this
is tuition we're talking about, remember) _for_ the university, nor is it that
the school is benefiting from the student taking classes. That's something the
school is providing to them as a service for a cost.

What the schools and grad students are trying to do is to barter their way
around taxes: "you give me tuition, I give you some TA and research work", and
no (or minimal) money changes hands. That the tax code allowed this was a
loophole: in general, you're responsible for the value that was received, not
just the dollars portion.

This is even part of ObamaCare: I have to pay tax on part of what my employer
pays for my healthcare, even though it was never given to me in any monetary
fashion. (the reason it's only "part of" is one of the great tax engineering
f-ups, leading to the disaster that is our current system of health insurance)

Even campaign finance law recognizes in-kind services as being equivalent to
the dollars they'd otherwise be worth. If your airline writes off the cost of
the candidate's cross-country trips, for example, the value of those tickets
would count as a campaign contribution.

~~~
klipt
> In this case, it's not that the grad student is getting to take classes
> (this is tuition we're talking about, remember) for the university, nor is
> it that the school is benefiting from the student taking classes.

Why not? The grad student's real job is research. The tuition is for classes
to make them better researchers.

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cgb223
Its funny,

so many of the people I speak with who either go to or went to Berkeley
support raising taxes.

They think if the government is better funded, it can provide more social
good.

But now that it's actually happening to them, there's this massive pushback.

I don't know if this tax bill will be beneficial or not, I'm a coder, not an
economist, but I do think there's just a bit of irony happening with this
proposed tax increase.

~~~
52804375092485
I think the part you're missing is that they support raising taxes on the very
wealthy, not on college students who are barely scraping by as it is...

~~~
friedman23
oh those poor poor Berkeley college students

~~~
JohnTHaller
53% of Berkeley students have under $30k a year of income and receive an
average of $14000 in aid.

~~~
megaman22
What are the 47% who make more than 30k a year doing, and going to school at
the same time?

~~~
jedberg
I worked in University IT and made over $30K working part time during the
school year and full time in the summer, as did most of my coworkers. Also, we
made slightly more than the normal person because Social Security tax is
waived for working students, so that's like a 7% bonus.

When you're in the Bay Area and your students can choose to work for the
University or go get a paid internship down the road, you have to compete on
wages.

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Upvoter33
If this change goes into effect, I'm not sure a real problem will occur. The
reason is that many students will not be able to afford this change. Thus,
universities will have to drop the tuition for such students altogether
(instead of charging NSF or other funding agencies for it). Schools will then
(eventually) respond by raising "overhead" on grants to make up for the
shortfall. The net effect, thus, may be zero.

~~~
glauque
Finally someone is pointing at the elephant in the room. When I look at my
student billing account, I see $60,000 waived under my grad "tuition waiver"
every year. Should I feel thankful, or completely dumbfounded by the fact that
they'd consider charging me that much to be a grad student in the first place?

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smanzer
I finished a chemistry Ph.D. at Berkeley in 2016 - the way that the university
handled "tuition" for science graduate students always seemed like a scam to
me during my time there.

In the early 2010s, we all made ~$28K/yr, while the university pocketed a
comparable sum from the funding agencies as "tuition." I assume that they
spent it like any other general tuition funds. For the vast majority of the
time during a typical graduate career, everyone was working on individual
research. I suppose the "tuition" could be interpreted as paying for the 1 hr
a week of meeting with your advisor (when they weren't blowing you off for
conference travel), but that seems like a stretch. That money should stay in
the sciences, and ideally be used to pay grad students more.

So it would be good for universities to get rid of this money laundering
scheme, but I worry very much for the folks that I know who are still in the
system who may be hurt by this. I think this problem should be treated in some
way less likely to hurt vulnerable people.

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jostmey
The problem isn't that republicans want to tax graduate students (I think they
should be taxed). The problem is that Universities classify their "employees"
as students and then pay them very little. The underlying issue here is that
graduate students are not paid well and are not really students

~~~
smanzer
Exactly - appreciating this fact could help clear up other disputes in this
thread. For STEM Ph.Ds you are really only a "student" for 1-2 years tops
(when you actually take some classes) - after that, you are an entry-level
employee. Your advisor is more of a boss than a teacher.

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harryh
There was a fairly large discussion on this topic yesterday:

[https://news.ycombinator.com/item?id=15646571](https://news.ycombinator.com/item?id=15646571)

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notyourday
Berkeley is crawling with people who are foam at the mouth liberals that love
taxes. Why are they upset?

~~~
rconti
This generalization has zero value, and that's before we even get into the
specifics of the argument.

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jbob2000
It's still income even though it never hits your bank account. Other students
who pay their own tuition don't have this luxury. I'm surprised graduate level
students at an Ivy league school can't figure this out, but then again, it's
not in their interest.

~~~
allenz
Do you also believe that cancer survivors should be taxed $100k+ on their
income from health insurance?

~~~
jbob2000
Well no, because you paid tax when you paid your insurance.

But some people would argue that health benefits should be taxed. We debated
taxing employee benefits in Canada briefly. When an executive gets a $500k
salary and $500k in benefits, should they be taxed as earning 1mil?

~~~
eli_gottlieb
In the United States, even the most basic medical insurance is an "employee
benefit", even if in Canada it would be covered by the provincial system out
of taxes.

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valuearb
Don't tax you!

Don't tax me!

Tax that person behind the tree!

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PatientTrades
Everyone is for higher taxes until it affects them personally of course.
Berkeley is essentially an ivy league school and a guaranteed ticket to a
upper/middle class life. Asking their students to pay more and help the
government stay funded is too much to ask though.

~~~
krastanov
You are confusing college students and graduate students - their demographics
are very different. This article is about graduate students for whom it is not
uncommon to have done their college years in less expensive and less renowned
universities. Grad students have fairly low salaries for their level of
expertise (but there are other benefits to grad school).

Most liberals will be happy with a reasonable tax hike that is used to help
the country. This one is used to cut taxes for the rich - this is why people
are unhappy.

