Critics fail to analyze grad tax question
Since the Massachusetts Legislature changed the tax status of student finances, there have been a number of letters and articles in The Tech about the issue ["Student seeks grad tax repeal," March 3]. It is interesting that although most of the letters claim the law is unfair, few seriously analyze the issue.
It is usually asserted that taxing graduate students' tuition and stipend is unfair, and so the tax change should be repealed. One MIT student has authored a filed bill in the regard. However, it is not clear that repeal will eliminate "unfairness" in graduate student taxation, nor certain that repeal is good public policy.
If a student works part-time outside of MIT at a job while going to school, the student pays taxes on the money used for both tuition and expenses. (Federal law does allow for deduction of tuition and other school expenses under certain circumstances that don't apply for most students; school expenses are not deductible under Massachusetts law.) Under the new state law, if a student works at MIT on an assistantship, then only the stipend is taxed, not the tuition. With the proposed repeal, neither tuition or stipend would be taxable. Repeal does not eliminate unfairness without including some other changes such as making educational expenses deductible. Repeal exacerbates the unfairness between the tax status of inside-school income versus outside-school income. Is that fair?
I know most MIT graduate students receive funding from inside MIT, so my example of working outside reflects a minority of MIT graduate students. However, the percentage of graduate students who work outside the university to pay for school is probably much greater at many schools that have significantly less funding than MIT. Also, one cannot assume that work at a university is of more educational value than work outside, and somehow deserving of favorable tax status. That is a value judgment that is surely subject to question.
Regardless of the inside income or outside income issue, there is a larger and more significant issue of government policy and spending. It is easy to make a case that government should support educational opportunities and, therefore, tax-free status of graduate income is a good supportive policy. Dropping a few names of big high tech companies founded by MIT graduates helps in this regard. However, making the case that restoring tax-free status is a better policy than spending more on other government educational programs, or on any other government programs for that matter, is a much harder task.
Although the money raised by the tax change may be very small in comparison to the total state budget, repeal must be weighed against the need for funding of other worthwhile government programs, and especially against other methods of supporting graduate education. It is conceivable that maybe this money is better spent on direct grants to universities. Or maybe the state colleges should receive the money to improve the status of public higher education. I don't know what the best policy is; I do know I haven't read anything in The Tech that convinces me that repeal is unequivocally justified.
Although I believe that changing graduate student tax status retroactively and without comment from the educational community was definitely unfair, I'm not convinced of the unfairness of taxing graduate student tuitions or stipends. My education at another place and at MIT has taught me to try to think about issues before making assumptions, even if it hurts my wallet. Maybe that kind of education is worthy of government support.
Richard Macchi G->