When the country’s best creative minds choose paths that don’t lead to their full potential for fear of financial ruin, the damage is felt throughout the society.
Perhaps the most misguided part of the House Republican tax plan, which was passed on Thursday, is its raising rates on graduate students — by 300 to 400 percent, according to economics PhD students at the Massachusetts Institute of Technology, who are thus affected.
In exchange for teaching courses or working with professors on research projects, universities typically grant modest stipends to doctorate students. These almost never exceed $30,000 a year and often fall lower, depending on the teaching or research load. As part of the deal, doctorate students get free tuition.
That tuition price tag of, say, MIT is roughly $50,000. Under the tax plan passed by House Republicans, these students would have to report doctorate students’ tuition forgiveness as income. So students barely scraping by on $30,000 a year stipends will have to pay taxes as if they made $60,000-$80,000.
At a time when demand for well-educated workers has never been higher, the government should not be making it harder than it already is for Americans to seek advanced degrees. Many of these doctoral students will have already been struggling to pay off tens of thousands of dollars of debt from their undergraduate degrees.
The 20s are the decade of life when young people should be the most free to take economic risks. When the country’s best creative minds — whether entrepreneurial, artistic, scientific, or some combination thereof — choose paths that don’t lead to their full potential for fear of financial ruin, the damage is felt throughout the society. In economics, the relationship between the average level of education of a nation’s workforce and its GDP is obvious. Much less clearly correlated to a nation’s prosperity is how little it taxes top earners.
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