Tax Reform and You//Valerie Ryan

Photo from: https://www.flickr.com/photos/trialsanderrors/4327173385 

If you’re like me, when you hear the words “tax reform” you sort of shrug and attempt to slowly back away from whoever uttered the phrase. I don’t know much about the tax code and I don’t want to be pulled into a boring conversation to which I can’t contribute anything meaningful. Until this month, all I knew about taxes is that, like many graduate students, I qualify for a refund every year: my stipend is large enough to live on, but small enough to put me in the second lowest tax bracket.

I started caring about taxes two weeks ago when House Republicans proposed taxing the tuition waivers many of us rely on to fund our educations. As an out-of-state student with no chance of qualifying for in-state tuition (at my school you have to own a home or business in the state or marry a state resident to qualify) my taxable income would more than double, resulting in my small stipend shrinking so much I won’t be able to afford rent and groceries.

The “good” news is that the Senate version of the tax plan does not include taxing tuition waivers. The bad news is that the House and Senate need to come to an agreement and they could decide at any time that our tuitions should be taxable income (1). The resulting increases in taxes discourages those of us who are not independently wealthy from pursuing an advanced degree in the United States (2).

But if we look past the sections of the tax plans that affect graduate students, we see a much bigger problem: the rich benefit the most from the tax reforms and the poor benefit the least. According to the Senate version of the proposal, big corporations receive an enormous tax cut, which adds to the wealth of those in the highest corporate positions and does very little to grow the economy. The wealthy would receive a 1% deduction in taxes from the current rate, they will become eligible for the child tax credit, they can deduct interest paid on mortgages worth up to one million dollars, and they benefit from an increase in the threshold of tax free inheritance (3).

The Senate plan won’t take away any of the tax credits already in place for those who don’t make enough money to pay federal income tax, but those in the lowest tax bracket won’t receive any benefits from the plan, either. The proposal raises the United States’ debt, which will lead to funding cuts in programs that benefit those in the lowest economic brackets (4, 5). Republicans included cuts to programs such as Medicare, Medicaid, and the Supplemental Nutrition Assistance Program (SNAP) in their budget, which passed the House and Senate last month but will need to be approved by Congress (6, 7). This tax plan attempts to use taxes generated from the middle and working classes to cover tax cuts given to the wealthiest Americans by targeting education and the poor.

As feminists, graduate students, and psychologists we need to use our privilege to advocate for those with less privilege. We’ve seen the research – we know that living in poverty adversely affects mental and physical health (8). We know that those living in poverty are disproportionately disadvantaged groups, such as children and people of color (9). We can’t start caring about these issues only when our stipends are threatened.

We need to contact our representatives. We need to educate others about what’s happening. We need to protest unfair bills and policies. We need to conduct research that doesn’t blame the victims of economic hardship. And we need to pressure our professional organizations to end institutional distancing from the poor (10). The tax system may indeed be broken, but stealing from the poor and giving to the rich is not the way to fix it.

~ Written by Valerie Ryan

References

1. Kreighbaum, A. (2017, November 10). Higher ed in the Senate tax bill. Retrieved from: https://www.insidehighered.com/news/2017/11/10/senate-tax-bill-has-some-not-all-provisions-alarmed-higher-education-leaders-house
2. Kirby, J. (2017, November 7). The GOP bill could be a disaster for PhD students. Retrieved from: https://www.vox.com/policy-and-politics/2017/11/7/16612288/gop-tax-bill-graduate-students
3. Rappeport, A. (2017, November 9). House and Senate have big differences to bridge on tax plans. Retrieved from: https://www.nytimes.com/2017/11/09/us/politics/tax-plan-house-senate-differences.html
4. Golshan, T. (2017, November 2). 2 winners and 3 losers from the Republican tax bill. Retrieved from: https://www.vox.com/policy-and-politics/2017/11/2/16595980/winners-losers-house-republican-tax-bill
5. Long, H. (2017, November 10). Winners and losers in the Senate GOP tax plan. Retrieved from: https://www.washingtonpost.com/news/wonk/wp/2017/11/10/winners-and-losers-in-the-senate-gop-tax-plan/
6. Bacon, P. (2017, October 26). What the GOP budget taught us about the party’s tax reform plans. Retrieved from: https://fivethirtyeight.com/features/what-the-gop-budget-taught-us-about-the-partys-tax-reform-plans/
7. Shapiro, I., Kogan, R., & Cho, C. (2017, September 5). House GOP budget cuts programs aiding low- and moderate-income people by $2.9 trillion over decade. Retrieved from:  https://www.cbpp.org/research/federal-budget/house-gop-budget-cuts-programs-aiding-low-and-moderate-income-people-by-29
8. Evans, G. W. (2004). The environment of childhood poverty. American Psychologist, 59(2), 77 – 92.
9. Dreyer, B. P. (2013). To create a better world for children and families: The case for ending childhood poverty. Academic Pediatrics, 13, 83 – 90.
10. Lott, B. (2002). Cognitive and behavioral distancing from the poor. American Psychologist, 57(2), 100 – 110.