Graduate Stipend Taxation

[E. Wijsman]

I enclose the information below giving details on the proposed
legislation.  Yes, it could have very negative effects on student support
for a number of reasons, including, as you point out, the cost of graduate
students compared to postdocs if stipends rise to offset the tax.  This is
actually already the case here at the Univ. of Washington, by the time we
pay tuition & student benefits out of our grants, if you also figure that
students are paid as 50% FTEs, and aren't as effective as postdocs for
most of their student tenure.  If the situation gets much worse, it will
really be hard to justify paying students as RAs.  This could also affect
the Universities more generally in that there is a reasonable amount of
teaching etc. done by TAs.  Either the faculty will be even more loaded
than they now are (with consequent declines in quality of teaching), or it
will be necessary to raise tuitions to cover the added costs, or the
states (for public institutions) will have to kick in more money, or we
won't get good graduate students, and again, quality of teaching &
research will decline. 



Legislative Update


June 30, 1997


I Background


The Congress will recess from June 27 until July 8 and return to complete 
the FY'98 budget reconciliation bills (OBRA'98) in conference. During 
this time please contact your Representatives concerning the issues 
below.



HOUSE TAX BILL CREATES NEW AND MAJOR TAX LIABILITIES FOR GRADUATE 
STUDENTS AND FACULTY:



The recent House tax bill would create tax liability for two previously 
tax-exempt provisions: tuition waivers given to graduate research and 
teaching fellows, and the faculty retirement trust fund of TIAA-CREF. 



The House tax bill would eliminate Section 117d of the Internal Revenue 
code.  Section 117d currently protects from taxation the tuition waivers 
often granted by universities to graduate teaching and research 
assistants in return for teaching courses at these universities. The tax 
burden of many graduate students would increase by thousands of dollars,  
which would force many students to discontinue their education. It also 
might force graduate programs to compensate students at a higher rate 
which could in turn be deducted from already strained research resources.



Pension assets managed by TIAA-CREF currently are not taxed. Most college 
and university faculty have their pensions invested in TIAA-CREF. The 
House tax bill would revoke the tax-exempt status that TIAA-CREF has held 
since its founding in 1918.  This legislation could have serious adverse 
effects on TIAA-CREF participants.



Neither the tuition waiver provision nor the TIAA-CREF provision are in 
the Senate version of the tax bill and could be defeated in Conference 
when legislators return after recess. It is important to contact members 
of the House Ways and Means Committee and the Senate Finance Committee as 
well as your own Member of Congress to urge them to oppose these measures 
in the House version of the bill when it goes to Conference (see list of 
key Senate Finance Committee and House Ways and Means Committee members 
below).



602 b ALLOCATIONS TO APPROPRIATIONS SUBCOMMITTEES:



The House Appropriations Subcommittee on Labor, HHS & Education, Chaired 
by Rep. John Porter (R-IL), was scheduled to markup funding for the 
National Institutes of Health on July 8, but the markup has been 
postponed until July 15. The Senate Labor, HHS Subcommittee is scheduled 
to mark up the week of July 22.



Both the Labor, HHS & Ed. Subcommittee (which funds the NIH) and the VA, 
HUD & Related Agencies Subcommittee (which funds the NSF) received 
allocations that will allow them to meet most of the Administration's 
funding priorities, and to adequately fund the NIH and NSF, respectively. 




Under the House allocation process, the L/HHS & Ed Subcommittee received 
$79.59 billion for discretionary spending, an increase of about $5.2 
billion or 7% over 1997. We expect Rep. Porter to comply with the demands 
for new education and training funds, while funding his own priority, the 
NIH, at around a 6% increase. On June 19 the Senate made its allocations 
to the 13 subcommittees including $79.34 billion in discretionary 
spending, an increase of 6.6% ($246 million less than the House) to the 
L-HHS Subcommittee. We believe the Senate expects to fund the NIH under 
this allocation at a similar increase of between 5% to 7%.    



VA, HUD & INDEPENDENT AGENCY MARKUP OF NSF:



The House Appropriations Subcommittee on VA, HUD conducted its markup of 
FY'98 funds for the National Science Foundation (NSF). The House Science 
Committee had authorized the NSF for $3.505 billion, a 7% FY'98 increase 
overall in funding. House appropriators came close to this goal with 
nearly a 7% funding increase for the NSF at $3.480 billion. Last year the 
NSF overall was funded at $3.2 billion.



STEARNS' AMENDMENT & SPECTER/HARKIN AMENDMENT ON NATIONAL FUND FOR HEALTH 
RESEARCH:



Thanks to everyone who supported the Stearns (R-FL) Amendment to the 
Commerce Committee's Medicare provisions, which are part of the FY'98 
budget reconciliation bill (OBRA'98). The Amendment would have 
transferred 1% of the $115 billion of Medicare savings mandated by the 
budget agreement to a national fund for health research to be distributed 
by the NIH. The Amendment was withdrawn on a point of order by Rep. 
Waxman (D-CA) in committee. Sterns then filed the amendment with the 
Rules Committee, but it was not taken up by the Committee.



Senators Specter & Harkin also attempted to offer the National Fund for 
Health Research as a Senate Floor amendment to the Medicare provisions of 
the budget reconciliation bill. The amendment also failed on a point of 
order but such efforts make an important contribution to keeping 
biomedical research before the Congress.



II. Action Needed



Contact your Representative on each of these matters during the July 4 
recess, an ideal opportunity to reach them at home. Urge your Member to:



- oppose efforts to tax graduate student tuition waivers and faculty 
retirement trust funds within the revenue reconciliation of 1997.



- support Chairman Porter's efforts to adequately fund the NIH. 



- support the effort to increase funding for the NSF by nearly 7%.







For further information or assistance, contact Tim Leshan at 
tleshan at ascb.org or Pete

Farnham at pfarnham at asbmb.faseb.org.



Finance Committee Members to Contact Regarding Tax Issues



William Roth (D-DE)			John Chafee (R-RI)

202-224-2441 - 202-228-0354 (fax)	 202-224-2921 - No fax



Alfonse D'Amato (R-NY)		Daniel Patrick Moynihan (D-NY)

202-224-6542 - 202-224-5871(fax)		202-224-4451 - 202-228-0406



Jim Jeffords (R-VT)			Charles Grassley (R-IW)            

202-224-5141 - No Fax		202-224-3744 - 202-224-6020 (fax)



Key House Ways and Means Committee Members



Bill Archer (R-TX)			Charles Rangel (D-NY)

202-225-2571 - 202-225-4381		202-225-4365 - 202-225-0816



Clay Shaw (R-FL)			Pete Stark (D-CA)

202-225-3026 - 202-225-8398		202-225-5065 - 202-226-3805


************************************************************************
Ellen M. Wijsman			Express mail address:
Div. of Medical Genetics and		
Dept. Biostatistics 			1914 N 34th St., suite 209
BOX 357720, University of Washington 	Seattle, WA  98103
Seattle, WA   98195-7720		(Note:  do not mention the	
phone:  (206) 543-8987			 Univ. of Washington !!)
fax:    (206) 616-1973			email:  wijsman at u.washington.edu
*************************************************************************



On 3 Jul 1997, Dr. Paula J. Schlax wrote:

> Congress seems intent on making graduate school a little more difficult
> for a lot of students? According to a memo here, (I haven't paid as much
> attention as I should have) tuition may start to be taxed- since a lot
> of students have tuition waived, this could be a huge change in their
> taxable incomes and their net take home pay. 
> 
> Does anyone have more info on this- has it been voted on, who's
> sponsoring the legislation etc? It seems like graduate stipends would
> need to increase significantly to counteract this- and for a lot of PIs,
> postdocs would end up being cheaper than grad students. Any opinions?
> (Don't flame me- I know I'm not informed!)
> 
> Paula Schlax
> JHU Postdoc
> 
>