Before Thanksgiving, the House of Representatives passed H.R. 1, the Tax Cuts and Jobs Act, by a vote of 227 to 205. The vote largely fell along party lines, with no Democrats voting for the bill. The House bill has several provisions of concern to the American Society of Nephrology (ASN), including one that could devastate the pipeline of future scientists.
“The already strained kidney science and care workforce—particularly PhD scientists—would be decimated by eliminating the deduction for graduate education and by PAYGO1 cuts to student aid administration program, jeopardizing any hope of future discoveries to cure kidney diseases. Every effort should be taken to encourage, not discourage, the next generation of scientists from pursuing their studies,” wrote ASN President Eleanor D. Lederer, MD, FASN, in a November 22, 2017 memorandum to House and Senate leaders.
The 429-page House-passed tax plan would require students to report tuition-fee waivers as taxable income, moving the students into a higher tax bracket. Graduate students, who receive the lion’s share of tuition waivers, would be most affected. And 60% of the 145,000 students who get tuition reductions each year are working in STEM fields (science, technology, engineering, and mathematics).
See the example of a graduate student in atmosphere and sciences whose current annual income taxes equal $2,334 for a yearly stipend of $30,000 in exchange for her work in research and as a teaching assistant. The new tax plan would include the grant she receives to cover her $30,000 annual tuition as annual income. Her total “income” would then be considered $61,398 and she would owe $7,488 in annual income taxes. This would raise her taxes by $5,000, but she still must pay that out of the $30,000 she receives in wages, therefore ultimately lowering her take-home wage substantially. Find more on this example via NPR.
While the Senate bill does not currently contain the student provisions that the House bill does, the Senate bill does include a repeal of the individual mandate set forth by the Affordable Care Act (ACA). According to the Congressional Budget Office (CBO), repealing the individual mandate would reduce federal deficits by $338 billion over the 2018-2027 period and result in 13 million more individuals without insurance by 2027. The Senate is trying to finalize its version of a tax reform bill this week.
ASN has emailed all US members asking them to contact their members of Congress to express their opposition to these provisions.
 PAYGO, which stands for “pay-as-you-go,” is a budget rule requiring that (using current law as the baseline) tax cuts as well as increases in entitlement and other mandatory spending must be covered by tax increases or cuts in mandatory spending. It does not apply to discretionary spending (spending that is controlled through the appropriations process). http://www.taxpolicycenter.org/briefing-book/what-paygo