Taxation On Education
On the laundry list of ways the Trump administration is thinking of making life more unpleasant and difficult, add counting scholarships as taxable income. Yup-- that college scholarship your child landed could come with a big tax bite.
Like many of the actions being taken and under consideration, there is no particular theory of action to explain why we're supposed to think this would be a good idea.
It's not clear yet what scholarships would count. Grants for students who show need? Those "scholarships" that involve the university reducing its sticker price? But the National Center for Education Statistics says that 64% of undergraduate students get some sort of grant or scholarship. That's a few hundred thousand shy of 10 million students who would get hit with a new tax bill, and in some cases that could be pretty hefty.
Common sense tells us that the students who most need the scholarships would be the ones getting the biggest tax bite.
What problem does this solve? The end result is sure to be fewer students attending higher education, which does seem to be a goal of some folks on the right. In terms of funding the government, it seems counter-productive; Uncle Sugar will get more money from a college-educated high-paying job than one more fry cook at Micky D's, but then, defunding the government also seems to be a goal on the right as well.
So maybe this does make sense for folks of a certain bent.
It does raise one question, however, because there is another type of "scholarship" out there-- vouchers for K-12 school, including the national voucher program that's still lurking out there. It's true that most voucher laws specify that the vouchers don't count as income, but we're ripping up the rules right and--well, right-- these days, so why not make school vouchers taxable as well?
It's not the Most Awful Thing in front of us at the moment, but it's awful enough to use the power of the federal government to raise the cost of college so that fewer people will pursue higher education. Stay tuned.
Ghoulish -- Imagine, you're dirt poor and get a scholarship for college, but you can't afford the tax bill on it?!
Thanks for exposing this, Peter - there's a lot to talk about (and it has only been a week) - but important to take note of all the ways Elon, his puppet Prez, and the oligarchs are extracting cash from the rest of us.