REFORMING THE TAXATION OF GRADUATE TUITION REMISSION

WHEREAS, it has long been recognized that graduate education, in addition to its purely intellectual value, increases individuals’ lifetime earning potential and is a hugely powerful economic stimulus; and

WHEREAS, in recent decades, for more and more employees, a graduate degree has come to replace the bachelor’s as the essential credential for entering into and remaining competitive in the workplace, for moving on to more highly compensated employment, and for changing careers to different fields of work; and

WHEREAS, graduate school is often very expensive, and its price is ever increasing well beyond the rate of inflation, which saddles many who undertake it with years of crushing debt and dissuades many others from even attempting it; and

WHEREAS, many institutes of higher education offer tuition remission to their employees; and

WHEREAS, many members of the American Federation of Teachers have sought employment at institutes of higher education to pursue a graduate education with the help of tuition remission benefits; and

WHEREAS, since 1990, the Internal Revenue Service has taxed as imputed income the value of graduate tuition remission above a de minimis amount—currently $5,250—but has not so taxed the value of undergraduate tuition remission; and

WHEREAS, even at relatively inexpensive institutions, the taxation of graduate tuition remission valued above $5,250 can significantly decrease employees’ paychecks, and at more expensive institutions can reduce them to the level or bare subsistence, or even below, making a graduate education that much more difficult to obtain for employees who cannot take on debt or dip into their income to cover taxes levied against the value as set by the going rate of tuition; and

WHEREAS, this is the very definition of “penny wise, pound foolish,” sacrificing future increased economic productivity—and the increased tax revenue that comes with it—for paltry present gains; and

WHEREAS, the Union of Clerical, Administrative and Technical Staff at NYU, Local 3882—the AFT/New York State United Teachers affiliate at New York University—submitted a version of this resolution to the 2015 NYSUT Representative Assembly, held in Buffalo, N.Y., where it was adopted unanimously by more than 2,000 delegates:

RESOLVED, that the American Federation of Teachers affirms the value of graduate education; and

RESOLVED, that the AFT commits itself to fighting the problem of ever-increasing tuition in higher education—both undergraduate and graduate—and to discovering and working toward the implementation of appropriate solutions; and

RESOLVED, that the AFT will work together with the National Education Association and the AFL-CIO to effect the necessary changes in tax law and regulation to lift the $5,250 cap on the graduate tuition remission benefit exclusion, and make the full value of graduate tuition remission benefits excludable from gross income for income tax purposes, as the full value of undergraduate tuition remission benefits is currently.