GOP tax bill would undercut MIT’s mission
The Tax Cuts and Jobs Act of 2017, versions of which have now passed both the House and Senate, would undercut MIT’s mission to advance science and technology in the 21st century. The signing of either version into law would only weaken MIT’s ability to help produce the science and tech innovations that fuel our country. And in doing so, it could, more broadly, hinder the very economic growth that the bill’s champions claim they are trying to create.
The bill includes two provisions regarding higher education: an increase in grad student taxes to exorbitant rates and a cut into the income from our endowment.
The House version of the Tax Cuts and Jobs Act includes a provision that would add tuition reductions to grad students’ taxable income, making grad school at MIT completely unaffordable. The provision could add more than $10,000 to the tax burden of grad students at MIT, taxing them as if they made more than double their current incomes and leaving them with very little money to pay for even basic expenses like rent and food. This, just by itself, is reprehensible.
But furthermore, to compensate for the measure, MIT would likely have to reduce the number of grad students it accepts, damaging the Institute’s capacity to do research and needlessly reducing the number of people who can receive an MIT education. MIT produces an extraordinary amount of beneficial — lifesaving — research, and the new taxes would damage its capability to do that.
Both the House and Senate versions of the bill include a provision that would tax university endowment income. Under this provision, MIT would be taxed tens of millions of dollars each year. The Institute would require hundreds of millions more capital in its endowment to make up for this loss. And the fact that this provision is present in both versions means it will likely make it into the final bill.
Endowment income is used for a wide array of programs that benefit both MIT students and the larger world. MIT’s increasing commitment to student financial aid is funded through endowment income. So are projects like MITx, which does pioneering work in online education.
With both of these provisions, the GOP tax bill puts MIT’s mission to “advance knowledge and educate students in science, technology, and other areas of scholarship that will best serve the nation and the world in the 21st century” in jeopardy. Science and tech innovation are often cited as drivers of economic growth. And those in favor of the tax bill want to create jobs and spur economic growth. But who creates jobs? Former MIT students, for one. Companies founded by MIT grads, combined, would form the world’s 10th largest economy. And numerous important discoveries have been made at MIT — among them, radar, the genetic basis for cancer, and RSA encryption.
In short, the Tax Cuts and Jobs Act constitutes an attack on higher education in this country, especially at universities like MIT. Not only is it personally ruinous to grad students, but it also cuts into funding for important programs and damages our nation’s ability to innovate. The entire MIT community should be incensed. We urge all of our readers to call their representatives immediately, regardless of political party, and speak out against this egregious bill.