Between 1951 and 1963, individuals in the top federal tax bracket were subject to a marginal tax rate of over 90%.
While there is no chance that those in the top income bracket will suffer any such indignities in 2017, there is at least one group that will be subject to forking over about 90% of their total income to the government. And these are some of the poorest paid workers in the country — graduate students.
Graduate students often work half time as teaching or research assistants, and their salary is barely enough for a single person to scrape by on. However, as part of their deal, they are typically given tuition remission, which, at private institutions, is likely to be worth a good deal more than their actual salary.
The tuition remission is not currently deemed to be income according to the tax code. That may be about to change.
Let’s see how this affects a Ph.D. student at, say, the University of Chicago. Without tuition remission, the student pays $48,000 a year to the university. Say that the student earns $12,000 over eight months as a TA. If the tuition remission is considered income, that leads to a tax bill of $8,054. Toss in Illinois tax of $2,865, and the poor (literally) student gets to see about 10 cents of every dollar earned.
It’s obvious that a revenue-neutral tax bill that cuts the rates of the richest individuals is going to have to increase the rates of many people who aren’t among the richest in the country. If the bill is written cleverly enough, it can shift as much of that burden as possible to groups of people who tend to vote for Democrats. (That principle was put to work in Wisconsin recently when a special tax was imposed on Prius owners.)
This also seems to be part of a general attack on higher education in this country. Campuses started to be viewed in the 1960s as hot-beds of radicalism, and the “Make America Great Again” voter of 2016 is the anti-intellectual heir of the “America, Love It or Leave It” voter of 1968.