Pro-tax university professors find a tax that they don’t like

A lot of my Facebook friends are university professors. As such they get, as part of their compensation, free tuition for their children (or, oftentimes, partial payment for tuition if they send their kids to other colleges). Some of them have graduate students, who get their fictitious tuition paid when on research or teaching assistantships.

All of these folks publicly supported Hillary Clinton prior to the election, denounced the Trumpenfuhrer’s hints about shrinking the government’s role in our society, and generally advocate for higher tax rates so as to enable the government to fulfill all of our collective dreams.

How are they reacting to the latest proposed tax law changes? With desperate lobbying efforts to preserve their own tax exemptions. Examples:

To my California friends and family, especially those who have children to educate: Republican representatives in these CA districts near you have BIG influence over *which version* of the tax bill—including whether it taxes things like tuition remission, etc.—eventually gets approved. It’s not an exaggeration to say the future of American higher education is at stake.

A crucial decision remains to be made between the House and Senate versions of the GOP tax bill. So here’s a plea to everyone who cares about the future of American universities: not only must we CALL OUR REPS, we must urge our friends and family to do so as well! I’m calling not just my own reps and senators but others’ too, identifying myself as a professor and trying to convey my sense of urgency about this bill.

[mass email to faculty at University of Chicago] Doubtless all of you are thinking about the potential effects of the Republican tax bill, which appears bent on directly attacking higher and lower education in the United States. …  The bill passed by the Senate *does not* include the grad student tuition waiver tax proposed by the House bill. …

For students like Mollie Marr, pursuing her M.D. and her Ph.D. in behavioral neuroscience in the OHSU School of Medicine, losing the tax waiver could mean dropping out of OHSU. Paying the estimated tax on top of her non-deferrable undergraduate student loans would leave her about $ 500 a month to live on. … students, staff and faculty to share their personal stories and perspectives about the impact of losing this tax waiver … Call and email your U.S. representatives and senators.  [official OHSU news release]

If universities actually are delivering something of value to professors’ children via tuition waivers, shouldn’t these good folks want to pay tax on that value? A core principle of U.S. income tax is that you pay tax on the fair market value of stuff that you receive in exchange for work. Also, if universities are delivering something of value to graduate students in exchange for work, why should a Walmart cashier have to work extra hours to make up for the tax not collected? (see Ugliest part of the Republican tax plan: What if universities were forced to calculate the value of a graduate education? for an exploration of what the imputed value of this tuition waiver should be, though)

These same folks have spent years on Facebook arguing for the government to collect more in taxes. Now they’ve found a tax that they don’t like!

Related:

Philip Greenspun’s Weblog

Columbia University develops a nuanced position on unionization

“Columbia Challenges Vote by Graduate Students to Unionize” (nytimes) is about how the faculty and administration at Columbia aren’t sure that a unionized grad student workforce is right for them.

[“Faculty Voter Registration in Economics, History, Journalism, Law, and Psychology” found that registered Democrats outnumbered Republicans at Columbia by 30:1 across a range of five departments.]

Philip Greenspun’s Weblog

Supreme Court orders full employment for university administrators

The Supreme Court’s ruling in Fisher v. University of Texas contains some inspiration for those who want to be university bureaucrats:

That does not diminish, however, the University’s continuing
obligation to satisfy the burden of strict scrutiny
in light of changing circumstances. The University engages
in periodic reassessment of the constitutionality, and
efficacy, of its [race-based] admissions program. See Supp. App. 32a;
App. 448a. Going forward, that assessment must be undertaken
in light of the experience the school has accumulated
and the data it has gathered since the adoption of its
admissions plan.
As the University examines this data, it should remain
mindful that diversity takes many forms. Formalistic
racial classifications may sometimes fail to capture diversity
in all of its dimensions and, when used in a divisive
manner, could undermine the educational benefits the

University values. Through regular evaluation of data
and consideration of student experience, the University
must tailor its approach in light of changing circumstances,
ensuring that race plays no greater role than is necessary
to meet its compelling interest. The University’s
examination of the data it has acquired in the years since
petitioner’s application, for these reasons, must proceed
with full respect for the constraints imposed by the Equal
Protection Clause. The type of data collected, and the
manner in which it is considered, will have a significant
bearing on how the University must shape its admissions
policy to satisfy strict scrutiny in the years to come. 

Translation: Decades of job security for academic administrators who figure out how to sort applicants by skin color. Certainly better than being an adjunct…

Related:

Philip Greenspun’s Weblog

University of Massachusetts: Our tax dollars at work

We get a lot of press coverage about college students drinking and having sex with each other. We also get books such as Missoula. But what is it like on campus when students are learning and discussing ideas? Here’s a video of University of Massachusetts students that sheds some light on what we’re paying for.

[the “Rationale” chapter of Real World Divorce contains some material related to the “third wave feminism” topic that pops up in the video:

Legislators and attorneys told us that women’s groups and people identifying themselves as “feminists” were proponents of laws favoring the award of sole custody of children to mothers and more profitable child support guidelines. Is that a recognizably feminist goal? For a woman to be at home with children living off a man’s income? Here’s how one attorney summarized 50 years of feminist progress: “In the 1960s a father might tell a daughter ‘Get pregnant with a rich guy and then marry him’ while in the 2010s a mother might tell a daughter ‘Get pregnant with a rich guy and then collect child support.’” Why is that superior from the perspective of feminism? A professor of English at Harvard said “Because the woman collecting child support is not subject to the power and control of the man.”

We interviewed Janice Fiamengo, a literature professor at the University of Ottawa and a scholar of modern feminism, about the apparent contradiction of feminists promoting stay-at-home motherhood. “It is a contradiction if you define feminism as being about equality and women’s autonomy,” she responded. “But feminism today can be instead about women having power and getting state support.”

Why isn’t there a rift in the sisterhood, with women who work full-time expressing resentment that women who met dermatologists in bars are relaxing at home with 2-4X the income? “[Child support profiteering] is kind of an underground economy. Most people just don’t know what is possible. We hear a lot from the media about deadbeat dads who don’t pay any child support and the poverty of single mothers. The media doesn’t cover women who are profiting from the system. The average person assumes that equal shared parenting is the norm and that, in cases where a man is ordered to pay child support, it will be a reasonable amount.”

How did we get to the divorce, custody, and child support system that prevails in Canada and in most U.S. states? “This is because of the amazing success of feminism,” answered Professor Fiamengo. “The movement has totally changed the sexual mores of society but held onto the basic perceptions that had always advantaged women, e.g., that a woman was purified through motherhood. Feminism did not throw out the foundations of the old order that it pretended to reject.”

What’s the practical implication of these perceptions? How do they influence the legislators writing the statutes and judges hearing cases? “People still think of the mother as the best parent, the essential parent,” said Professor Fiamengo. “And that a woman would never lie to obtain the financial benefits offered by the system. A woman would never try to profit from her child. We think of mothers as moral beings who care only about the welfare of their children. There’s a presumption that mothers don’t operate out of greed or self-interest despite the fact that all humans operate out of self-interest.”

But couldn’t it actually be true that women are purified by motherhood? That they wouldn’t lie to collect a few million dollars tax-free plus enjoy the company of their children? “Even pretty decent people would be tempted by the rewards handed out,” said Professor Fiamengo. “It is easy to justify if you no longer like the guy you had been with.”

“Will Single Women Transform America?” is an Atlantic magazine video that confirms this perspective. The women getting government handouts and/or court-ordered child support for the single-mother lifestyle that they have chosen are characterized as “independent, unmarried women.”]

 

Philip Greenspun’s Weblog

Should the University of California abolish the Chancellor job?

“MIT built its own Ellen Pao before the Ivy League did: Gretchen Kalonji” covers a UC chancellor who arranged a sinecure for her lover and ran up $ 600,000 in renovation bills before it all ended in suicide and litigation.

Today’s nytimes has “University of California, Davis, Chancellor Is Removed From Post” about Linda Katehi and “questions about the campus’s employment and compensation of some of the chancellor’s immediate family members.”

Do they really need to have someone in this position if it is so prone to nepotism?

Philip Greenspun’s Weblog

What kind of university would you start if PhDs were common as dirt?

Christine Ortiz, an MIT materials science professor and dean, is starting a new university. This article makes it sound as though nearly all of the money will be spent on real estate and administration because there will be a physical campus in the Boston area. What about the teachers? Here’s a great exchange:

Q. Prestige is a very important factor in higher education. Do you worry that you’ll have trouble attracting top scholars and academics because it’s so new and untested?

A. There are so many talented doctoral students and postdocs that are unable to secure jobs in academia. I can name like 100 right now … but there are not just enough jobs at prestigious university. So I know there is a plethora and a pool out there of potential faculty and faculty who would want to be part of a really innovative model and want to be part of a transdisciplinary community. And I’ve gotten hundreds of responses from potential students already saying, When can I apply?

Q. What about tenure? Will your university have that?

A. My thinking at this point is very much moving away from tenure. I’m going to really investigate alternative models, and really there are a number of alternative models that are being used. At this point, tenure seems like a great mismatch with the system that we’re thinking about.

In other words, all adjuncts all the time. I am going to follow this start-up with interest!

[Separately, Professor Ortiz may not realize what a world of hurt she can get into with the state government:

Q. Will it have the word university in it?

A. Unclear at this time.

About 16 years ago we started “ArsDigita University” as a free one-year post-baccalaureate non-degree program in CS. The Commonwealth of Massachusetts assigned a state worker essentially full-time to the job of threatening us with litigation if we did not change the name. It seems that one cannot be a “university” if one does not issue graduate degrees. We responded with “Since we’re not charging money for this we can call it whatever we want, especially give that the first sentence of our home page says that there is no degree at all.” The battle went on for at least 1.5 years before the Commonwealth lost interest in us.]

Philip Greenspun’s Weblog

2 trading lessons from our lecture at Pace University

In our SMBU Daily Video, Mike Bellafiore visited Pace University for a guest lecture.  It was a great event and standing room only turnout.  There are two lesson to learn from our visit, which we share in this video.

It is not true that all great traders must have conviction with their trade ideas.
It is not true that controlling your emotions is always best as a trader.

In this video, we explain why.

We hope you find this video helpful to your trading.

– SMBU Team

* no relevant positions

 

Read more […]
SMB Capital – Trading Education

Scott Walker and the University of Wisconsin

Scott Walker is in the news for wanting to cut the budget of the University of Wisconsin by 2.5 percent and/or tweak the mission statement to include vocational readiness (nytimes).

A vocational mission for the university doesn’t make a lot of sense in a state where child support is typically a flat 17 percent of the defendant’s pre-tax income, without any limit. A person who wants to have the spending power of, e.g., a veterinarian, doesn’t need to go to the University of Wisconsin’s vet school. He or she can simply have sex with three veterinarians (married or single, drunk or sober), obtain custody of the resulting children, and then collect roughly one third of each vet’s after-tax income (17 percent pre-tax being approximately 33 percent after tax). Wisconsonians can go to college and work to do things that they love and find personally rewarding; if they want cash they can get it more straightforwardly and securely from having children.

What about the cuts? Is 2.5 percent really that bad? Since universities don’t strive for operating efficiency and since they are big employers, subject to an ever-increasing array of costs, absent structural changes the university probably needs at least 4 percent more each year just to stay even. So a 2.5 percent cut is likely a 6.5 percent cut compared to what the university had been planning. Could the university absorb these cuts and still operate in the traditional “stick speaking human in the front of a classroom full of listening humans” manner? Sure. In the book Higher Education? the authors back out the numbers and find that colleges are paying professors between $ 242 and $ 820 per teaching/office hour. You can’t spit in the street in Madison without hitting a PhD, many of whom would be delighted to work as adjuncts for a lot less than that. The simplest ways for the university to respond to budget cuts would be (1) eliminate tenure so that it doesn’t have to pay a lot of professors that it doesn’t actually want, and (2) offer to pay anyone qualified a straight $ 50/hour to teach classes. They could then look at cutting back on some of the administrative positions that they’ve added over the past few decades.

Philip Greenspun’s Weblog

Tuition to faculty salary ratio at New York University

I got hold of some aggregate numbers for a typical private American university. Last year New York University (NYU) collected $ 1.395 billion in tuition and fees from students (this is actual money received net of discounts (“financial aid”), i.e., not the aspirational rates that they publish). How much was spent on education? Faculty salaries were $ 395 million and an additional $ 82 million was paid to adjuncts.

A little arithmetic shows that the students paid 2.92 times what the university paid out to teachers.

Related: posting regarding the ratio back in Calvin Coolidge’s college days.

Philip Greenspun’s Weblog