Tax Reform, Tuition Waivers, and Economic Mobility

By Michael Austin and Sam Brunson

“Before any great things are accomplished, a memorable change must be made in the system of education and knowledge must become so general as to raise the lower ranks of society nearer to the higher. The education of a nation instead of being confined to a few schools and universities for the instruction of the few, must become the national care and expense for the formation of the many.”—John Adams

There has been much ado recently (including on Surly) about the fact that the current version of tax reform before the House of Representatives repeals Section 117(d) of the Internal Revenue Code. As a general rule, you have to pay taxes on anything of value your employer gives you. Section 117(d) is an exception to this rule; among other things, it exempts graduate students from paying taxes on tuition waivers. With that subsection excised from the Code, graduate students would be taxed on tuition waivers that they receive (usually in addition to a very modest stipend) when they worked as teaching and research assistants as part of their program.

If this repeal were to become law, students without personal or family resources would have a very difficult time pursuing graduate education. But while the plight of graduate students has gotten huge amounts of attention, it is not the worst thing about the repeal of Section 117(d). Continue reading “Tax Reform, Tuition Waivers, and Economic Mobility” →

The GOP Tax Plan and Divorce

By Sam Brunson

Well, it has finally arrived. This morning, the House GOP gave us a 426-page bill (and an 82-page section-by-section summary).

There’s a lot going on here, and it’s hard to say how much attention we should pay. After all, now lobbyists, Democrats, and interest groups can read the bill and start arguing against (or for) it. Moreover, this is just the House; the Senate still has to release its bill,[fn1] which may differ substantially. And the fact that we have a bill doesn’t in any way indicate that (a) it will be enacted, or (b) the enacted law will look anything like the bill.

Still, we have a bill! Continue reading “The GOP Tax Plan and Divorce” →

House Staffer is a Tax Protester?

By: David J. Herzig

Politico reported yesterday that “Isaac Lanier Avant, chief of staff to Rep. Bennie Thompson (D-Miss.) and Democratic staff director for the Homeland Security Committee, allegedly did not file returns for the 2009 to 2013 tax years.”

According to the Department of Justice Press Release, Mr. Avant has been a staff member of the U.S. House of Representatives since 2002. In 2005, he filed a form with “his employer that falsely claimed he was exempt from federal income taxes. Avant did not have any federal tax withheld from his paycheck until the Internal Revenue Service (IRS) mandated that his employer begin withholding in January 2013.”

This seemingly innocent story might get more torrid. For starters, missing from the press release by Justice is that, as Richard Rubin pointed out to me, Mr. Avant’s employer was Congress. Do you hear the can of worms opening? I mean, who at payroll in Congress is green-lighting the stopping of withholding? What did his form look like? Did he make up an official and name it – W-NONE? How many other staffer’s did this? How did he never get audited? According the the press release and the story, Mr. Avant did not file tax returns for 5 years; I guess a matching program would not catch anything since he had no withholding. But, one would think Congress would at least ensure that every employee has filed a tax return.

Not sure which awesome tax protester argument he is going with. Personally, I hope it is that he is a sovereign citizen. It would be great if the Democratic staff director of Homeland Security thought the U.S. laws did not apply to him. I guess we will have to wait for the actual complaint. For those interested, the IRS has outlined numerous frivolous tax arguments.

[UPDATE 8/24/16 at 8:41 pm: It appears that a claim of Sovereign Citizen might really be in play. According to the Panolian, a local Batesville, Mississippi newspaper, Mr. Avant is the son of Vernice Black Avant and the late Robert Allen Avant Sr. In 2011, according to the Panolian, Mr. Avant’s mother, who is also a court clerk, filed an “11-page ‘Affidavit of Truth'” “declaring that she is a “freeborn Sovereign” are meant to distinguish her as an individual, distinct from a corporation.” “The affidavit cites participation in the use of bank accounts, Social Security numbers, driver’s licenses, vehicle license plates and tax returns as ‘under duress.'”]