Perry Gershon, a congressional Democratic candidate running in New York’s 1st district against Republican Congressman Lee Zeldin, visited Stony Brook University on Wednesday, Nov. 29 to discuss President Donald Trump’s tax plan, and the impact it could have on Stony Brook students.
The United States Senate passed the Republican-led Tax Cuts and Jobs Act on Saturday, Dec. 2 by a vote of 51-49. In order to be signed into law, the House of Representatives must vote to pass the Senate bill as is, or call a conference committee in which members of the two chambers work together to create and pass a unified version of the bill.
The Tax Cuts and Jobs Act would make the United States a territorial system of taxation, in which businesses would only be taxed on the income they make within the country’s borders. The plan would make major changes to individual income and corporate tax, particularly lowering the corporate tax rate by 20 percent permanently. The tax bill will also reform health-care, state budgets for schools and roads, and allow for more oil drilling in Alaska.
Republicans have said that this tax bill will lower taxes for the middle class and help stimulate the economy by cutting corporate taxes. Democrats, on the other hand, argue that the bill will only benefit the nation’s wealthiest citizens, and that the middle class will end up paying higher taxes in the long run.
During his visit, Gershon repeatedly stated that the bill is not a tax cut for the middle class. “If you want a middle class tax cut, let’s have a middle class tax cut,” he said. “But don’t pretend that a corporate giveaway is a middle class tax cut.”
One highly controversial aspect of the bill is the effect it will have on state, local and property tax deductions. Currently, Americans are free to deduct all of these items from their federal taxes. Originally, the bill was set to repeal this process altogether, but the version that ultimately passed allows for itemized reduction of property taxes up to $10,000.
To Gershon, this is an issue that could have a devastating impact on students in particular. “The state is going to need to reduce state taxes in order to compensate,” he said. “When the state reduces taxes, then they have to cut services to go along with those tax reductions. So, student assistance is one of the programs that is going to be at risk.”
The reform would also impact graduate students who receive tuition waivers from their university for being research and teaching assistants. Currently, the tuition waivers are considered tax-exempt income, meaning students aren’t taxed for the money they receive. If the bill becomes law, this practice will be reversed. Tuition waivers tend to amount to around $25,000 per year. For many students, this money is their primary source of income.
“If this new tax bill goes out for instance, that’s a 400 percent increase on the taxability on a Ph.D. stipend,” Meelod Wafajow, a junior political science major, said. “I wouldn’t be able to afford that.” Wafajow said that coupled with the high cost of living on Long Island, out-of-pocket educational costs are dangerous.
According to the New York state 2018 fiscal year budget, taxes for the middle class are cut significantly and the top one percent is taxed, resulting in funding of the Excelsior Scholarship and other such programs in the state, including investing over $800 million in prekindergarten. Due to the tax bill, these programs, and students, are at risk. “In terms of undergraduates, it’s taking the deductibility of student interest payment,” Gershon said.
“I am more concerned about financial aid with this new scholarship that we have,” Mulique Lawrence, a junior political science major, said. “I don’t want anything to happen to it because I’m dependent on it to continue my education… It will hurt the middle class, and it’s a bruise towards the program.”
Gershon said he had a message for the administration and Congress. “We’re a nation of middle class people who want to get ahead – don’t go out of your way to help the privileged few and the special interest – remember to take care of the middle class and the people who elected you into office.”