Why Is the Tech Industry Keeping Mum?

In the current debate on tax reform, one topic that has arisen is that the House bill would tax graduate students on the tuition benefit they receive in their graduate stipends. Though not the topic getting the most attention, it has been covered quite a bit in the print and electronic media.

The grad students are speaking out against the proposal. So are the universities. The rhetoric is that this provision would destroy graduate programs. But in the dozen or so articles I’ve read on the topic, one group conspicuous by its absence is the tech industry.

The industry lobbyists have told us repeatedly that they hire H-1B workers from U.S. graduate programs because not enough Americans pursue grad study. Really? If so, the tech leaders should be up in arms. Yet not a peep out of them.

Of course, a possible answer is that they are salivating so much at the proposed cuts in corporate tax rates that they want to keep a low profile. This is probably part of it, but this can’t be the full explanation.

I suspect that the main reason they don’t care about the issue is that (a) they really don’t need people with graduate degrees after all, and (b) they are counting on the fact that, as one university dean put it, “Foreign students will do anything to stay in the U.S.,” tax or no tax (plus mitigation by tax treaties).

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10 thoughts on “Why Is the Tech Industry Keeping Mum?

  1. In fact, what this is going to do is to make the US educational system even more biased AGAINST US students and in FAVOR of foreign nationals. As it is today, the US system is horribly biased – we charge huge tuition for undergrads while many foreign system charge nothing or very small fees. Our students leave undergrad school with huge debt in many cases. Thus, due to debt, US students are shut out of the grad school process, although PhD programs pay stipends. Foreign students will regard the taxes as a small impediment. Even worse, in many cases, foreign workers get a reduced tax benefit. This may happen in this case as well.

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    • – generally, tech doesn’t hire Masters, and educated abroad means hiring from far East means cheap pay because they’re not carrying a boatload of debt (US student loans or, for US workers, mortgages).
      – foreign, US tax exempt, by one of the 57 or so treaties, yes?
      – foreign student, restricted to working on campus, so any forgoing of tuition, more than made up by ultra cheap staff as “research assistant” – billed out for big $$$$$ or using grants, or “teacher assistant” – driving adjunct profession/pay into the ground.
      Win/win for universities, lose/lose for US students and education professionals.

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  2. It’s already strange that H1-B’s have to pay SS tax, but many will never collect SS. This implies that H1-B’s are being used to keep SS afloat. Now it looks like they’ll be taxed on tuition, BUT, as you mentioned, Norm, I suspect tax treaties will prevent a lot of the imported students from getting taxed. Instead, the new tax may act as a barrier to U.S. students and thus make it even more likely that they will choose to skip grad school… Thus reinforcing the tech industry’s argument.

    So either way, those in charge find a way to soak those doing the actual work.

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    • The fact is that the corporations save considerable money from not having to pay SS tax on the US workers. That fact alone reduces their tax payments.
      Equally important, in many places, the corporations do not have to pay unemployment insurance (since the H1-Bs are generally not eligible).
      Finally, we all know that most H1-Bs do not go home. Until last November, most H1-Bs planned to stay in the US and most of them actually were able to figure out some way to get better immigration papers. Most likely, they will eventually be able to collect SS payments.

      Your argument is incorrect in several ways.

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      • They pay FICA on H-1B workers but not OPT or CPT workers.

        Totalization agreements do allow SS payments to be considered in the calculation of other countries’ pensions.

        I expect unemployment insurance varies by state; some guest workers are eligible for unemployment (depends on status and state).

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    • Many countries have reciprocal treaties that give workers retirement credit for time worked overseas. A citizen of Turkey gets credit for time worked in the US and in Turkey when retiring. It’s not uncommon in other first world countries as well.

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  3. I have a plausible reason as to why the tech industry is keeping mum. There is a conspiracy among the tech industry, the Higher Education Lobby, and the government to impose financial harm on grad students.

    The tech industry can keep mum on the conspiracy to harm grad students via higher taxes. The public will incorrectly assume that the reason the tech industry is keeping mum is because of the tax cuts for corporations. The Higher Education Lobby has little choice but to publicly express outrage. It’s just for show. The government, which is already controlled by Corporate American, plays the role of the villain.

    Once the new tax starts affecting grad school enrollments, the tech industry will start protesting against the tax hike for grad students along with the Higher Education Lobby. Studies will be published showing the importance of foreign student enrollments in STEM grad school due to the talent shortage among the natives. They will claim that foreign students will go to other schools outside the USA and then work for our competitors. This must be stopped.

    Next Staple will be passed to compensate for the tax and soaring tuition. Of course, this will not help the natives. Foreign enrollments will soar! Just what the tech industry and the Higher Education Lobby wants. So the tax is just a sneaky way of getting closer to enacting Staple.

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    • I’m not sure I follow your argument, nor am I even sure it is not meant facetiously, but your projected effect on passage of Staple a Green Card is correct, I’m sure.

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  4. “The rhetoric is that this provision would destroy graduate programs.”
    The public funds, via grants, a whole lot of research and patents for it is then sold off to industry.
    It is in and of itself a for profit enterprise funded with public monies.
    US industry does not employ many Masters and PhDs (never has), most are foreign students here for the back door to a green card – and this is one heck of an incentive for the universities to keep this going.

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