Of Course They Are

Universities and businesses are objecting to losing the tax-exempt status of tuition assistance, tuition that the universities receive in exchange for pretending to educate our youth and that businesses provide as an employment perk.  The House version of the tax bills currently in the offing eliminates this exemption status.

Hewlett Packard Enterprise Co, Starbucks Corp, and others say offering tax-free tuition assistance makes it easier for them to keep and train employees.

Schools say they could lose thousands of students if the tuition program is taxed. The nation’s economic development would be stunted if employees shy away from pricey training programs, they say.

Both groups are being disingenuous.  If everyone loses the exemption, no business gains an advantage, and so there is no hit to competition in keeping and training employees.  The businesses just have to make their decisions in this arena based on what’s truly good for the business and not on what works based on Government involvement—those taxes.

The schools won’t lose much either, other than students for whom college isn’t the best choice, anyway.  If their training programs are pricey, too, well, the answer to that is both obvious and wholly within the purview and capability of the schools to effect.  The exemption of tuition assistance from taxation, after all, is nothing but a subsidy, and so it contributes to inflating the price (not the cost) of the programs involved.

Tuition assistance is income; of course it should be taxed, as should all income regardless of source.  The questions here are whether income will be taxed at a low rate—as it should be—and whether our tax code, including tuition assistance being exempt, should be used for social engineering—as it should not be.

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