City defends tax on grad students

But graduate students say wage tax should not apply to them To Philadelphia revenue examiners at least, the wage tax on graduate students fellowship money makes perfect sense. But many graduate students say they find little sense in the regulation. Officials in the city's department of revenue said yesterday the taxation of graduate students' fellowship and stipend money is a "cut and dry" issue. The affected students, however, who will face new withholding on their fellowship checks effective January 1, are much less content. A memo issued by the University comptroller last month states that the University, in order to comply with a 1989 city tax law, must withhold taxes on stipend and fellowship money paid to students providing "any services" to the University. The only exception to withholding this new tax is money earned toward satisfying a departmental requirement, such as the mandatory work done by teaching assistants. Many graduate students said they feel the city should not tax the fellowship money they receive for academic research. But Joseph Kots, the city's chief revenue examiner, said if students do something for the University and get paid, then they should pay taxes like everybody else. The city is merely following the lead of state and government regulations which similarly tax graduate students, he said. An audit delivered to the University in October found that approximately $1.5 million in city wage taxes were not properly withheld from graduate student payroll checks. Kots also said that anyone could "come off the street" and do the work of research fellows at the University, and so the research money is properly considered a taxable wage. Michelle Grimm, an engineering graduate student, said such an argument seriously undermines the value of graduate degrees. "It's possible that a technician could come in and do a lot of the experiments, but the analysis of the data and the theoretical work are beyond a technician," Grimm said. Moreover, students said the research fellows should not be taxed since the amounts of their fellowships are not fair compensation for the research they do. "A technician would be getting at least $25,000 to $30,000. I'm in one of the higher-paid departments, and I just get $13,000 a year," Grimm said. Classics graduate student Nigel Nicholson said there is a clear distinction between real wages and the money students receive for research. "We don't get paid in a way that's proportional to the amount of work," he said. "A real employee would get benefits. Students don't, and it seems pretty clear research fellows do not provide any service." Grimm said she is worried the extra financial burden of a wage tax on fellowship money will deter some students from coming to the University in the future. "If you factor in all the taxes and compare the cost of living in this city to others that have research universities," she said, "a lot of students will say it's not worth it to come here." Kots said yesterday students' decisions on where to go to college should not be affected by the tax. "I'm sure that's not a consideration," he said. But many students, Grimm said, are going to have trouble making rent and grocery payments, especially when the tax begins in the middle of the year. "It's going to be cutting more corners on already tight student budgets," she said. "Luckily, I'm graduating in the spring."

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