In the name of cutting taxes, the Americans have handed Canadian universities (and Canada itself) the opportunity of the century. We’d be daft not to find the funding to seize that opportunity. But it will require a lot of money, a lot of foresight, and a lot of political will.
Last Thursday, the Republican majority in the House of Representatives passed H.R 1, a bill to cut taxes for the rich and on corporations by some $1.4 trillion over 10 years. (The Republican-majority Senate has brought in a similar bill.)
To pay for this tax cut, university students and graduate students, among many others, would bear a far heavier tax burden.
How much heavier? Current grad students estimate a 300-per-cent increase in their taxes.
If students teach or do research, they often get free tuition, plus a small stipend. They now pay taxes only the stipend, but under the new rules their “free” tuition would also become taxable income.
One Princeton graduate student figures his taxes would rise from $2,600 to over $11,000. If his waived tuition were treated as income, he says, “This would mean adding the university tuition — about $49,500 — on top of my stipend. In effect, I would be taxed for about $81,000 in gross income, when my actual pay is less than half that… my effective federal tax rate under the new plan would be about 35 per cent.”
A lobotomy with a railroad spike
For post-secondary education in the U.S., Trump’s tax bill amounts to a lobotomy with a railroad spike. Undergraduates (or their families) will also find many Obama-era tax benefits now redefined as taxable income, making post-secondary unaffordable. About 150 of the country’s top private universities will also find themselves paying far more in taxes.
But it’s the grad students (and their professors) who are likely to be worst off. They’ll be caught between unaffordable tuition fees and low-paying teaching jobs, their careers suddenly dead at the starting line.
Moreover, U.S. graduate education depends heavily on foreign students. In September 2016, a record 1.08 million foreign students enrolled in U.S. universities. But the number of first-time foreign students actually fell by three per cent from the previous year. The real growth came in foreign students taking part in Optional Practical Training, which allows them to stay in the U.S. for a year after they graduate. The Obama administration expanded OPT to 36 months for students graduating in science, technology, engineering and math (STEM).
It’s now clear that Trump is intent on rolling back every measure that Barack Obama ever brought in, so OPT is likely to be shut down or sharply reduced.
In any case, grad students from Muslim and African countries are already likely to feel doubly unwelcome in Trump’s U.S. The steady rise in foreign student numbers is beginning to level out and may be on a downward trend.
This is a disaster in the making not just for American post-secondary education, but for U.S. technology and even the country’s tax base. According to the Council of Graduate Schools, overall graduate enrolments are still below the peak year of 2009. Without international students, enrolments would be even lower.
And this would be despite the fact that people with advanced degrees earn higher lifetime earnings (and pay higher taxes) than those with bachelor’s degrees, and the council estimates that U.S. employers will need over 2.3 million new workers with advanced or professional degrees between 2012 and 2022.
Strikingly, foreign students are heavily enrolled in STEM programs, as well as business; without them, those programs — especially engineering and math and computer sciences — would be in grave trouble.
Canadian wealth beyond imagining
Here is where I begin to dream of new Canadian wealth beyond the dreams of avarice: opening our universities to scores of thousands of U.S. and foreign graduate students (and likely a lot of their professors).
We did it 60 years ago, when we were a smaller, poorer country. We incorporated a whole Hungarian university forestry department into the University of British Columbia in 1957 after the Soviets had crushed the Hungarian revolt the year before, while also accepting a lot of other Hungarians. We’ve certainly absorbed countless school-age refugees: Ugandan Ismailis, Vietnamese boat people, Chileans and Czechs, Serbs and Croats, and now Syrians.
But now we need an effort an order of magnitude greater to respond to the Trump opportunity, and it would stress some powerful interests.
Suppose we offer graduate students in the U.S. a safe haven in our universities, at no greater cost than they now incur at home, in programs as good as the ones they’d be leaving.
First, we’d have to recruit a lot of superb U.S. professors, and then we’d have to build whole new campuses and laboratories to house them.
Second, we’d have to build affordable housing for the students themselves, when cities like Vancouver and Toronto can’t build such housing for their own people. (Students and profs would likely include swarms of returning Canadians as well.)
Third, we’d have to offer our new immigrants something like the Optional Practical Training program available in the U.S. and the hope of permanent Canadian careers to induce them to stay and repay the costs of welcoming them. Otherwise they’d just give us a hug and head home to Omaha or Guangzhou or wherever their careers could flourish.
Calling all headhunters
None of these objections is a showstopper. First, send headhunting expeditions to the U.S., offering professors good-weather junkets to Nova Scotia, New Brunswick, the Gaspé and the Prairies. Tell provincial governments (and their construction contractors) that federal money will fall like heavy rain on campuses willing to expand. Hire them, and they will come.
Second, build the rental housing Canadians already need, and more, and damn the upfront costs. Our present housing disaster needs developer incentives that were ditched 30 or 40 years ago in favour of condos. Give those developers the incentives, and they will build. With new rentals, the overall cost of housing could return to affordability.
If nothing else, build affordable housing in Lethbridge and Saskatoon and other university towns. That would induce Vancouver and Toronto to make themselves more affordable or lose out.
Third, we’re already killing ourselves to attract a new headquarters for Amazon in some impossible places like Vancouver. Create new high-tech campuses in gorgeous Canadian regions near our universities, set very clear ground rules for good behaviour and improve our health care system, and tech companies all over the planet will pound on our doors.
The courage to jack up taxes
Of course, the expenses don’t stop there. Grad students, professors and corporations will all expect not just affordable housing but also excellent public schools and a lively local cultural scene, plus good local public transit. When they consider the tsunami of jobs for their locals, provincial and municipal governments will somehow find the courage to jack up taxes a bit.
Probably the biggest obstacle will not be Canadian know-nothings and xenophobes, but Canadian professionals. They have protected their own jobs for decades by making their immigrant colleagues jump through hoops before qualifying to do jobs they already know how to do. Doctors, engineers and teachers should be fast-tracked back into those jobs instead of working as hospital support staff and teachers’ aides. If the professional associations don’t like it, see how they like the application of a great deal of torque to their collective arms. After the last half-century of bullying their immigrant colleagues, they have it coming.
Seizing this opportunity would be stressful for many Canadians. But when they realized that their communities were suddenly full of young, smart, exciting people who were delighted to join them, hire them and pay a hell of a lot of their taxes, they should be reconciled.
They might also be glad to see some of their own kids and cousins happy to come home to a country that values brains and talent and enterprise.
Canadian universities, start your engines.
Read more: Education