Lift the tax burden on CSO student workers

By Editorial

Santa Clara Community Action Program Director Katy Erker ran into quite a surprise while doing her taxes this year -- she owed the government about $700.

This was a shock for Erker, because in years past, she had gotten a refund making a similar amount.

"I'm in the hole now," Erker said.

The reason that Erker had to pay the government this year is because the IRS considers her an independent contractor as SCCAP director. This means that she technically owns a small business, as do all of the eight Chartered Student Organizations, including Associated Students, KSCU and The Santa Clara. (Disclosure: This tax issue affects The Santa Clara editorial board).

Because CSO workers "own a small business," they are required to pay social security taxes that the university would pay if the students were employees. This is 7.65 percent of workers' salaries.

For Erker, who will earn $5,275 over the course of this school year, that translates to an extra $403 she is paying in taxes that the university would have paid otherwise.

Two years ago, all CSO student-workers were considered employees. But in the summer of 2006 the university abruptly declared that nearly all of the 150 CSO workers were not employees, but stipend workers.

In making the decision, the university did not consult with students. One result of this change was that students were paid once per quarter rather than every two weeks.

This spring, the university realized this was harming students, and changed the policy to three times per quarter.

We commend the university and Vice Provost for Student Life Jeanne Rosenberger for making this change in the interest of students.

Now, another change must be made.

It was short-sighted of the university not to realize that students would have negative tax implications. In essence, the university has cut the pay for students in the CSOs, some of the most active student groups on campus.

This issue only affects a small portion of the student body, but that doesn't mean it should be ignored. Students in chartered organizations are among the most active at Santa Clara, especially the organization leaders -- who are hit hardest.

The university should put its students first and change the current "stipend workers" policy.

Clearly, Erker does not own a small business as SCCAP director. She uses a university office, university funds to do her job and has an advisor who is employed by the university. There is no reason she should be paying social security taxes as her own employer -- the university should.

The university should do one of two things: change the positions of its student workers in CSOs to employees, or raise the amount that students are paid.

Since the social security taxes that employers pay is 7.65 percent of workers' salaries, a simple solution is to raise stipend amounts by this same rate, offsetting the tax burden.

The rates that student workers in chartered organizations are paid has not gone up in several years, while minimum wage has jumped from $6.75 to $8. For the university to impose an additional tax burden on these students leaves them too far behind other student jobs.

Rosenberger has said she hopes to address this issue. We hope the other university departments involved show the same concern as Rosenberger.

Because if the university ignores this issue, it ignores some of the students who give the most to Santa Clara.