Tax Time
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Needless to say, there aren’t many fond memories about tax time over the years, but in the process of preparing my taxes this year, trying to squeeze in as many deductions as legally possible, I recalled a tactic that a few of the upper classmen were doing back when I was a freshman in college at General Motors Institute (now Kettering University). Since GMI was a co-op university, students were considered employees of GM and as part of our job responsibilities, had to attend school in order to be employed. So several bold students decided to deduct their tuition costs from their income on their IRS 1040 submission on the premise that the tuition was a deductible expense associated with their work requirements. Coupled with the standard deductions at the time, those students literally incurred no federal or state income taxes. And if the GM facility where they worked was close to their parents, they could live at home and save enough money in one year to buy a new Corvette!
Back then, the sticker prices on a new Corvette were under $5000 as shown on the right, and coupled with a 20% GM employee discount, could be bought for about $4 grand. Imagine a student buying a new ’67 Vette, enjoying it for 50 years, then selling it on auction like the vehicle pictured below going for $3,100,000, with the basis of that original investment being the tax savings accrued from deducting their tuition as a student at GMI. To my knowledge, these students never were audited by the IRS, so the deductions stuck. Within a year, the IRS stiffened the rules, so I was never able nor had the courage to give it a try. But after graduating, I did saved enough (after taxes) to buy a used Corvette, in fact several of them over the years, chronicled in this previous blogpost.
Back in the ’60’s, by the time of our Senior year at GMI, we were making $8 an hour, working 1100 hours a year, so would accrue income of about $9,000. And GM would subsidize the tuition costing $3000 a year, so if one lived at home with minimal expenses and no income taxes due, there was more than enough money remaining to buy the Vette. That’s why we nicknamed GM Generous Mother while going to school there and as chronicled in this song about GMI from that era:
High above the old Flint River, factory whistles blow, toot, toot
Stands an ivy covered outhouse General Motors Institute
She's our mother, how we love her, raise her name on high, hi de hi de hi
To hell with Ford and Chrysler products, God bless GMI
Having traveled back to Kettering's campus last summer for an alumni affair (a car show, of course!), while talking to current students, discovered they now get paid about $12 an hour and tuition is up to $30,000. Plus GM is no longer affiliated with the University, so no more discounts are offered on new vehicles nor is the tuition subsidized by their co-op employer, now expanded to about 700 companies. And with Corvette’s costing upwards of $70,000, the same economics unfortunately don’t come close to working out for current students. Besides, the Corvette is not really an inspirational vehicle for today’s millennials; instead it’s an old man’s car designed for someone like me who wanted one back in the day but couldn’t afford it. For that matter, many of today’s millennials don’t even want a vehicle! They’d prefer autonomous vehicles to drive them from place to place! I can assure you of one thing, that won’t be nearly as much fun as driving a Corvette. On second thought, there might be only one activity in a self driving vehicle that would be more fun, but I won’t go there! Oh, how times have changed indeed.
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