1% Tuition Tax in Pittsburgh

Parents Forum
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<p>Well, CMU and U Pitt just got more expensive -
<a href="http://www.nytimes.com/2009/12/16/education/16college.html%5B/url%5D"&gt;http://www.nytimes.com/2009/12/16/education/16college.html&lt;/a&gt;&lt;/p>

<p>On Wednesday, the City Council is expected to give preliminary approval to Mayor Luke Ravenstahl’s proposal for a 1 percent tuition tax on students attending college in Pittsburgh, which he says will raise $16.2 million in annual revenue that is needed to pay pensions for retired city employees. Final Council action will be on Monday.</p>

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<p>Wow thanks Pittsburgh. Great precedent - wonder how long other cities will take to follow suit.</p>

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<p>The vote was postponed again:</p>

<p>[The</a> Associated Press: Pittsburgh City Council delays vote on tuition tax](<a href=“http://www.google.com/hostednews/ap/article/ALeqM5idX-ahRLU0pMULRtdHdJhN892U2wD9CKIA900]The”>http://www.google.com/hostednews/ap/article/ALeqM5idX-ahRLU0pMULRtdHdJhN892U2wD9CKIA900)</p>

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<p>What a nutty idea? It would just turn out to be a tax on the colleges and the universities there. If they passed it on to the students directly as a tax, I doubt they would get much interest in students applying. Those students who get aid would not be getting aid for the tax. The parents who pay aren’t likely to want to pay Pittsburgh taxes anymore than they already do by sending students there who eat, shop, and use services that pay sales taxes and business taxes.</p>

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<p>An increase in tuition of 1% won’t change the volume of applicants one bit. Demand for post-secondary education is not that elastic. 100 years of data shows in fact that university education is among the most inelastic of all services.</p>

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<p>Kinda funny, actually, in that the vast majority of 18-22 year-olds voted for the guy who said that he would spread-the-wealth around. :D</p>

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<p>Yes, most of them learn that later. Income and taxes go together and if you vote for taxes you will have less spendable income. Most won’t like it.</p>

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<p>“Kinda funny, actually, in that the vast majority of 18-22 year-olds voted for the guy who said that he would spread-the-wealth around”</p>

<p>It is somewhat amusing. What they didn’t realize was that the guy was talking about spreading their wealth around–to the union employees.</p>

<p>So a $400 tax for Carnegie Mellon students and as low as a $20 tax for cheaper schools. I’m sure those CMU students are using the city services all the time—cops always having to go break up those wild parties.</p>

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<p>You all are being a little dismissive of a real problem. Pittsburgh, like many cities, has a declining industrial/commercial base, and a burgeoning nonprofit sector. The steel mills, fabricators, and tool shops are closed or on life support, the banks have all merged or restructured and their office buildings are see-through. But the University of Pittsburgh and Carnegie-Mellon have both been expanding rapidly.</p>

<p>They don’t pay city income or real estate taxes. They do require, and use, city services. As in most cities, there are periodic negotiations between the city or county government and large nonprofits over “PILOTs” (payments in lieu of taxes) that the institutions “voluntarily” pay to bear their fair share of government cost.</p>

<p>My understanding is that this novel “tuition tax” was someone’s creative idea to give the city some leverage in ongoing PILOT negotiations with the universities, which had not been going well. It’s effectively a way to tax the untaxable – theoretically the incidence of the tax falls on the students, who are not tax-exempt, rather than the university, which is, although the university would have to “collect” it and pay it over.</p>

<p>The point is that this was going to be a university cost, and potentially be funded in whole or in part by tuition, either way. The universities doubtless have it in their power to scuttle the tax by agreeing to pay slightly higher PILOTs. They also have it in their power to reduce tuition increases and to fund their budget gaps from endowment or new fundraising, so that students are not in fact harmed by the tax (or the PILOTs). Basically, this is all strenuous negotiation between big businesses and local government.</p>

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<p>Pilot? What a wonderful expression. It also seem that it must have generate its counterpart in the public sector as both schools and city government have shown a tremendous ability to place their increases in spending on … automatic pilot. :)</p>

11

<p>The argument that the universities are somehow a burden on the cities ignores the fact that the universities employe thousands of people who pay taxes to the city. In addition, the students and the employees of the universities spend a lot of money in the city, creating even more jobs (and people who pay taxes).</p>

<p>The students and employees providing all the benefits to the city require very little in the way of city services - they are not poor, have medical insurance, do not require housing, food, etc.</p>

<p>Boy, could you imagine the negative financial impact if a major university just said to Pittsburgh, we are leaving. It would be a financial disaster for the city.</p>

<p>Better not kill the goose that laid the golden egg.</p>

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<p>Nope. I understand the issues. </p>

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<p>Perhaps you are being too dissmissive on the definition of “fair share.” </p>

<p>Does a local resident who attends a community college use LESS city services than a CMU student who is a PT resident? If not, why are they charged less? Or, what about the externalities of the non-profit businesses. Those colleges employ thousands of Pittsburg employees, who all pay tax income taxes and local sales taxes. Without those non-profits, many would be unemployed. And, don’t forget, that the colleges run their own police forces and pay for their own security. Thus, they minimize the impact on the local police, and employ even more local workers.</p>

<p>PA has a problem, and perhaps its a (over) tax problem. I heard on the news that it is second to Florida in population age. Where did those folks go? Why is PA much older than neighboring NJ and Ohio? Sure, some state has to be #2, but why not AZ? Why PA? What is driving the young to leave? Could it be lack of jobs? If so, the best way to encourage more jobs is to tax the heck out of 'em, correct? While that is an excellent solution in Washington DC – Congress is really good at legislating economic reality – it doesn’t work on Main Street. :)</p>

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<p>bluebayou:</p>

<p>Of course Pitt and CMU are huge employers, and anchors of Pittsburgh’s economy, and Pittsburgh is glad to have 'em. If you want more fuel for your fire, here is Pitt’s fact sheet on its contributions to the city: <a href=“http://www.govtrel.pitt.edu/PDF/Pitt-Tax-Eco-Services-OtherPayments-Contri-08.pdf[/url]”>http://www.govtrel.pitt.edu/PDF/Pitt-Tax-Eco-Services-OtherPayments-Contri-08.pdf&lt;/a&gt;&lt;/p&gt;

<p>But so are PNC Bank, PPG, and Kirkpatrick & Lockhart, and THEY pay real estate taxes, too. As for comparative service-usage, the tax really doesn’t have anything to do with that. This is a tax on institutions, not students. It would be silly and circular for Pittsburgh to slap a tax on a community college that is basically a line-item in Pittsburgh’s (or Allegheny County’s) budget. </p>

<p>Because it’s really a tax on institutions, not students, it may be unconstitutional. But that doesn’t make it a terrible idea, just one that won’t ultimately work if the universities keep calling the city’s bluff. (Actually, I agree it’s a bad idea; I just think it’s less clear than the knee-jerk reactions indicate.)</p>

<p>As for aging in PA: I think several factors are in play. First, PA actually has a higher percentage of rural population than Ohio (or New Jersey), and those are the areas where the young people are leaving and the old people are staying. Second, PA, like many northeastern states, has seen a new trend over the past few years – REALLY old people moving back from retirement communities in Florida and Arizona to be near their middle-aged children. I know that this is a huge and accelerating factor in PA’s Medicaid budget, one that no one foresaw 10 years ago. And I see it in my own family.</p>

<p>New Jersey, by the way, has significantly higher taxes than Pennsylvania. And the volume of complaints about them is much, much higher. And don’t even talk about New York. Apart from Philadelphia (with its very high local wage, sales, property, transfer, and business privilege taxes), I’m not sure Pennsylvania qualifies as a high-tax jurisdiction.</p>