Perhaps The Only Tax We Don’t Have. Yet.

Across the country mayors watched with interest Pittsburgh Mayor Luke Ravenstahl’s attempts to levy the first-ever tax on college tuition.  The mayor proposed a 1 percent tax to help fund the city’s dwindling pension and to overcome a $50 million dollar gap in property taxes lost by granting tax-free status to nonprofit institutions like universities and hospitals.

Does this sound like any other city you know?  One, say, with a large university and five sprawling hospitals; among them an institution announcing just this week a $222 million expansion, all of it tax exempt?

As you can imagine, Mayor Ravenstahl’s proposal created a nuclear town-gown reaction.  There are 10 colleges and universities in that fine city and the University of Pittsburgh and Carnegie Mellon University lead the opposition.  Spokesmen claimed a tax on tuition would prohibit the brightest students from coming to Pittsburgh to learn, and it was antithetical in times of declining endowments and increasing requests for financial aid.

But the Mayor was stuck.  He told The New York Times “Our colleges and universities are giving less and less while they increase tuition and executive pay and expand their campuses, removing high-value land from the tax rolls. The cost to provide public safety and public works services continues to increase, but our revenue continues to decrease.”

The tax would add approximately $27.00 to the cost of a semester at a community college, and $430.00 per semester at prestigious Carnegie Mellon.  The bottom line: $16.2 million more annually for the city.

Other northeast cities like Boston and Providence, R.I. flirted with the idea of a tuition tax, but it never passed the necessary legislative channels.  Pittsburgh came closest but was scuttled today when the nonprofits agreed to increase their voluntary donations to the city in a one-time deal.  The issue is not dead.  Both sides want a more permanent understanding for the future.

In Syracuse we tweak our own town-gown symbiosis with visionary Chancellor Nancy Cantor working hard to mesh the campus with Syracuse’s struggling downtown.  Like the University of Pittsburgh, Syracuse University shines on a hill overlooking the commercial district.  Cantor created an eye-popping gallery and classroom space in her edgy rehab of the old Dunk ‘N Bright warehouse in Armory Square and now retailers are following the students.   This is a dream for city planners who would prefer organic economic success, and not one forged from increased taxation.  Other proposals like a tram linking the campus to the city center have yet to materialize but the Chancellor gets high marks for her determination to remove students and their spending money from isolation in the storied buildings on the hill.

I can appreciate a city government’s attempts to squeeze more money out of the families who seem to have it.  Living in the University area of Syracuse, I see students driving Range Rovers and BMWs.  They compete for the newest luxury dormitory suites.  I wonder what planet they descended from because it’s so unfamiliar.  I find the college years for my four children are the most expensive of all and for our family at least, it’s back to the basics.  My ex-husband and I mandated college for our children and we have no intention of not funding our own mandates.  Any additional fee adds to the high interest Salliemae Parent Plus loans I’ll be paying off for years.

Other students pay for their own education in an inverse economic formula that is failing our society.  On the one hand we tell young people to stay out of debt and live within their means, and on the other hand we encourage them to go to college even if it means going deep into debt for decades afterward. We are conditioning generations of our citizens to borrow and spend, borrow and spend.  Isn’t that the flawed economic theory that got us into this recession?

I’m also a homeowner in Syracuse which takes the largest percentage of a home’s value in property tax in the country, around 3.5% when the national average is between 1 and 1.5%.  Were so much of Syracuse not exempt from property taxes I’d like to think my tax bill would be reasonable, but other cities with equal percentages of tax exempt land manage to survive without charging extraordinary taxes.  Maybe consolidation of services is the only answer, or maybe we can just tax the college students who drive range rovers.

For the next generation of college kids, the close call for a tuition tax in Pittsburgh should set off alarms.  It didn’t happen this time around, but it’s just a matter of time before some other city takes a shot at it.

Tagged as: Carnegie Mellon University, College, Mayor Luke Ravenstahl, pittsburgh, Syracuse, Syracuse University, tax, University of Pittsburgh