Pittsburgh Mayor Wants to Tax College Students

Published December 23, 2009

The mayor of Pittsburgh believes he has found a new potential source of revenue: College tuitions.

Mayor Luke Ravenstahl (D) estimates his proposed “fair share tax,” which would charge students between $27 and $409 annually based on their tuition, would raise some $16.2 million in annual revenue for the city.

The proposal faces strong opposition from students, colleges and universities—and some Pennsylvania lawmakers.

‘Can Barely Pay for Books’
Rep. Paul Costa (D-Allegheny County) has introduced a bill to block Pittsburgh and other communities from imposing tuition taxes, and it quickly garnered nearly three dozen sponsors.

“I understand we are in hard economic times and we have to look for ways to raise revenue, but I will not stand for raising this revenue at the expense of our students,” Costa said in a press statement. “We cannot place our financial burdens as a city on college students, many of whom can barely pay for their books and tuition, let alone a tax on that tuition.”

Ravenstahl and city council supporters of the tax say they want the schools and students to “pay their fair share.”

“We value Pittsburgh’s nonprofit community,” Ravenstahl said in announcing the tax proposal. “They are our major employers, and a big part of why our economy continues to be strong. However, we can no longer afford to provide city services to those who are not paying their fair share.”

One Percent of Tuition
The students would pay the 1 percent tuition tax to their colleges and universities, which would then remit the money to the city. The city has 10 nonprofit accredited colleges and universities, ranging from low-cost community colleges to pricey and prestigious institutions such as Carnegie-Mellon University.

The state-appointed Pittsburgh Intergovernmental Cooperation Authority—which counts four university-affiliated panelists among its five members—opposes the tax on the grounds it violates Pennsylvania law. The authority was created in 2004 after the state declared Pittsburgh severely financially stressed.

The Pittsburgh Council on Higher Education, which represents the city’s 10 nonprofit accredited colleges and universities, also opposes the tax proposal.

‘Mean-Spirited Hostage-Taking’
“As usual, Pittsburgh needs money, and rather than raising taxes on residents or businesses or cutting spending, they’re going after students who are attending colleges and universities,” said Jake Haulk, president of the Allegheny Institute, a public policy organization based in Pittsburgh. “This is a mean-spirited attempt to hold the kids hostage with this tax threat until the universities make payments to the city, which to their credit they’ve not done.”

Haulk said Pennsylvania’s Act 511 gives municipalities great leeway on what to tax, including “privileges.” Ravenstahl argues attending college in the city is a privilege subject to taxation.

Haulk said he believes if the tax is imposed it will be challenged in court and struck down on uniformity grounds. He noted some students would pay barely $20 a year while others would pay more than $400, depending on which college or university they attend.

Haulk says the “fair share” argument is bogus because the students already directly or indirectly pay city taxes and support city businesses.

“Lots of students are city residents. They pay taxes through rent. They pay the local wage tax and services tax. Their employers pay tax. Many students are attending schools that are for-profit, so those students would be doubly taxed,” Haulk said.

Extorted ‘Donations’ an Alternative
Ravenstahl and some city council members have said they would also accept “donations” to the city from the colleges and universities, in which case they would not impose the tuition tax.

“They thought they could hold this tax threat as a cudgel over universities and they would give in, but the universities are not folding,” Haulk said. “It’s extortion. It’s a reflection of what is happening in this city. The city has refused to make serious cuts or hold the line on spending since it went into financial distress status in 2004. Five years later they are spending 10 percent more than when they went into distress status.

“Overspending is how they got into this mess. Taxing tuitions won’t get them out of it,” he concluded.

Phil Britt ([email protected]) writes from South Holland, Illinois.