Pittsburgh Won't Tax Tuition; Nonprofits to Donate

As I explained in this blog entry from early last week, the city of Pittsburg, PA had been considering a first-in-the-nation tax on college tuition fees. Fortunately, the city’s officials have decided not to move forward with this highly unpopular tax increase. According to the Associated Press, they ditched the tax after two universities and a nonprofit health insurance company agreed to make large financial contributions to the city.

Mayor Luke Ravenstahl hopes the contributions from the University of Pittsburgh, Carnegie Mellon University or Highmark Inc. will serve as a catalyst to get other nonprofits to help the city financially.

Ravenstahl had called for the 1 percent tuition tax on the city's 65,000 college students as a way of getting money to help pay for some $15 million a year for the city's pension obligations.

Nonprofits are exempt from most taxes, but represent many of Pittsburgh's major employers and hold about one-third of the city's property value.

Neither the mayor nor the three institutions would disclose how much they would give, but Ravenstahl said he was optimistic the money would help resolve the city's long-standing financial problems.

"This is a leap of faith for all of us. The future of our city and our citizens is riding on it," he said.

A First-in-the-Nation Tax on College Tuition

Tuition fee increases are fairly common on college campuses lately, despite the uproar they usually provoke from students. However, the city of Pittsburgh is considering a different way to increase revenue from college tuition. They are hoping to impose a 1% local tax on tuition, which would make Pittsburgh the first place in the country to ever tax college tuition fees.

This announcement has frightened students, and taxpayers across the nation who fear that if the measure is passed that it will set an example for other government agencies to follow suit. According to the New York Times the Pittsburgh City Council is set to vote on the tax on Monday, which is expected to generate over $16 million in additional revenue for the city.

“It’s really a disappointment that we’re in this situation,” Mr. Ravenstahl said. “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, which would take effect as early as July, would range from about $20 a year for students at cheaper schools like the Community College of Allegheny County to just over $400 for students at the city’s priciest university, Carnegie Mellon.

Other cities, like Boston and Providence, R.I., have also considered taxing college tuition, Mr. Urbina reports.