Down with the Universities?

I haven't had the time or taste to post about the proposed Tuition Tax on Pittsburgh college students, but as I've listened to the rhetoric, I've wondered why the debate is so lopsided.

Over on one side, there are folks arguing that Pittsburgh really needs every penny that it can find, and that there are no pennies left to find except the pennies floating around in students' pockets. There are folks arguing that this logic is an insult to everyone's intelligence, or, in other words, what Chad Hermann calls the "Shakedown Tax" is a stupid idea from the perspective of the City and the politicians who run it. The City of Pittsburgh is really after the non-profit landowners like Pitt and UPMC; college students are pawns in a poorly-executed strategy to get them to pay up. (For what it's worth, I think that this critique is right.)

Over on the other side, there are the leaders of our local universities, who are doing a not-very-effective job of explaining why the proposal is a stupid idea from the perspective of the universities themselves. Chad deconstructs their argument here, though with some rhetoric that is a little overwrought for my taste. The colleges argue that the students are good for the City, and that the benefits that they offer far outweigh any alleged drain on Pittsburgh resources. As Chad rightly points out, this is thin gruel. But Chad grants the city some debating points that he doesn't need to concede, like the point that students "should pay for what they get," thus twisting the knife in the colleges' back ever so subtly and indirectly. Lots of us get things that we don't pay for. All the time. And rightly so. Especially students. The whole point of education is that at its core, it's a gift. But that's a debate and discussion for another time.

What's missing, even in a more constructive suggestion like this op-ed about a PILOT program in Rhode Island, is a defense of the idea that Pittsburgh's colleges and universities are unique and special resources. They are assets to the region and to all of its residents, and neither they nor their students (or faculty, or staff) should be singled out as the City proposes without an extraordinary justification.

I won't go into a full defense of the idea here; it would come off as spectacularly self-interested. I do think that something like the Rhode Island (and Connecticut) PILOT idea should be explored in Pittsburgh; the complaint about non-profits avoiding real estate taxes on their land holdings is a valid one. And universities and colleges are hardly above criticism. For their aloofness alone they invite skepticism about just about everything that they do. And their aloofness only scratches the surface.

It's possible to ascribe the lop-sidedness to the universities' own arrogance. Hoist on their own smug, irrelevant petard, one might say.

But I have a different hypothesis for the lop-sidedness. It isn't about the universities' aloofness and arrogance; universities have been aloof and arrogant for centuries, yet in general terms, and especially during much of the 20th century, universities were often viewed as central to economic and social progress. Attacks on universities were attacks on society.

Instead, I hypothesize that public indifference today has to do with sports. The Pittsburgh population in general treats big-time universities (read: Pitt, not CMU, for reasons that are clear in a moment) as the equivalent of big corporations, rather than as large-scale educational institutions. Here as elsewhere, most people encounter big-time universities in their roles as purveyors of big-money, prime time football and basketball programs. The Big East, Big 10, SEC, and the Big 12 conferences are functional equivalents, in our consuming experience, to the NFL, NBA, and Major League Baseball. (For exactly this reason, in Sunday's PG Norman Chad - the Slouch - repeated the oft-heard and mostly sensible suggestion that colleges should simply abandon intercollegiate sports.)

In the Tuition Tax debate, is Pitt reaping the bitter harvest of its athletics success? Pitt has certainly played the athletics card to its advantage: For the first time in the modern (ESPN) era, it has nationally competitive football, men's basketball, and women's basketball teams. And its academic standing has risen dramatically over the last 15 years. (Coincidence? I hope so.) Selectivity at the undergraduate level has gone way, way up. In other words, the school has gotten more populist in its general community engagement (football games at Heinz Field, more appearances on national TV) while becoming much less populist in its student selection (it's more difficult today to get admitted to Pitt). The payoff is that in cultural terms, the region treats Pitt very differently than it treats the Steelers. We all "own" the Steelers, because everyone has equal access to fandom. (The same might be true of the Penguins.) But not everyone "owns" Pitt; access, in various ways, is limited. When the City of Pittsburgh comes calling at Pitt, hat in hand, the region mostly yawns. If the City of Pittsburgh were to go to the Steelers with the same proposition, there would be demonstrations in Market Square. The millionaires who compete on Sunday already do more than their fair share for all of Steelers Nation! But college students? They aren't paying their fair share.

Surely I'm missing something.


15 Responses to "Down with the Universities?"

jet said... 12/02/2009 10:46 AM

Interesting angle -- PGH "owns" Pitt but not CMU. (And do they "barely tolerate" CMU after Walking to the Sky?)

I wonder what a %1 tax on the salaries of pro sports players or hospital executives would do for the local budget?

Miller said... 12/02/2009 11:34 AM

Calling it a privilege to play professional sports goes down a little more smoothly than saying as much about attending school.

Still, I am not sure it is a question of ownership. After all, residents allow their own property to be taxed.

Mike Madison said... 12/02/2009 1:29 PM

Remember that I'm using "ownership" as a metaphor, and only as a metaphor.

Also, property owners don't "allow" their property [both real and personal] to be taxed. The power to tax is reserved to the government -- and granted to the government, by the people -- in state and federal law.

Grimace said... 12/02/2009 1:58 PM

Both the city and the universities are wrong. This will continue to play out until the state government permits taxes to be collected in a manner that better reflects services provided.

Jim Russell said... 12/02/2009 2:37 PM


You should check out the following NYT blog post:

Miller said... 12/02/2009 3:18 PM


I understand that you're using it metaphorically. However it seems ironic that a tax on sports figures would not be proposed for fear of public upheaval, whereas the individuals in question have not risen up in significant fashion against their own assets being taxed.

Government is able to tax because, in theory, it has the consent of the governed. As you say in your own justification, "granted" by the people. Because of this, I stick by my usage of the word "allow."

Adam said... 12/02/2009 3:24 PM

Yesterday I was complaining that both sides of this issue just kept droning on acting as if the other side had absolutely no legitimate points. Actually, that's a lot like every issue ever debated.

Regardless, thanks for taking the time to approach the situation taking into account the multiple point of views. Very refreshing.

Mike Madison said... 12/02/2009 4:42 PM

M - I think that the irony arises partly because the individuals in question (students) (i) don't know about the tax; (ii) don't understand the tax; and (iii) and to the extent that they know and understand, they believe that it won't actually come out of their pockets. They may be wrong; they may be right; but above all, they're students.

On the metaphysics of property ownership, consent, and taxation, there's an interesting question buried in there about where property comes from. Which has no place in this blog, this post, or this comments thread!

Ryan said... 12/02/2009 6:36 PM

Regarding PILOTs, I was under the impression that that was what the Pittsburgh Public Service Fund was for. I think a core issue that has not been addressed is why more than 100 non-profits contributed to the PPSF in 2005 and only about 36 non-profits contribute now. Correspondingly, the PPSF received around $14 million over 3 years from 05-07 (I think) and only $5.5 million over the next 3 years (an offer that was rejected by the city). If 1/3 of non-profits contribute, the city should expect to receive 1/3 of the funds.

So why have more than 60 non-profits stopped contributing to the PPSF? Granted, times are tough, grants expire, expenditures increase, etc. But is there a larger message being sent to city leaders by the non-profit community in their witholding of PILOTs to the PPSF?

Paul said... 12/02/2009 7:40 PM

Well said. However, didn't Pittsburgh or Pennsylvania try (and fail) to tax out-of-town athletes? With Pittsburgh's professional teams (sans the Pirates) held in as high esteem as the unions, I doubt anyone would have the cojones to push it through.

The notion of students "not paying their fair share" is a canard, albeit one that the Mayor and his compadres used to get the universities to the table. But I think Luke was the one hoisted on his own petard. He, and Roosevelt, created the Pittsburgh Promise right after the non-profits agreed to contribute to the PPSF. So what has happened since the creation of the PPSF? The market bottomed out (read: drop in non-profit endowments) and people/foundations shifted their donations to the PPSF. And now the Mayor is saying, stay in Pittsburgh and we'll give you money to attend college, but we will take it back by taxing the full amount (not the scholarship-discounted amount) of your school's tuition.

And the argument that the non-profits hold the most tax-exempt property in the city is wrong - tally it up, and it's the City, the Urban Redevelopment Authority, and the County that hold the lion's share. (But god forbid we should liquidate the URA.)

Again I argue that until city government recognizes the two-ton elephant (and its droppings) in the room - legacy costs, duplicated services, nonsensical line items (security detail for the Mayor? please) - we (the city and its residents) will keep falling into this trap. Call a band-aid for what it is.

Anonymous said... 12/03/2009 8:12 AM

I'm suprised nobody has mentioned that Pitt alone brought in $381 million in NIH funding in 2008.

What is Pitt's current indirect cost rate?

Isn't there some way for them to support the City for essential services out of that? It's not like a miniscule percentage out of research grants is going to depress the incentive to get such grants (it's the lifeblood of the place). It would be coming out of the University's take (indirects), not the Researcher's operational funding.

Mike Madison said... 12/03/2009 8:36 AM

The total dollar amount of federally-sponsored research flowing into Oakland each year is close to $1 billion. At that scale, and whatever the indirect cost reimbursement rate, the dollars really add up.

But federal law imposes restrictions on how that money is spent and accounted for. What is claimed for reimbursement purposes and the reimbursement rate are carefully negotiated between the research entity and the sponsoring agency.

In other words, Pitt can't simply look at that big pool of indirect cost recovery and write a check to the City.

Nick said... 12/03/2009 8:51 PM

Taxing athletes is ridiculous. If you are going to pursue this line of thinking, why not do the fairer thing and impose a sports ownership tax. These players often come from modest backgrounds, are the absolute best in their field (top 1000 in the country at least) and work their butts off and risk life and limb in their jobs. The owners of these teams (obviously Mario's situation is unique) often inherit their teams and enjoy the benefits of a government protected monopoly and government subsidized stadiums (and in the case of Nutting, welfare in the form of revenue sharing that seems to go directly into his pockets and out of the city to business concerns like seven springs). But yeah, tax guys like Ryan Clark who goes out and literally almost kills himself to let the Steelers win and let the Rooneys and Nuttings enjoy the fruits of their labor.

Mike Madison said... 12/03/2009 9:41 PM

@Nick: QED!

Mike Madison said... 12/03/2009 9:47 PM

But seriously ... professional athletes earn their millions because of the physical risks that they take and the sacrifices they make for owners and the community? That's beyond idiotic. If people got paid for their putting life and limb on the line, then football players would be paid like schoolteachers (of course, I wish that schoolteachers were paid like football players!) and Marines would get paid $5 million apiece. Have a little perspective out there. Ballplayers are rich because TV rights and merchandising have turned pro sports into cash machines, and for no other reason.

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