If the city's maneuver is a product of unusual financial stress, as appears to be the case, then the universities might do best to bargain now. In return for agreeing to make modest payments for "services" (based perhaps on a formula that took their own expenditures on police services into account, especially insofar as these provide externalities benefiting the city), they could secure long-term agreements capping the tax or the payments.The serious point bears noting: The universities could offer the city a guaranteed revenue stream - with a discount for making it a long-term deal. The slippery slope point bears noting, too: A tax on churchgoing! That would sell here - about as well as a tax on cookie tables at weddings. Then again, Dean Levmore is known for a sharp wit; he once asked his economics students to answer the following question: "Why does a house cost more than a cookie?"
Finally, we can see the tuition tax as much more clever than a lump sum payment for services or a removal of the property tax exemption.Of these, only the tuition tax distinguishes colleges from museums and from churches. The city can be seen as arguing that it, along with many other jurisdictions, already imposes sales taxes on amusements and other things that straddle the line between services and products. A modest sales tax on tuitions - and on museum entry fees - is thus rather clever. But can taxes on temple dues and pew fees be next?
Showing posts with label tuition tax. Show all posts
Showing posts with label tuition tax. Show all posts
Wednesday, December 16, 2009
The Tuition Tax: An Economist's View
University of Chicago Law School Dean Saul Levmore, who is an excellent economist as well as a celebrated legal scholar, has posted a characteristically acute analysis of Pittsburgh's proposed Tuition Tax (replete with a Chicagoan's dig at Pittsburgh's population struggles). The payoff:
Wednesday, December 02, 2009
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.
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.
Wednesday, November 11, 2009
The Tuition Tax: Robbing Peter to Pay Paul
[Updated: After posting the note below, I was advised that the city already has a tax on local income received by non-resident professional athletes. Here's a link. What I'm talking about below is related, but perhaps a little different. The existing rule is a form of income tax. (Of course, it should be possible to raise the rate and increase the $2-$3 million already generated annually.) What I'm talking about is the same kind of "usage fee" or "service fee" that is the conceptual driver behind the "tuition tax."]
This morning's PG editorializes that the proposed "tuition tax" on Pittsburgh college students isn't a great idea -- but the PG, like the mayor, can't think of any other solution to Pittsburgh's pension deficit. The underlying problem, according to the PG, is that "Harrisburg" won't solve Pittsburgh's pension problems, and Pittsburgh doesn't want to let Harrisburg take over the pension system. (Why the paradox in that statement is ignored still puzzles me.)
But there are other solutions.
Here is one:
Who is better able to afford paying an extra sum per year for the privilege of enjoying all the amenities, services, and privileges afforded by the City of Pittsburgh? College students, or professional athletes?
Don't enact a "tuition tax." Instead, enact an "amusement tax": Every pro athlete who competes in Pittsburgh, including both Steelers, Pirates, and Penguins and players visiting teams -- full active rosters, whether or not they play a particular game -- could pay a very modest percentage of his annual income (salary plus prorated bonus plus endorsements) to the City of Pittsburgh. Athletes already pay a pro-rated income tax to states where they compete as visitors, so the concept of local taxes isn't foreign. Given the number of athletes, the number of games in Pittsburgh in each sport, and the amount of money needed ($15 million per year for the pensions, plus a $1 million in pocket change for the Carnegie Library system), it shouldn't be too difficult to come up with an appropriate tax rate.
Would this embolden other cities with pro sports teams to do the same? Sure. I think that pro teams generally take more than they give from their host cities as it is.
Would this serve as a disincentive to pursue a career as an athlete rather than a career in some other field? Maybe. I think that a little disincentive to be a pro athlete, and some incentive to do something else, would be great.
In case it seems to overreach to cover the whole $16 million gap by taxing athletes, we might collect, say, half the money from pro athletes and half the money elsewhere.
Just the other day, according to the paper, "The Rivers Casino will pay its $7.5 million a year toward construction of the new arena in two installments under an agreement approved by the city-Allegheny County Sports & Exhibition Authority board." What if the Sports & Exhibition Authority board sucked it up for the good of the city, its libraries, and its college students, and agreed to turn that money over to the mayor? Obviously, that would leave the arena looking for cash, and Pens fans and other prospective attendees of arena events would scream foul. But who is better able to bear the cost (and should bear the cost) of arena construction? Those who will use the arena, or ...
It's a borrow-from-Peter-to-pay-Paul situation regardless of how you add it up. The only question is who is going to be Peter, and who is going to be Paul.
This morning's PG editorializes that the proposed "tuition tax" on Pittsburgh college students isn't a great idea -- but the PG, like the mayor, can't think of any other solution to Pittsburgh's pension deficit. The underlying problem, according to the PG, is that "Harrisburg" won't solve Pittsburgh's pension problems, and Pittsburgh doesn't want to let Harrisburg take over the pension system. (Why the paradox in that statement is ignored still puzzles me.)
But there are other solutions.
Here is one:
Who is better able to afford paying an extra sum per year for the privilege of enjoying all the amenities, services, and privileges afforded by the City of Pittsburgh? College students, or professional athletes?
Don't enact a "tuition tax." Instead, enact an "amusement tax": Every pro athlete who competes in Pittsburgh, including both Steelers, Pirates, and Penguins and players visiting teams -- full active rosters, whether or not they play a particular game -- could pay a very modest percentage of his annual income (salary plus prorated bonus plus endorsements) to the City of Pittsburgh. Athletes already pay a pro-rated income tax to states where they compete as visitors, so the concept of local taxes isn't foreign. Given the number of athletes, the number of games in Pittsburgh in each sport, and the amount of money needed ($15 million per year for the pensions, plus a $1 million in pocket change for the Carnegie Library system), it shouldn't be too difficult to come up with an appropriate tax rate.
Would this embolden other cities with pro sports teams to do the same? Sure. I think that pro teams generally take more than they give from their host cities as it is.
Would this serve as a disincentive to pursue a career as an athlete rather than a career in some other field? Maybe. I think that a little disincentive to be a pro athlete, and some incentive to do something else, would be great.
In case it seems to overreach to cover the whole $16 million gap by taxing athletes, we might collect, say, half the money from pro athletes and half the money elsewhere.
Just the other day, according to the paper, "The Rivers Casino will pay its $7.5 million a year toward construction of the new arena in two installments under an agreement approved by the city-Allegheny County Sports & Exhibition Authority board." What if the Sports & Exhibition Authority board sucked it up for the good of the city, its libraries, and its college students, and agreed to turn that money over to the mayor? Obviously, that would leave the arena looking for cash, and Pens fans and other prospective attendees of arena events would scream foul. But who is better able to bear the cost (and should bear the cost) of arena construction? Those who will use the arena, or ...
It's a borrow-from-Peter-to-pay-Paul situation regardless of how you add it up. The only question is who is going to be Peter, and who is going to be Paul.
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