Taxing Higher-Ed

Congratulations must be extended to the City’s college and university community: they are the sole remaining group to be targeted by the Mayor’s new fee structure aimed at raising $15 million per year for pensions. Gone are the plans for taxing hospital admissions, all day parking, and water use by large non-profit organizations that were mentioned in the amended Act 47 plan.

That leaves the 1 percent "college education privilege tax" as the remedy-obviously at 1 percent it would hit students at different rates depending on their tuition bills. That sort of throws the notion that this is a fee out the window: a fee would be flat based on the consumption of some type of service. This would certainly be brought up in a court challenge on the matter, since the Mayor and the Act 47 team agreed that "legally enforceable fees and charges" be levied in order to fund the pension shortfall. The City’s likely line of argument would be that since the local tax code does not prohibit a "college education privilege tax" then the City would be free to levy it-sort of like the tax on un-metered parking that we discussed in previous publications-and the pensions are in such bad shape that this is a necessary levy.

Here’s what should happen: The City, Act 47, and/or the oversight board should hire a consultant to determine with precision how much college students generate in City taxes versus how much they consume or burden City services, down to the dollar amount. It is entirely possible now that they are producing a positive net impact for the City. Throw in the employees and administration of the colleges and universities and the net benefit may be even bigger.

But don’t look for that to happen: it is much easier to for the City to continue to demonize the exact institutions that they constantly claim boost the City and the region’s fortunes and provide stable growth.