The consideration of a tuition tax is appealing to populations beyond Pennsylvania as cities look to prop up budgets.
Leave it to California to be the first to jump on the bandwagon. In this Orange County piece, Gary Robbins urges for the adoption of a tuition tax in California to offset the state budget deficit which stands at $21 million.
The Tax Foundation rightly highlights the arbitrary nature of tax that borders on extortion, yet the deeper issue is subsidizing higher education- a debate worth having. If Pittsburgh needs more revenue they should consider revoking universitie’s property tax exemptions, taxing students ignores the underlying problem.
The tuition tax is unfair and futile. As I pointed out in my commentary with Nathan Benefield, financially strapped cities need to address the source of their problem, that is spending and pension reform, and refrain from new streams of revenue that perpetuate the old cycle. As we’ve seen time and time again higher taxes beget sluggish economies while lower taxes beget strong economies.
Update: The University of Pittsburgh, Carnegie Mellon and insurer Highmark have agreed to make larger voluntary donations to the city than they did in the years 2005-2007. However, it is unknown how long or how much they will contribute.