Ravenstahl’s “fair share” tax refutes basic economics
I used to babysit my cousin in high school. When I would reject his propositions, he would get mad at me, put his hands in his ears, and shout so that he couldn’t hear me. Eventually, I realized that you just can’t rationalize with a 5-year-old.
I recently came to a similar realization when the people of Pittsburgh re-elected Luke Ravenstahl as mayor, as he approaches the city’s problems with the rationalizing capability of a 5-year-old.
Recently, Ravenstahl proposed a 1 percent tax on the tuition of all students enrolled in post-secondary institutions. The mayor has met with opposition to this tax from the Pittsburgh Council on Higher Education, college administrators, students, and Pennsylvania state representatives. The tax has been unanimously rejected by the Intergovernmental Cooperation Authority — a group that discussed the legitimacy of the tax and Ravenstahl’s proposed budget — yet he is still pursuing it.
I recently sent a letter to the Pittsburgh city council members to show my opposition to the tax. In the letter, I described the tax as a violation of both common sense and economics. I explained that if Ravenstahl had taken a course on economics and paid any attention in class, he would be familiar with the concept of “negative externalities” and “positive externalities.” Negative externalities occur when an individual or organization makes a decision for which they do not pay the full cost, due to the fact that their decision is bringing about negative and expensive effects. These should be taxed so that the producers pay to make up for the deadweight loss created by the product. Ravenstahl has painted college students as “negative externalities,” claiming that by being in this region, we are freeloaders.
This is where his economics falter. Most students contribute taxes and pay for Port Authority in our tuition. And what would this city be without its post-secondary institutions? Probably something like Detroit. We give the city the prestige to have anything happen here besides a football or hockey match.
Imagine this city without a single post-secondary institution. Businesses that were started by graduates would be gone; the community service that students do for the city would no longer exist. In one school year alone, Carnegie Mellon students amassed 80,000 hours of community service. It is clear that we are a positive externality, not a negative one.
I hope that in making the budget decision, Ravenstahl keeps money on his mind as well as solid economic analysis to make his decisions. The least I ask of Ravenstahl is to grow up, take his hands out of his ears, and assess the current situation rationally to come up with an appropriate solution.