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Saturday, December 27, 2014

"Just tax the University of Scranton"

A familiar comment you hear relative to Scranton's never-ending march towards municipal bankruptcy was noted recently on a Facebook thread:

"I know I might get slapped down for this comment...but we need the University to start paying taxes.  Look at the amount of properties they have amassed over the years..."

Now the issue about the University of Scranton having to pay property tax is complex, to say the least. As I understand it, the exemption technically resides at a state level, and is based on a 1985 court ruling (Hospital Utilization Project v. Commonwealth Pennsylvania), whereby there is a 5 point test to determine if an organization should be exempt from property tax.  That test defines a public charity as an organization that:

• Advances a charitable purpose;
• Donates or renders gratuitously a substantial portion of its services;
• Benefits a substantial and indefinite class of persons who are legitimate objects of charity;
• Relieves the government of some of its burden; and
• Operates entirely free from private profit motive.

You could argue that the University of Scranton both does and doesn't meet the above test, but that's not my point.  Rather, my point is this:  To say that the law should be changed to allow for taxation of an organization like the University of Scranton creates more questions than it problems it solves (in my opinion).  For example, if the University of Scranton has to pay taxes, what about Scranton Prep? What about the Hebrew Day School and every other private religious school? What about churches? An Atheist could easily argue that many churches in fact do far less for the community than the University of Scranton does. Do we want to just exempt small property owners, so that large property owners like the University are taxed? If so, how would the Diocese of Scranton, as a whole, be treated?

At the end of the day, I'm not arguing for or against taxing the University of Scranton, but rather what I'm saying is that a government simply can't single out one charitable organization for taxation without creating a whole host of other questions that need to be answered.

I will say the following though:  The refrain of "Just tax the University of Scranton" is just another way to avoid dealing with what REALLY is the central issue facing the City of Scranton, namely incompetent leadership, a budgetary expense structure that has not changed along with the city's population, unrealistic (including pension promises made to employees that are simply impossible for the city to keep) compensation/benefits for city employees and a punitive tax structure.

When all is said and done, complex problems seldom are solved with sound-byte answers.


Tom Borthwick said...

I agree. While they have taken property off of the tax rolls, they are a charitable institution. I would like them to pay taxes on properties that don't fulfill their mission. For example, they have a Chick Fil'A on campus. That has nothing to do with education and they are collecting rent. The business doesn't pay property taxes and competes with those that do.

Stephen Albert said...

Thanks for reading Tom.

I do wonder about for profit businesses operating at the universities...including the bookstores (which HAVE TO BE making a profit, given what they charge)...and whether or not they do in fact pay taxes. They should, if they don't, although a poster on one the Scranton Facebook forums claims that they do pay taxes.

I also think, as noted in the posting, that we as a society need to re-examine what the concept of what a "charity" actually means. For example, I make contributions to the Keystone Rescue Mission, which feeds homeless people. That's clearly a charitable endeavor, and I know for an absolute fact that they do darn good work charitable. However, are Scranton Prep, Holy Cross HS and Wyoming Seminary considered to be "charities"? While I'm sure they do provide educational opportunities to some lower income students, the reality is that the vast, vast majority of students at those schools come from middle class (or wealthier) homes which can afford a private education. Should they then benefit from a tax break designed to help charities? I think it's a question that should be asked.

Anyway, I had better end this comment before I get into too much trouble.

Take care and here's to a Happy New Year!

- Steve