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Monday, April 05, 2010

Tax college students for being college students?

If one searches "university" or "college" and "economic impact" you will find hundreds of studies sponsored by institutions of higher learning highlighting the economic impact they have on their local and regional economies. I am always a bit suspicious of the ultimate numbers, but there is no doubt that a local college provides some boost to the local economy. Even local politicians will often point out that they have one or more colleges in the area in hopes that potential employers will see the area as having a more highly educated and trained workforce.

Yet, the tough times are providing more "natural experiments" in areas that economists can explore for years to come. One example comes from New Jersey where a number of municipalities, having seen their state-based resources dwindle over the past several years, are proposing to tax college students, perhaps up to $100 per year, to defray local operating costs attributable to college students. It has been a perennial debate as to whether college students, specifically, contribute net tax dollars to the local coffers. Many point out that the students often demand relatively few services - fire, police, perhaps hospital - because they are generally single and without children. On the other hand, many point out that college students only contribute to local coffers through sales taxes, and rarely directly through property taxes.

I find the story/concept interesting although I have no empirical evidence to support the necessity to tax college students simply for being college students. What the proposal does provide, if it were to pass, is at least one dissertation idea.

Story here

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