Ferlo proposes 0.4 percent payroll tax on larger nonprofits

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State Sen. Jim Ferlo, D-Highland Park, said today he will introduce legislation to charge a 0.4 percent payroll preparation tax on Pittsburgh nonprofits with more than 250 employees.

Mr. Ferlo said his proposal, which would need approval by the Legislature, would "end the bickering and bartering" the city goes through every couple of years to get payments in lieu of taxes from nonprofits.

As part of the proposal, the payroll preparation tax of 0.55 percent charged to for-profit firms would be reduced to 0.5 percent.

Mr. Ferlo estimated the tax would generate $6 million to $10 million annually for the city. It would primarily apply to medical centers and universities within city limits.

Through his spokeswoman, Mayor Luke Ravenstahl said he hasn't seen the legislation but looks forward to reviewing it.

Ken Service, executive director of the Pittsburgh Council on Higher Education, said the proposal comes at a difficult time because of state funding cuts for higher education. Such a tax would be "counter-productive" to the mission of nonprofits.

"I think one of the things that has gotten lost is the reason they are tax-exempt in the first place," he said. "That is because they provide a service that is too expensive for government to provide on its own."

UPMC, one of the city's largest nonprofit employers, couldn't be reached for comment and West Penn Allegheny Health System declined comment.

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Ed Blazina: eblazina@post-gazette.com or 412-263-1470.


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