For-Profit Tax Breaks
Career College Central summary:
Grand Canyon University, an Arizona-based for-profit college, is working to lower its property tax rate in the state. A bill sponsored by the chairman of the state’s Senate finance committee would allow Grand Canyon Education Inc. to avoid an estimated $1.5 million in property taxes next year – plus more in years to come. The publicly traded company is expanding its main campus in Phoenix and working to open a new campus in Mesa by 2015.
C.E.O. Brian Mueller said the tax break would be miniscule compared to the company’s past and ongoing investment in the state. He said that between 2009 and the end of 2013, Grand Canyon has invested about $401 million on classrooms, dorms, athletic facilities and technology. Over the same period, the company made about $267 million in after-tax profit.
While many industries seek tax incentives and exemptions, for-profit college lobbyists tout that they pay taxes and have taken shots at tax-exempt public colleges and private nonprofit colleges. For-profits also argue that they don’t take direct government subsidies, as public colleges do — though for-profits do end up collecting about $30 billion a year in federal financial aid that flows through students. Mueller said what’s happening in Arizona and at Grand Canyon is unique.
Officials of the company argue that even though its tax rate will go down, it will actually be paying more taxes over all because the value of its property is going up after the investments, which are designed to bring thousands more students on campus in coming years. The university currently has about 60,000 students. Fifty thousand are online but about 8,500 are going to classes in Phoenix. Grand Canyon is not the only Arizona for-profit to get a tax break.
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