Socially & fiscally responsible taxes

HIGHER TAXES. Who wants to pay them?

As the former chairman of the Philadelphia Tax Reform Commission, I can attest that the answer is no one.

In the fall of 2003, we recommended the most ambitious tax-reduction program in the United States. Philadelphia has methodically put much of it in place.

But the Tax Reform Commission also believed that tax cutting had to be socially and fiscally responsible - and shouldn't gut essential city services in the process. That's why our program was set to take place over a 10- year period. You couldn't predict what might happen along the way.

Now, faced with hard times, Mayor Nutter is seeking a temporary increase in the sales tax, raising the city rate to 8 percent from 7. (While the suburbs will still be paying only 6.)

Nutter was the councilman who proposed the Tax Reform Commission. But we all understood that there would be times when we simply had to do this.

And what about Gov. Rendell's proposal to increase the state income tax from 3 percent to 3.57 percent for three years?

That's $5 a week more for households earning $50,000 a year. Five dollars isn't even enough to buy a Big Mac and a Coke at McDonald's, but should we pay it?

The Republicans in Harrisburg - led by state Sen. Dominic Pileggi of Delaware County - say no. No new taxes. They have lots of ideas on how we can avoid them.

We need to understand them.

Start with the schools.

As part of the stimulus package, the federal government sent Pennsylvania $728.8 million to strengthen our investment in basic education.

Rendell's budget does just that. It increases support for basic education by $418 million. But the Republicans say that to save money, we should use the federal money to replace state support for education.

If Harrisburg adopts their plan, Philadelphia will lose $222 million from what the governor recommends, Delaware County will lose $20 million, and schools in Montgomery, Bucks and Chester counties will lose $20 million between them. That's just part of what it will take to save us $5 a week.

Next, the Republicans tell us we should eliminate just about every economic development program designed to help small businesses in Pennsylvania.

One of these is called KOZ, Keystone Opportunity Zones, where businesses can locate tax-free. The city of Chester used a KOZ to attract Harrah's casino.

It now generates more than $300 million in state tax revenues. But the Republicans say that we just can't afford to do this anymore.

Then there are hospitals. The Republicans propose to cut $280 million from hospitals and health care in Pennsylvania - everything from trauma centers to outpatient care.

Philadelphia's Mercy Hospital loses $3.3 million under this plan. The Hospital and Health Care Assn. of Pennsylvania tells us we could lose 13,000 jobs if these cuts go into effect. Is this how to fight the recession?

Then there's child care, nursing homes and people with disabilities. All face cuts under the GOP plan.

Aren't these the people who need our help most during times of economic crisis? But if we want to save $5 a week, we can't afford to provide it.

So to save that $5 a week in new taxes, the Republicans in Harrisburg recommend that we downsize federal investment in our schools, terminate economic development, force layoffs of more than 13,000 people working in hospitals, and leave our most vulnerable citizens behind.

Does this sound socially and fiscally responsible to you? *

Ed Schwartz is president of the Institute of the Study of Civic Values. He served as chairman of the Philadelphia Tax Reform Commission in 2003.

Visit the ISCV web site at

www.iscv.org.

Also check out "Neighborhoods Online" at neighborhoodsonline.net. Or phillyneighborhoods.org.