City Council approved repeal of wage-tax-rebate

Lost in the shuffle of the budget debate, City Council voted Thursday to repeal the late City Councilman David Cohen’s working families’ wage-tax-rebate law.

The law was set to go into effect in 2017 after being delayed several times by former Mayor John Street in 2006 and Mayor Nutter last year. Thursday the administration was successful –Council voted 10-6 to kill the law. Council members Cindy Bass, Jannie Blackwell, Wilson Goode Jr., Kenyatta Johnson, Dennis O’Brien and Mark Squilla voted against the repeal. Councilwoman Maria Quinones-Sanchez was absent.

The wage-tax-rebate –modeled after the state’s Low Income Tax Forgiveness program –would have provided relief to 165,000 Philadelphians earning 200 percent below the poverty line, said Revenue Commissioner Keith Richardson.

“People at that level of poverty need that money to spend every day of every week,” Goode said. “A lot of people are struggling economically.”

“We know that money will be spent locally,” he added. “It’s more of an economic boost to do a wage-tax (rebate) for the poor.”

But the administration said they want to do broad-based wage-tax relief that would apply to all Philadelphians, not just a few. The city’s Budget Director Rebecca Rhynhart said the administration includes in their five-year plan broad based wage-tax relief.

As a Councilman, Nutter supported the law, but at a press conference Thursday afternoon he said, “The additional cost of that particular bill as well intentioned as it is in these current economic circumstances …2006 was before the worst recession since the great depression. We can’t afford that level of tax-relief at this time or in the near future.”

The Cohen law would have cost the city $8.5 million during its first year of implementation and then jump to $22 million the following year, Rhynhart said. The administration’s broad-based tax relief would cost $11 million in fiscal year 2014 and then $23 million the next year.

Councilman Bill Green, who supported the repeal, said “I would like resources available to address taxes that prevent us from growing the city as opposed to small amounts of money that go to a lot of people. We need to use money to create jobs.”

Supporters of the law clutched signs calling for Council to vote against the repeal and booed when the measure was approved.

Sherrie Cohen, Cohen’s daughter and organizer of the Fair Share Coalition said, “People in this city, including city’s leadership speak about the war on the poor, but the Mayor and City Council should not be voting to increase their hardship.”