The Long Battle To Give The City's Working Poor A Tax Break

It has been called the "crowning legislative achievement" of the late City Councilman David Cohen's long career.  Now after years of delay, Cohen's call for a reduction in the city's wage tax for the working poor might never take effect.

Mayor Nutter, in a five-year financial plan released Thursday, called for the elimination of the "Low Income Tax Credit." The Revenue Department has said the tax cut, due to start in July 2013, would cost the city $80.8 million in three years.

Cohen, who died in 2005, championed the tax cut for years and got it passed by Council in 2004.  Nutter voted to support it and helped override a veto by Mayor Street, who was in a budget battle with Council that year.

Street tried to kill the tax cut two years later, just four months after Cohen died, sparking fury in Council. Councilman Jim Kenney accused Street of "Smacking David Cohen in his grave."

Council finally settled on a compromise, keeping the tax cut alive but pushing back its start from 2010 to 2013. Nutter and Kenney voted against the delay.

Nutter's five-year plan notes that the city is working to reduce the wage tax for everyone and that the city's poor have benefited from the expansion of the Federal Earned Income Tax Credit program.

UPDATE:  Rob Dubow and Stephen Agostini, Nutter's finance and budget directors, say the Low Income Tax Credit would actually cost the city $80.8 million in fiscal year 2016 alone, after starting in 2013 and ramping up in 2014 and 2015.

And it looks like Nutter may have an easier time politically with this issue that Mayor Street.  Kenney today said that would still like to the see the tax cut happen but understands that Nutter is dealing with substantial financial issues, like the city's pension fund and upcoming labor negotiations. "I'm willing to give them some latitude and some leeway in setting our financial course," Kenney said of Nutter's budget team.