Setting the table: Tax Increases
Philadelphia Mayor Michael Nutter says that given a projected billion-dollar shortfall, when it comes time to create a balanced budget for FY 2010 and the five years from 2010 to 2014, everything is "on the table." Let's take a closer look at that table.
Setting the table: Tax Increases
When he announced last week that the city is facing an additional $1 billion five-year gap in its budget, Mayor Michael Nutter said that "everything is on the table for discussion and legitimate debate." So between now and when the Mayor and the Penn Project of Civic Engagement commence the series of community forums to come up with the next budget and 5-year-plan, It's Our Money will try to set that table with its various dishes, utensils and entrees.
We'll begin with what some might consider "the spinach" on a table that's pretty much all vegetables and no dessert: raising taxes.
Over the weekend, the Inquirer had an item about how some members of City Council are preparing to talk about tax increases as one part of the plan to close that gap:
The real questions now, those Council members said, are: How steep will the increases be? And which taxes will be targeted: the dreaded wage tax, the oft-criticized property tax, or something else entirely?
"We're never going to be able to resolve a budget problem this big solely by reducing the size of government," said Councilman Darrell L. Clarke, whose views are shared by Council members Maria Quiñones Sánchez and Bill Green.
To be sure, there are still at least as many tax-hike opponents on Council as advocates, as well as a third bloc that is on the fence.
Ben will have more about the various tax hike scenarios in the coming days. The Inquirer piece breaks it down into five options: property taxes, wage taxes, business taxes, delinquent taxes and other fees and taxes.
Your thoughts on these options are welcomed in the comments section.
A quick snapshot of my family's finances while looking for a home in Montgomery County instead of in our current Northwest Philadelphia area(Mount Airy): Property Taxes increase roughly $2000 a year (to $4200 from $2200) and wage taxes are reduced to $0 from our family's current $4640 a year. And this is before the threats of any more increases in either the wage or property tax camoe to fruition. Not to mention improved schools, less crime, and better overall community services. Anybody with a good reason why my family should stop looking in Montco? I'd love to hear it. Oh yeah, and buying that $220000 house in Mt. Airy? Tack on $6600 in title transfer fees that add about $40 a month to your mortgage debt (i.e.- $15000 over the life of an average 30yr. loan. Not Buy Buy Philly... more like Bye Bye Philly.— NHB- Increase the wage tax on people who live outside of Philly, So when NHB moves to Montgomery county, he can pay more for working in Philly. That way, he also won't lose his city wage tax deduction on his income taxes.
- I don't work in Philly- I only live here... just not for too much longer.— NHB
- Yes, I missed that wage tax going to zero. At least if you do move, shorten your commute to work, or be close to public transportation. Philly should lower it's sales tax to at least the state level.
- Right now my commute to Blue bell is about 7 miles and by looking on the other side of the Stenton Ave/ Northwestern Ave. corner it'll be down to about 4-5 miles. We used to live in NoLib and moved out here about 4 years ago... we just feel now with a new child it's time to get the rest of the way out. The city has basically taken away all incentive to stay.— NHB
It is never that simple. Check out a web site like www.bestplaces.net, which will provide a little insight to other county taxes. Mont Co has a lot of little taxes depending on town, borough or township, like a library tax and trash tax, that increase the cost of living (average mont co income tax is 7.75% - local, county and PA. Not much lower than Phila.). good luck.— nebulus- You're right- it's not a few numbers, but the point is the same, just like the title of this blog- it's about getting more "bang for your buck". The basic premise still applies: the disparity between what you pay out and what you get in return is too great in Philadelphia to warrant staying; especially for those who don't work in the city.— NHB
- NHB - how do you figure your wage tax goes to $0? If you still work in the city, you still pay it, the percentage is just a little lower.— philly transplant
- @philly transplant- read the whole thread... I only live in city limits, but I work in MontCo.— NHB
- Great discussion, folks. I think the moral of NHB's story is that the city is never going to get EVERYONE to live here no matter what they do with taxes. Someone in NHB's situation will almost always choose the live in the suburbs route especially if it means being closer to a place of employment that is outside of the city and that itself is probably not accessible from transit. There are plenty of other folks who work in Philadelphia OR don't have kids OR have kids and want to raise them in a more walkable environment. These are the folks who are more on the fence and for whom changes in city policy, service delivery, tax rates, etc. would make the difference.— Dan Pohlig
- Thank you Dan- my point exactly. The decline in city services/ quality of life, coupled with the specter of ever-increasing taxes (not just the wage tax) and trimmed services has defined our "tipping point". Would I like to stay in the city? Absolutely. There are times when I can't imagine not having Chestnut Hill's main drag a mile walk away, but, is it practical given my family's situation? Absolutely not. I'm not thinking about this with blinders on- there would be several ways to keep people like me around; I just don't see the Mayor and council doing those things anytime soon.— NHB
- That leads us to start playing the game of what if. What if Philadelphia shifted away from an wage/income tax as its major source of income and towards a property tax? Assuming that property tax rates were similar, if a little more in Philly to make up for all of the other borough and township fees and taxes in the suburbs, then it comes down to comparing quality of service delivery between Philly and Montco and quality of "amenities" between the two.— Dan Pohlig
- it's a game that needs to be played though... otherwise the city will be asking a different question once the next wave of people move out: why us?— NHB
- It comes down to this: a quarter of Philadelphians live in poverty. That means they don't pay a whole lot in taxes, but they consume the same services and then some. In most suburban municipalities, everybody is middle class, so they only have to pay enough taxes to pay for the services they actually consume. City government could become the most efficient in the universe and it wouldn't change that basic fact.— dartvader
