PhillyTablet Inquirer Daily News
Mobile
Home Delivery
philly.com
email
font size
comments
5
options
 
Monday, October 26, 2009

Philadelphia needs to change how it does and deals with business

Expecting a tax-policy task force to recommend something other than cutting taxes would be like counting on the Pennsylvania Milk Marketing Board to champion orange juice.

On Friday, the Mayor’s Task Force on Tax Policy & Economic Competitiveness did recommend resuming wage and business privilege tax cuts in 2012. To close a widening budget gap, the Nutter administration halted scheduled reductions last fall.

To those in the business community, this is a no-brainer. Reduce the burden from some of the nation’s highest taxes and business is more likely to view Philadelphia as competitive.

But tax-cut opponents say that nearly 13 years of such trimming under the Rendell, Street and now Nutter administrations has not halted the job drain. Why, they wonder, would these cuts be any different?

They may not be, which no one wants to hear. But to raise business taxes or do nothing to improve the ’50s-era system we’re stuck with now is destined to accelerate job losses.

Cuts in the wage tax since 1996 saved the city 25,000 jobs, according to research by Wharton finance professor Robert Inman. Still, employment in the city had fallen to 633,461 by the end of 2008.

Chaired by PRWT Services Inc. CEO Harold T. Epps, the task force projects that the city would save 47,000 jobs and gain 23,000 more by 2025 if the city were to implement its suggestions. That would be a 180-degree turn for a city employment base that’s plunged steadily since 1970 when 920,400 labored here.

We’ve all heard these ugly statistics, and Center City Renaissance aside, we see the result every day in decaying industrial hulks and empty storefronts in fraying neighborhoods.

High taxes, while one of the biggest disincentives, is only one cracked piston in the city’s economic engine. There’s the unfairness of property assessment of the Board of Revision of Taxes. The technology used to ensure tax compliance and collection is obsolete. About 15 percent of the city’s taxable properties are tax delinquent - more than 80,000.

To its credit, this task force handed Mayor Nutter a to-do list of items that his administration could implement without the hurdle of needing City Council approval. The mayor promised a review of the report’s recommendations.

But as the private-sector members of the panel lined up for a photo with the mayor in City Hall on Friday, I couldn’t help feeling that this would be another report that will do a slow fade from memory as the Tax Reform Commission’s did in 2003.

“Thinking Beyond Today: A Path to Prosperity” is a nice enough title for a government-sponsored report. But it’s no call to action, and given the enormous budgetary pressures on the city, I’m afraid it will be easy for the political class to ignore it.

Knowing what needs to be done is important. Still, it’s only a bunch of words until Mayor Nutter actually demonstrates that Philadelphia is changing to become a fairer, clearer and more efficient place for business operate.

Read an executive summary of the task force's work here or the full report here.

Earnings

This week will see an avalanche of quarterly reports from area companies. You really will need a scorecard, so here it is:

Monday: Liberty Property Trust, Sunoco Logistics Partners, Triumph Group;

Tuesday: Ametek, Carpenter Technology, Cephalon, NutriSystem Inc., Quaker Chemical, Sun Bancorp, Teleflex, Vishay Intertechnology;

Wednesday: Auxilium Pharmaceuticals, Brandywine Realty Trust, FMC, GlaxoSmithKline, GSI Commerce, Harleysville Group, InterDigital, Lincoln National, Pennsylvania Real Estate Investment Trust, SAP, Unisys, ViroPharma;

Thursday: Adolor, Airgas, AstraZeneca, Bryn Mawr Bank, CDI, eResearchTechnology, Endo Pharmaceuticals, Harleysville National, ICT Group, National Penn Bancshares, PPL, TF Financial, Universal Health Services;

Friday: Abington Bancorp, Dollar Financial, Dorman Products, EnerSys, Quigley, Safeguard Scientifics.
Posted by Mike Armstrong @ 2:05 AM  Permalink | File Under: Politics, Taxes | 5 comments
Comments   
  • 0 like this / 0 don't   •   Posted 10:11 AM, 10/26/2009
    Nutter will do nothing, but maybe request another report.
    — Mark Chalupa
  • 0 like this / 0 don't   •   Posted 12:39 PM, 10/26/2009
    Well, the City cannot make things much worse.
    — tonyS
  • 0 like this / 0 don't   •   Posted 1:56 PM, 10/26/2009
    Cut Taxes, Cut Taxes...sounds like a Republican Campaign Slogan! I would love to volunteer to sit on one of these "committees". How could a businessman tell his employees that next year, after relocating to Philadelphia, they can send their kids to the Philadelphia Public School System, travel in and out of the Philadelphia Airport and be subjected to the Philadelphia Parking Authority...not to mention the beatings,and deaths in the SEPTA System as well as the growing homicide rate. Several years ago, I remember another "Blue Ribbon" panel commissioned by Wilson W Goode, who thought they would rubber-stamp a tax hike, taking the heat off of him and his administration. Well, they came back and their studies showed that Philadelphians are really lookig for 3 things; SAFE STREETS, CLEAN STREETS AND AN EDUCATION SYSTEM THEAT WORKS! Their recommendations didn't gain any traction then and I imagine a similer finding would go about as far today.
    — MJU
  • 0 like this / 0 don't   •   Posted 2:11 PM, 10/26/2009
    Consider the suburbs with very low comparable business/wage taxes as an independent variable in deciding if Philadelphia should keep lowering taxes-it's a no brainer. Now consider the success of the tax-abatement program in Philadelphia to see what substantially lower tax rates would bring. In both cases, Philadelphia would benefit greatly in job creation and comparative advantage if it substantially lowered the cost of doing business in the city-one of the main things companies focus on when making capital investments. Finally, consider when employment loss started to become endemic to the city-the 60s and 70s-exactly when the city substantially raised business and wage taxes.
    — CoolZanna
  • 0 like this / 0 don't   •   Posted 4:27 PM, 10/26/2009
    Keep it high, keep the wealth out of Philly. Nutter and his predecessors have agendas. Keep the folks poor they will vote for another term. Feed Vince Fumo and his ilk. Pay for the perks of being City Council.
    — robentcorp


5 comments
About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980
Advertise Here