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Report: City should shift tax burden to property owners

Philadelphia should overhaul its tax system to shift more of the burden onto property owners and reduce its reliance on business and wage taxes, according to a new report to be issued today.

The recommendations in the report, by the mayor's task force on tax policy and economic competitiveness, are not radically new notions. They reflect, in large part, the findings of prior studies, including a more comprehensive one completed in 2003 by the Tax Reform Commission.

But the task force report does focus on a key goal: How to make changes that will yield 70,000 more jobs by 2025. It also outlines administrative steps that must be taken to make that happen, from adopting a more accurate system for assessing property values to creating the job of a tax advocate.

Formed in March, the 17-member task force suggests a return to regular cuts in the wage and business-privilege taxes. Under its proposal, the nonresident wage tax would drop from the current 3.5 percent to 2.4 percent in 2022. Likewise, the resident wage tax would fall from 3.93 percent to 2.77 percent in the same time period.

"Recommendations to improve the tax structure have been offered in report after report, but while there have been some improvements, implementation has not been comprehensive due to concerns about the costs and risks of change," wrote the task force chairman, Harold Epps, president of PRWT Inc., and its vice chairman, lawyer Joseph Dworetzky. "These are, of course, valid concerns, but the cost of inaction is even more troubling."

Specifically, the task force said it believes the city stands to lose upward of 70,000 jobs over the next 15 years unless major changes are made in how Philadelphia taxes.

The report was met with an initial bout of skepticism by some City Council members who attended a briefing held for them yesterday by task force members.

Council members Maria Quiñones Sánchez and Bill Green, for instance, chafed when told the report, and its authors, did not address Sánchez's proposal to preserve the gross-receipts tax by allowing businesses to reduce their burden by instead crediting that tax against what they pay in net-income taxes.

Task force member Robert Inman, a finance professor at the University of Pennsylvania's Wharton School, responded that, in part, the task force focused primarily on tax-policy changes that were directly connected to job growth. Epps also noted the task force's limited resources and mid-October deadline to submit the report to the mayor.

Nutter, who has not endorsed any of the report's findings, was scheduled to hold a news conference about the report today.


Contact staff writer Marcia Gelbart at 215-854-2338 or mgelbart@phillynews.com.

Comments   
Posted 06:34 AM, 10/23/2009
psyrus
Why not reduce wasteful spending first? Why are we still paying for non-essential programs even when this city is broke? How many people does it take to run a city? Maybe every city job from the mayor on down should be audited. Then we can discuss shifting the tax burden.
Posted 09:03 AM, 10/23/2009
knot2hazy
I'm for auditing all city jobs also. it's a no brainer.
Posted 09:58 AM, 10/23/2009
Ben Dover
only part of this plan will go through, the part where they raise taxes
Posted 10:16 AM, 10/23/2009
glennm7
I live West of Penn. City residents need to understand that Penn has been pushing for property tax increases for years. They tried to raise property taxes in our neighborhood with a business improvement district. The money was to be given to their marketing organization, UCD. The mayor tried a big property tax increase to take advantage of the Wall St created crisis. Property taxes will shift tax burden to the poor and middle class to continue subsidies for big business and the wealthy. This is a long term propaganda campaign to concentrate wealth.
Posted 11:43 AM, 10/23/2009
philly57
for too long property owners aka middle class residents have been subsidizing the city's poor population (those who rent). imagine all the police time, prisons, healthcare, afterschool activities, utilities discounts, etc. that the poor get - and they get all these tax breaks. oh, and they never pay parking tickets, etc. how about we start to figure out how to make philly more attractive to the middle class?
Posted 12:54 PM, 10/23/2009
rbpeeple
Then rents will go up too. The only people who will make out on the deal will be Section 8'ers...who don't pay anything anyway...and who are incidentally the people who are the cause of the city's woes anyway. And we wonder why people move away. This is one more step towards making Philadelphia = Detroit. Tax the middle class, put the burden on the middle class, expect nothing from the poor and less from big business.
Posted 01:41 PM, 10/23/2009
philly transplant
Number 1 - fix the BRT and assessment process so that it's fair and defensible. Once that's done, I support raising property taxes and lowering wage and business taxes. The city needs to shift its revenue balance so that it relies more on taxes on things that change slowly (property values) and are fixed (houses) instead of wages and business taxes which can fluctuate significantly year to year. It just makes sense. And I say that as a middle class, property owner who works in the city and has no plans to leave.
Posted 01:48 PM, 10/23/2009
SpeakPhilly.com
non residents should pay 5 times as much taxes...if you want to live in the burbs then find a job there
Posted 02:23 PM, 10/23/2009
Lori T.
SpeakPhilly, really? Isn't it the goal to get people to move back to the city, right? So if we take your suggestion, the city loses all that wage tax revenue and what replaces it? Non-residents don't use the city's entitlement programs, they add revenue. I think Philly transplant is right...you need to make the city more attractive to people who work. Add in full accountability from the BRT/CITY COUNCIL and we might have a start to a solution. Waste and corruption rule, so until you address these issues, nothing will change. What exactly is your problem with people commuting to the city to work? THEY aren't the ones ruining your neighborhoods, so why hate us?
Posted 02:47 PM, 10/23/2009
SpeakPhilly.com
yes Lori I am serious. Non residents come to the city make their money and roll to the shopping centers in the burbs and Jersey. Very little of that money is returned to the Philly economy. Their should be a working privilege tax for those living outside the city. BTW, my neighborhood isn't ruined.
Posted 02:58 PM, 10/23/2009
dreinterests
this report is disingenious, the problem is both the level of spending and where it's spent. the city suffers from bad schools despite high taxes because the money is siphoned off for unproductive uses. speakphilly.com is on crack. nobody would work in the city at that rate and the city woudl be with even less jobs. I don't think there's a worse idea possible. they need to reduce the tax burden and increase the tax base, not just shift it to homeowners. remember, Penn and Temple are exempt as are the stadiums and probably the airport which leaves a pretty small pool outside homeowners. Worse, reliance on proeprty values lately has been a detriment to many budgets. our budget problems are almost entirely due to pension funding issues, not excessive swings in property values.
Posted 03:03 PM, 10/23/2009
phillystl
SpeakPhilly - This is the single smartest comment I've seen on this site! And Lori T. - you're an idiot. You're argument doesn't even make sense. If we increase the tax on the non residents then they will have the best incentive to move to the city in order to pay the reduced wage tax, additionally, if they are property owners, they would then pay property tax to the city instead of the 'burbs.
Posted 03:55 PM, 10/23/2009
tonyd123
why not tack one dollar on concert event tickets and sporting events,and also parking,a lot of the people coming to these events are from out of town, make thier mess and leave,why not make them pay too for all the clean up
Posted 07:35 PM, 10/23/2009
Catch22
SpeakPhilly and phillystl... stay ignorant and uneducated. That will keep us out of the city, for fear we'd wind up with neighbors like you.
Posted 09:01 PM, 10/23/2009
daveg3
The wage tax is so high. City council does not know what it is talking about. They want to keep things like they usually are. If the wage tax were reduced, people would have more money to save for retirement and would be in better shape. I hate seeing part of my salary go to support this city. Philadelphia needs to become more competitive and just implement these changes.
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