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Inquirer Editorial: High suburban taxes make city more attractive

A new study showing the middle-class tax burden in Philadelphia is now comparable to what suburbanites pay makes it even more urgent to improve schools and make neighborhoods safer so the city can attract families and businesses.

(PEDRO MOLINA)
(PEDRO MOLINA)Read more

A new study showing the middle-class tax burden in Philadelphia is now comparable to what suburbanites pay makes it even more urgent to improve schools and make neighborhoods safer so the city can attract families and businesses.

A hypothetical middle-class family in the city paid 12.9 percent of its income in state and local wage, real estate, and sales taxes this year, down from 13.5 percent in 2000, according to the study by the Pew Charitable Trusts.

That's comparable to what residents of Philadelphia's Pennsylvania suburbs pay after seeing their tax burden increase from 9.8 percent of income to 12.2 percent between 2000 and 2012. South Jersey residents' tax burdens have also increased - from 9.9 percent to 11.3 percent.

The Pew numbers should also add energy to efforts to upgrade the city's arts and cultural resources.

The advantages of living in Philadelphia are growing, and developers are reacting. The city Planning Commission last week approved three apartment buildings that would be built within walking distance of the remodeled Race Street pier. South Street is slated to be book-ended by condominium and townhouse developments by the end of 2014.

Now is the time for Philadelphia to move more aggressively. Young families who enjoy the convenience and diversity they find in the city won't stay if they have to opt for expensive private schools for their children, or live in fear that violent street crime will seep into their communities.

In fact, even as city officials applaud the reduction in the gap between city and suburban tax loads, they should note that it is in part due to suburban residents' willingness to pay higher taxes for better schools and municipal services - public safety in particular. The tax gap's reduction is mostly due to small cuts in the city's wage taxes and increases in suburban real-estate taxes.

Suburban residents who commute to work in the city have the heaviest tax load. In addition to paying higher local taxes, they pay the city's wage tax. But an analysis by the Delaware Valley Regional Planning Commission shows the number of suburban commuters has dwindled as more jobs became become available outside the city.

The city's dysfunctional property assessment system is another reason that the gap between city and suburban tax burdens is much smaller today. Too many properties haven't been properly assessed, meaning the city isn't collecting taxes that reflect their true value.

That just adds to the importance of Mayor Nutter's completing his Actual Value Initiative, which promises to end the current unfair system that has owners of expensive homes paying lower taxes than they should. A more equitable property-tax system, better schools, and safer streets will bring more people to the city to live.

The suburbs need to pay as much attention to the Pew study as Philadelphia, but for the opposite reason. They are going to lose residents if they continue on this course. Their rising tax burdens have become a much heavier lift for families still struggling after the recession. But without more revenue, it's hard for towns to keep up with residents' demands to maintain or improve services.

The situation begs for consolidating many of the taxing districts in the region. The suburbs are cluttered with mayors, superintendents, and police chiefs, all doing the same jobs in side-by-side jurisdictions. The inefficiencies, duplication, and growing personnel costs are becoming a luxury that suburban taxpayers cannot afford.