Philadelphia has gotten into the bad habit of simply raising taxes – on its citizens, businesses, and anyone else with the ability to pay – whenever it needs money or wants to fund some “program.” The soda tax is a prime example. The city needed money for its general fund so it enacted a tax the negatively effects nearly every citizen. Oh, and City Hall said it was for Pre-K – a good goal – but only a small portion of the proceeds went to fund the program.
Fight New Taxes and Increases in Existing Taxes
Probably the biggest reason for decimation of Philadelphia’s tax base has been the jobs chased out of the city by our high tax rates and our irrational tax structure. Our current tax structure is perfect for mid-19th Century Philadelphia. At that time, the economy of the city was driven by manufacturing. Manufacturing businesses had to be along the river or rail lines and within walking distance from their workforce. Manufacturing was very labor intensive. There was no moving your factory to Blue Bell. Taxing jobs and businesses made some sense.
The economics of the region changed but our tax structure did not evolve. We have a more mobile economy and service industries have become dominant, while less manufacturing takes place. Drive down City Line Avenue to see what happened.
We need a tax structure that will keep businesses in Philadelphia, while not placing the burden too heavily on one group or industry. Our current City Council has decided to place the city’s financial burden on some groups and industries while selecting other groups and industries for tax benefits. For example, Philadelphia taxes soda and cigarettes on one hand, and provides corporate welfare like tax increment financing and the tax abatement on the other. Taxes should be broad based rather than targeting specific businesses.
Reduce Tax Rates to Attract Jobs
Tax rates also need to be reduced, particularly the wage and business taxes. Simple theory of economics: if you tax something you get less of it. Tax wages and business and jobs leave the city. While we have seen some incremental decreases in the wage tax, the progress has been much too slow. Nevertheless, we now have more wage tax revenue than we did when the rate was higher, and although it is not so simple as to attribute that rise to lowering the Wage Tax, it was certainly a factor. Mayor Nutter and Kenney stopped that progress and went on a tax-raising rampage, as the citizens of this city know all too well.
We need to go back to a predictable plan to lower the wage tax. It has to be incremental, but faster than the past decreases under Rendell/Street.