One of the main reasons Philadelphia is the poorest big city in the country is that it is also one of the highest taxed.
Among the dozens of taxes Philadelphians pay, the payroll tax is the highest in the country; sales tax is 33% higher than in the suburbs surrounding the city; the business tax reduces both revenue and net income, and the property tax system is uneven and riddled with inaccuracies despite reforms.
The result is that Philadelphia’s heavy tax burden discourages the presence of businesses that can create jobs—a factor that is inextricably linked to high poverty rates. The next mayor needs consistent tax policy that lowers payroll and business taxes to promote job growth and reduce poverty.
In addition to fighting crime and improving schools, where the mayoral candidates stand on taxes is a key issue for voters to weigh in order to make an informed choice. The Inquirer editorial board examined candidate websites, voting records, public comments and policy documents to create the following snapshot.
State Rep. Amen Brown did not respond to a request for a policy document, but his website mentions using tax policy to grow small businesses. He wants to give new small businesses a three-year tax break on the city’s business income tax and income.
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The business income tax has long angered businesses because it taxes both income and net income. Brown said the abatement would give small businesses a chance to get established before being hit by the tax. He likened his plan to the 10-year property tax abatement on new construction that helped spur development. It’s a decent idea, but it’s unlikely to change the game.
Jeff Brown, the grocery store magnate, also has not provided a policy document, and his website makes no mention of taxes. In an interview with the editorial board, Brown said he supports keeping a gradual reduction in wages and business taxes. He opposed Mayor Jim Kenney’s soda tax, but said if elected he would not repeal it. While Brown is an outsider who promises to change the status quo, his tax policies seem conventional.
Judge James DeLeon’s website does not address taxes, but does mention holding listening sessions with business owners, especially small business owners. He provided a two-page white paper that identified the problem of heavy taxes but offered no substantive solutions.
Alan Domb, a former city councilman and real estate mogul, has sponsored several bills in the Council designed to cut wages and business taxes. He provided a five-page white paper and plans to publish economic development and plan to fight poverty in the coming weeks.
Domb wants to accelerate cuts in payroll and business taxes to boost jobs. He opposes the wealth tax proposed in the City Council last year and said he voted for the soda tax but no longer supports it.
Domb doesn’t believe higher taxes will solve the city’s problems. He noted that the city’s budget has increased by 50 percent under Kenney, but poverty, crime and lower-performing schools remain unchanged, if not worse.
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“Our city’s problems are not due to a lack of available funding, but rather to poor prioritization, planning and execution,” Domb said. amen Now what will happen?
Derek Greene, a former city councilman, provided a three-page white paper calling for “pragmatic” and “inclusive” tax reforms that tell companies Philadelphia is “open for business.”
Green pointed to the need to continue cutting payroll and business taxes. In particular, he wants a tax policy focused on helping small businesses and wants the Department of Revenue to aggressively monitor sales taxes.
As a council member, Greene helped negotiate a deal with the Kenney administration to cut income and business taxes up to 5.99%. He introduced legislation to shift the property tax to a land value tax, a move experts say will create a fairer tax structure by putting more emphasis on taxing the value of the land instead of any buildings that sit on it On top of her. This is an idea that deserves more research.
» READ MORE: ‘It’s a start’: City council cuts wages and business tax rates in Branch in win for various chambers of commerce
Helen Gim, an activist turned city council member, voted against cut the payroll tax and opposed business and parking tax cuts. She led efforts to reduce the tax cut program that helped spur development. Jim and two other council members proposed a wealth tax that critics say could drive wealthy people out of town.
The Gym’s website mentions “fair taxation” but does not provide details. A four-page white paper calls for a tax commission focused on “ownership and growth”. In an email, Gym said it “will work with the business community to propose new grants and incentives that prioritize growing black, brown and local businesses” as well as “affordable housing, life sciences and manufacturing.”
She added that the current tax structure is “onerous and needs to change”. But given the results of the vote and Gym’s rhetoric, tax cuts don’t seem like a top priority.
Cheryl Parker’s website does not provide details on any policy issues, but as a city council member she led an unsuccessful effort to reduce the city’s parking tax. As a state representative, Parker pushed for a cigarette tax in Philadelphia and increased delinquent tax collection.
Parker said in an email that he wants to shift away from the city’s heavy reliance on the payroll tax to property tax taxation. A similar idea was touted several years ago by Paul Levy of the Center City District and prominent local real estate investor Gerard Sweeney, but died in the state legislature.
Parker said he will work with his former colleagues in Harrisburg and Gov. Josh Shapiro to get the measure passed. This is easier said than done.
Maria Quiñones Sanchez, a former city council member and self-described pragmatic progressive, doesn’t mention taxes on her website, but provided a five-page white paper mentioning a desire to reform the tax code to “take the burden off small businesses ‘ and to make big corporations ‘pay their fair share’.
In the Council, Sanchez rejected additional cuts to the payroll tax and pushed for larger cuts to the net profit portion of the business and income tax. She pushed to help small businesses by exempting the first $100,000 of business income from the income and business income tax. This is a good start, but much more is needed given the city’s tax burden.
Rebecca Rinehart, a former city comptroller, pointed out economic development issues on her website, where the word tax is mentioned only once. She would “evaluate our tax system so that it balances the desire for business growth against the undue burden on lower- and middle-income residents.” That’s not much to go on.
During the pandemic, Rinehart opposed the Kenney administration’s plans to cut services and raise taxes. Instead, she identified several cost-saving measures. At an event last summer, Rinehart rejected the idea of a wealth tax.
As the city’s top financial watchdog, Rhynhart released numerous reports that identified ways to spend tax dollars more efficiently, including one that cast a harsh light on the massive police budget. Another thoughtful report weighs the costs and benefits of the tax cut program. Voters need to see more than that.
Substantial solutions to the city’s burdensome tax structure are the most effective way for the next mayor to create jobs and reduce poverty. Much of the other rhetoric is noise voters have heard before.