Tax policy can make or break a city.
Philadelphia must enact intelligent tax policy that promotes economic growth while funding the services, platforms and quality of life that will make our city a great place to live, work and raise a family.
Good tax policy is not just a matter of low taxes. Taxes provide the basis for a desirable community with good jobs, better opportunities, quality academic and vocational schools, safe environment, modern technology, great public spaces and resources, well maintained infrastructure and lifestyles that accommodate and appeal to a wide range of people. At the same time, good tax policy takes into account the ability of the people to pay taxes and allows room for city leaders to find smart ways to supplement public funds with private funds to provide far greater value than taxes alone can provide. Taxes must be competitive within our region and with locations that we compete with across the nation. Taxes must be fair, affordable, evenly applied, easy to understand and predictable.
Philadelphia’s taxes are too high, too many and too complicated. Our taxes are not evenly applied or enforced. Philadelphia’s taxes are far from predictable, at this time. And despite the immediate need to reduce certain taxes, we are simultaneously faced with major problems that demand additional money such as the School District’s annual funding shortfall and the city’s pension fund deficit that consumes an ever increasing portion of our Operating Budget.
As your Councilman At-Large, I have worked hard to enact good tax policy that is both effective and realistic for our city. While we need comprehensive tax reform, we cannot wait for it. I have introduced bills to close the holes in our schools and pension fund so that we can stop wasting existing dollars and new funds will be used more effectively. I introduced a bill to restructure the governance of our public schools based on global best practices to promote quality academic and vocational learning, art and music classes, greater resources and technology in the classroom, more efficient use of funds, better administration and public accountability and transparency. I also introduced a bill to restructure the Pension Board so that it has members with actual expertise and applies Government Accounting Standards and practices. We have to stop using our employee’s retirement fund as a credit card to pay for city projects.
The best way we can reduce the tax burden on the residents and businesses while improving the overall condition of our city, is by increasing the number of taxpayers and increasing the wealth of each taxpayer. In other words, grow our economy. The opportunities for economic growth is limited if city government continues to focus almost solely on regional competition. Philadelphia government must lead our city’s growth in the global market place. It must also lead the effort to develop our city’s innovative and creative economies.
When I was elected, I advocated for the creation of Council’s Committee on Global Opportunities and the Creative Innovative Economy. I serve as its Chairman. I reached out to overseas investors, employers and visitors. I met with trade representatives and invited trade delegations to visit our city. I held a hearing with top experts regarding how Philadelphia could be more globally competitive. I have been implementing the recommendations of these experts. For example, I introduced a bill and am working with state legislators to establish Philadelphia’s first International Trade and Investment Fund to collect overseas money to invest in local projects, start-ups, institutions, businesses and construction. This will finance the creation of many new jobs and much more tourism.
I introduced a bill to reduce the Wage and Net Profits Tax by $100 million over 11 years. This bill would lower the rate in half, from 3.92% to 2.09%. It includes the conclusion of the PICA portion of the Wage and Net Profit Tax in 2023 and does not convert it into a new tax like other plans are anticipated to do. A sharp reduction in this tax would generate many more new jobs and the lost revenues could be replaced in five years and then surpassed. In the meantime, the loss of tax revenues would be funded by taxi medallion revenues and delinquent tax collection revenues. I am working with state legislators to authorize Philadelphia to add 300 new taxi medallions for green, wheelchair accessible taxi cabs with bike racks. Our city is grossly underserved by taxis so we need these 300 additional taxi cabs. The sale of these medallions would generate about $150 million for the state. I am asking the state legislature to deposit $125 million of this money into a fund and provide $25 million per year to the city for five years as an offset for the loss of revenues resulting from the reduction of the Wage and Net Profit Tax.
I introduced a bill to collect long term, delinquent taxes and make the collection process more efficient. Of the estimated $500 million in uncollected, long term delinquent taxes about $150 million is collectible. My bill initiates a quick collection or resolution of these taxes. In addition, it improves efficient collection by requiring the city to forward tax delinquent files to its third-party collection firm if no action has been taken on the file within one year of delinquency. This is typical of every jurisdiction surrounding Philadelphia. The average age of a tax delinquent file that is forwarded to the city’s third-party collection firm is ten years. An increase in voluntary compliance would result in an estimated 2% or more increase in tax collection which is about $26 million or more per year.
I fought against increasing the Use and Occupancy Tax. The increase in this little known tax has resulted in Class A office buildings being constructed in the suburbs and not in Philadelphia. That, in turn, has resulted in the loss of Philadelphia’s well paying office jobs, particularly important for those without a college degree. This has had a negative impact on our neighborhoods.
I support tax reform that encourages individuals in Philadelphia to start or own their own business. This is especially important to support minority and women owned businesses and young entrepreneurs.