Mayor Parker and Philadelphia City Council have revived the Philadelphia Tax Commission. It “has been charged with conducting a comprehensive analysis of Philadelphia’s tax structure, including state-imposed taxes, and providing recommendations on reforms to make it more inclusive, equitable, and growth-oriented . . . The 15-member Commission includes four members appointed by Philadelphia Mayor Cherelle Parker, four by Council President Johnson; one by the City Controller; and one by each of the six local Chambers of Commerce in Philadelphia. “
One of the Co-Chairs is the billionaire Richard Vague, who serves on the University of Pennsylvania and its medical school board, each with billion-dollar endowments that pay no local and limited federal taxes. Mr. Vague made his fortune in the banking industry, specifically persuading consumers to use high-interest credit cards. He then became an energy speculator, increasing his wealth. Mr. Vague has invested over $200, 000 dollars in Philadelphia’s electoral candidates.
The Commission will be releasing its reports in the next few weeks. In an attempt to control the conversation, it spoke on background to the Philadelphia Inquirer, which reported the Commissioners “are decidedly on the business-friendly end of Philly politics, and many City Hall observers expect them to recommend a massive cut or elimination of the net profits portion of the business income and receipts tax.” The story concludes that a majority of the Democrats in Philadelphia City Council will be supporting Trump’s economic plans while at the same time claiming President Trump is destroying the Country. Philadelphia’s “liberal” City Council Members supporting President Trump’s tax policies prove the old adage that politics makes strange bedfellows.
Its supporters call cutting taxes on the wealthy and corporations “trickle-down” economics. Give to the rich and businesses, and they will use the gift to hire more workers. The history of trickle-down economics is well known. It enriches the wealthy at the expense of the poor. The Roosevelt Institute Found “the systematic rewriting of the tax code . . since the Reagan era, slashing taxes for high-income individuals and corporations and resulting in more inequality and less revenue for public investment.
During America’s golden age of the middle class, 1940 to 1960, before the trickle-down economic policies, income and home ownership surged. The vast expansion of America’s middle class didn’t just happen; advocates for greater equality made it happen. Since the Reagan era, taxes on corporations and the wealthy have been slashed. The story has been that businesses and the wealthy would hire and pay more workers by cutting taxes.
It just has not been true. Back in 1982, in the early stages of that redistribution, Forbes began publishing an annual compilation of the nation’s 400 grandest private fortunes. The initial Forbes 400 list included just 13 billionaires. Their combined wealth is $92 billion. Over the next four decades, Forbes notes, the combined net worth of America’s richest 400 would rise to “a staggering $4.5 trillion — making them nearly 50 times better off than their 1982 counterparts, far outpacing the consumer price index’s near tripling.”
Policymakers, including those in liberal cities like Philadelphia, seem to have forgotten basic economics. Businesses are not social service agencies. They were formed to make money by providing goods and/or services. Businesses do not hire workers because they are altruistic. They hire workers when the business believes an additional worker will increase its bottom line.
The tax review commission has joined with the Trump Republicans not just in supporting a failed tax policy but also in its lack of transparency. Like Elon Musk, the commission members have not revealed how much more they will make if the recommended tax cuts are implemented.
As the Inquirer reported, across-the-board tax cuts will be recommended by the Commission and will do nothing to help small businesses, 75 % of whom don’t pay taxes. Of those that do, the average tax bill is $ 1,315 a year, according to the Pew Charitable Trusts report. Over 2,000 small businesses were never told that new businesses in Philadelphia are exempt from all taxes. The companies were paying without being required to do so. However, across-the-board tax cuts will increase the wealth of the billion-dollar businesses.
The shame is that we know that trickle-down economics doesn’t work. Even the co-chair of the Tax Review Commission, Richard Vague, says so: “Those who champion the trickle-down theory of economics are correct, except for one detail: it is the debt that has been trickling down, not the wealth.” So why does the co-chair recommend forcing greater debt on the Citizens of Philadelphia? Could it have anything to do with who will benefit from the cuts? And could the 100’s ofthousands in campaign contributions Mr. Vague makes have anything to do with why so many aspiring Philadelphia elected officials support his goal to bring Trump-like trickle-down debt to Philadelphia’s shrinking middle class?
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