The Tax Review Commission, established by changing Philadelphia’s Home Rule Charter, held its first public hearing on Monday, June 17th. The Co-Chair of the Commission, Matt Stitt, stated the Commission is “tasked with conducting an updated comprehensive analysis of all taxes imposed in Philadelphia, including by the Commonwealth of Pennsylvania, and to make recommendations concerning tax reforms. The Commission consists of 15 members; four members each are appointed by Philadelphia Mayor Parker and council president, one member appointed by City Comptroller Christie Brady, and the remaining members one each are selected by various local Chambers of Commerce of Philadelphia.”
Stan Shapiro, a former director of City Council’s technical staff, who helped to craft the language for the charter change that established the Commission, reminded the Commission members of what the voters were asking them to do. “The Commission shall analyze each tax to determine . . . whether and to what extent the rate of the tax may be decreased in a fiscally and socially responsible manner. . . The Commission’s work shall also be guided by the principle of tax fairness and tax equity in apportioning tax burdens.” there are four separately stated tests that any recommendations of this Commission must pass: First, they should promote growth. Second, any suggested tax cuts must be found to be fiscally responsible. Third, any tax cuts must be “socially responsible.” Fourth, each Commission tax cut proposal must meet the test of “tax fairness and tax equity.
In this, the first of what may be several public hearings, the business community organized itself and had the first words. The Commission heard from 12 separate businesses and three separate chambers of commences. Will Carter, the vice president of local government affairs of the Greater Philadelphia Chamber of Commerce, explained that the chambers worked together, which was evident in testimony. With almost the exact words, the businesses and the chambers urged the Commission to lower the business and wage taxes. To a person, each said the Philadelphia tax system was a burden and compared the growth of businesses in Philadelphia to growth in other regions. The message, first stated by Jeff DeVuono, an executive of Brandywine Realty Trust, the largest owner of commercial real estate in both Philadelphia, and surrounding suburbs: “if the City wants to continue to see a decline in its population, workforce, and overall economic vitality, leave the BRT and wage tax unchanged. But if it wants to increase the number of people living, working, and growing within its borders, it must reduce or, better yet, eliminate the BRT and a wage tax.” Business owners of all races and genders repeated this.
Not a single business person looked at other struggling cities. No one pointed out that Detroit, Michigan, which has lost 60% of its population, has much lower taxes. High-tech mapping shows in Detroit, [there is ] “the spatial mismatch of people to jobs and opportunities is stark. It gets all the more glaring when the Census Bureau (LEHD) reveals that just 30% of available jobs in Detroit are held by Detroit residents.
Reverend Gregory Holston, the NACCP appointment to the Board’s advisory council, spoke to that point. He asked: “Who are you creating jobs for? The people that live in North Philadelphia now? Are these jobs the kind of jobs you need such an education level they could never apply for? If we’re talking about tax cuts, how does it change the lives of those living in the North? Philadelphia right now?” The Reverend added, ” In many other cities, it is all about displacement. They’re changing jobs. They’re creating new jobs for other people who move into those cities, and they push other people, poor black people, out of those cities. What about those poor blacks that live there now?”
Marc Stier, the Executive Director of the Pennsylvania Policy Center, a think tax based in Harrisburg, spoke about the assumptions many of the speakers were making and how little evidence there they were true. He urged the Commission: “Look at the academic studies, look at the studies done in Philadelphia, seek the best evidence to evaluate them, and then come to a conclusion. He urged the Commission to spend some time considering other paths to equitable economic development besides changes to the tax code. Different cities, Steir pointed out, have succeeded in creating economic and job growth, especially in reducing poverty through strategies other than across-the-board tax cuts, including improving K to-12 education.
The Pew Charitable Trust’s Thomas Ginsberg testimony may have laid the groundwork for future recommendations. “One of our top line findings is that the city’s tax exemptions exclusions have had a big, almost decisive impact on the tax burdens.” Longtime community and civic activist Andy Toy suggested looking at a Land Value Tax that taxes the land, not the building, as a possible improvement of the City’s tax structure.
Advocates for those experiencing poverty made the argument against shifting the tax burden onto real estate. Jonathan Sgro of Community Legal Services said, “Some believe property taxes are a more reliable source of revenue because real estate doesn’t move. But families and longtime homeowners do move when they can no longer afford their bills.”
The Commission adjourned the public hearing and met in public session to develop work groups and timetables to create its recommendations in time for the next City budget. The Commission chairs are welcoming public participation and allowing members of the advisory committee to participate.
Philadelphia Hall Monitor will continue to follow this story as it evolves.
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