On Monday, the 24th, the Philadelphia Tax Reform Commission met to hear reports from its working groups. Members of the advisory committee also attended with two advisory members, Dr. Mark Steir, the Executive Director of the Pennsylvania Policy Center, and Jonathan Stein, the former head of Community Legal Services, testifying. The Commission made no recommendations or decisions on recommendations, so there is no way to know how much, if any, of each committee’s recommendations will make it into the report to the Mayor and City Council.
There were a few surprises. The former head of the Center City Business District, Paul Levy, argued, as the business committee created at the first public hearing, for a 50% cut to the net income portion of the Business Income & Receipts Tax (BRIT).
The BRIT taxes gross receipts at .001415 (.1415%) and taxable net income at 5.99%. Mr. Levy’s group found that the gross receipts portion of the tax was similar to the rate for other municipalities. He argued that the tax on net income led to many of Philadelphia’s problems, such as a high poverty rate and slow job growth. Like the prevailing “trickle-down” economists, Mr. Levy and his group argued that cutting taxes on businesses would lead to job growth and poverty reduction.
When asked what City services would have to be cut and how many city workers would have to be laid off, Mr. Levy stated that his proposal would not lead to any cuts or job losses as it would be paid for the job growth the City does not expect to happen.
Mr. Levy claimed his projections were better than the City’s but did not answer what would happen if his projections were even slightly inaccurate.
Asked directly by Rev Holston, the NAACP’s appointment to the advisory committee, how much money was being discussed, Mr. Levy declined to offer a projection or even the order of magnitude, millions, 10’s of millions, or hundreds of millions.
Mr. Levy drew his recommendations from assumptions based on the loss of jobs in Philadelphia and Philadelphia’s slower job growth than other cities. Dr. Steir took the data Mr. Levy looked at and changed the starting dates of the study. His study showed that Mr. Levy’s numbers were inaccurate if the reporting started in 2002, not 1980. In addition, Dr Steir questioned Mr. Levy’s assumption that Philadelphia’s tax structure caused the loss of manufacturing jobs.
The data presented by Dr. Steir showed that other cities, even those with significantly lower taxes, also lost manufacturing jobs as corporations sent jobs overseas to use enslaved people and low-cost labor.
Alan Domb, a former Philadelphia City Council member, wealthy real estate investor, and member of the Commission, stressed that the quality of life in Philadelphia was a significant factor in people and businesses locating in the City. Anecdotal evidence was presented that underinvestment in Philadelphia schools was another reason people and jobs left the City.
Spokespeople from the City’s Commerce Department stated that programs that eliminate all taxes for start-up businesses for two years were not being utilized. The PEW Charitable Trust found that over two thousand (2,000) new companies in the City did not take advantage of “Jump Start” Philadelphia, which grants tax exemptions for the first two years. The City’s Commerce Director stated that the new administration is changing the way the City helps businesses and expects the changes to be implemented before the next City Budget is introduced.
None of the evidence presented or comments about the quality of life or school deterred Mr. Levy’s committee from claiming that cutting business taxes would solve the City’s problems.
Philadelphia Hall Monitor’s Consumer Reporter, Lance Haver, a member of the Advisory Committee, asked the Commission in the public session if it was considering using any additional money to support more innovative programs or larger targeted tax cuts.
The Chairs of the Review Commission stated that no decisions had been made and that the Commission was looking at everything.
One of the many projects Mr. Levy’s groups did not examine was Panbo. Panbo is an effort to support local businesses and business corridors, providing better choices for consumers and helping build local wealth.
“Local businesses are the foundation from which strong vibrant communities grow—that can’t be replicated by big-box stores or on-line giants. The dollars you spend at local businesses recirculate through the hands of your neighbors, helping parents afford their children’s dance lessons, allowing a café owner to keep their doors open, and giving young entrepreneurs the courage to take their first leap.”
“If Philly households pledged to shift just 10% of their spending, it would generate:
- $605 million in additional local economic activity (or 40.3 million cheesesteaks, if you’re built like that).
- 4,100 more jobs to fully staff 1,200 new businesses.
- Enough public revenue to send 2,100 children to school.
- On top of that, donations from local businesses could pay for 970,000 soup kitchen meals.”
As the Commission continues to look at what can be done to help Philadelphians out of poverty and revitalize small businesses, perhaps looking at new ideas, like Panbo, will lead to better results from trickle-down economics, giving money to the rich and hoping for the best.
Tune in to this Wednesday’s Philadelphia Hall Monitor TV show to see an interview with Panbo’s founders.
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