Call Mayor Nutter Today re: taxes

Ah Brett Mandel. You gotta love him. From his Philadelphia Forward email today:

The city budget drama should end this week and City Council and the Mayor are deciding whether tax reform will be part of the city's final plan to raise and spend about $4 billion. While some on City Council urge the Mayor to stop reducing the city's onerous tax rates, Philadelphians are counting on Mayor Nutter to deliver on the tax reform he promised during his campaign.[He goes on to cite specific Nutter promises]...
Tax-reform advocates certainly understand that the city has other needs and that citizens have additional priorities, but ALL efforts to make Philadelphia a better place will continue to be frustrated if the city maintains its high and unfair taxes.

But here's the problem with taxes. Despite what Brett says later in his email, there is no data available that shows any impact from business/wage tax reduction on wage/population growth (don't get me wrong, it may exist, but the city has not released any of it publicly).

Meanwhile, it's pretty clear that city revenues are in bad shape. So the promises Mayor Nutter made on the campaign trail look different today in the context of our crashing economy. And I'd rather he break his promises on taxes than go ahead with cuts on top of 3-5% cuts across the board in every department.

And guess what? As Dan mentioned yesterday, the majority of Philadelphians agree! In a poll sponsored by the PA Economy League (a group incidentally that helped found Brett's group, Philadelphia Forward)

Taxes and Spending: Most Unwilling to Reduce Services to Cut Taxes

Most Philadelphians would favor maintaining the current level of taxes and services in the city, but more than one third would prefer “more city services, even if that meant taxes would have to be raised.” Only 10 percent would prefer “lower taxes, even if that meant city services would have to be cut.”

...

If you had to choose, which of the following would you favor:
* More city services, even if that meant taxes would have to be raised: 38%
* Lower taxes, even if that meant city services would have to be cut: 10%
* Maintaining the current level of taxes and services: 45%
* Unsure/No Answer: 7%

So there's that. And if you care about these things:

  • Afterschool programs (which help reduce juvenile crime)
  • Single-stream recycling
  • Libraries
  • Rec Centers
  • Fairmount Park
  • Neighborhood cleanups
  • Improved customer service
  • More police officers
  • More EMTs and ambulances

...the money has to come from somewhere to fund them.

And it does not look good right now without tax cuts, let alone with them. Not to mention that anything the city does to cut wages or benefits for city workers will have a much more immediate impact on net wage loss (which ultimately leads to net revenue loss) than any job that may or may not be created by business tax cuts.

But Brett is putting the pressure on the Mayor today and he asks his list to call him and urge him to go ahead with tax cuts (consequences be damned!). So, I urge YOU to do the opposite:

Call Mayor Nutter today (215.686.2181) to let him know that you'd support his decision to avoid service cuts over tax cuts, and to wait to reduce city taxes until information about their impact is publicly released; and that you are counting on him to stand up to the opponents of progress, and deliver on his campaign promises to improve city services and, above all, to make Philadelphia a fair and just place for all to live.

Is this really an either/or dilemma?

I don't think reductions of particularly onerous taxes like the BPT would negate gains made by new revenue streams such as the parking tax which will accrue to Fairmount Park.

yes it may be either/or on taxes

simply put, yes it might well be either/or. maybe it was not as much earlier this year, but revenue is lower than expected all the way around. recession time. ben's blog is chock full of good info on this:

http://www.whyy.org/news/itsourmoney.html

but i welcome you to throw up some specific numbers.

only one elephant here...

and that's you EC! ;)

Anyway, earlier this year Mayor Nutter said this:

"Our retirees and current city employees should not have to worry about their future after years of loyal service to the city and to our citizens," Nutter said to applause as he delivered his budget address in a packed City Council chamber. "We need to act."

And he said he wanted to spend $50 m upfront on a $4.5 b bond. He didn't say this, but it's pretty obvious: the city is the #1 employer in the city. Messing with retiree benefits will have an immediate negative impact on city revenue. I think I wrote that already above didn't I?

The Inky praised him for this:

Mayor Nutter's proposal to borrow $4.5 billion is a drastic step, but it's difficult to see a less painful way out of the city's fiscal dilemma.

Nutter and his budget team have decided to confront a crisis that has been decades in the making. The city's pension and health-care costs are exploding.

And it was an interesting, seemingly smart move. Nutter had no idea though how bad the economy was gonna get and time has run out. According to the Inky:

The crowd-pleasing $4 billion budget that Mayor Nutter proposed in February - packed with tax cuts and spending initiatives - will likely have to be scaled back, Nutter told City Council at a budget briefing yesterday.

The economy is partly to blame. The sluggish housing market has put a crimp in city revenue, forcing budget officials to revise downward their income projections for next fiscal year. The School District is also likely to seek extra cash from the city in the weeks ahead, putting further pressure on the budget, which Council must approve by May 31. And there is no telling whether the city has set aside enough to pay for yet-to-be-negotiated labor contracts.

But the biggest single wound to Nutter's 2008-09 spending plan is self-inflicted: a $50 million gap, caused by the administration's decision to delay recognized savings from an ambitious effort to strengthen the city's dangerously underfunded pension plan. The city has not changed its plans to issue the bonds by the end of the calendar year.

So that leaves a $50 million hole + decreased revenues which = a very different budget picture.

And it means business tax cuts are a lot less feasible than ever before.

Ok, bite the bullet Ray

Let's raise the Wage Tax and make it progressive, tax interest and dividends on personal income, and institute a corporate income tax.

Isn't that what we want?

You're insisting it be either/or here. So I guess you'll be standing in solidarity with Stan Shaprio on this one?

sure is

but it requires an amendment to the PA Constitution. I'd be very happy to see Mayor Nutter sign a law, like the gun law, challenging that, but ultimately an amendment need to be passed. I am not sure how you thin it's biting the bullet for me to say since I have said it many, many, many times before.

I'll be happy to take that one

Yes, we should have a personal income tax instead of a wage tax, make it progressive, and do the same with the corporate income tax. Exept there should remain some gross receipts tax, because the dirty little secret of that tax, one the corporate elites don't want you to know, is that much of the grt is paid by out of city and even out of state businesses that we could not tax through the net income tax. So as Nutter and Council abolish the grt, they're going to let large numbers of big corps who sell products in Phlly completely off the hook in providing revenue for our City.

Ideas

Is there an alternate business tax proposal that's been floated or is in the works in council? It would be useful to have something to debate besides the Nutter-supported Goode BPT bill and the current schedule.

There were half-a-dozen ideas about the BPT put forth during the mayoral primary; certainly council must have some ideas about how this should go.

Failing that, what could an alternate tax schedule look like? Let's assume for a moment that council stays in the bounds of what's widely agreed to be at-present constitutional.

Again, I think the best way out of this impasse for council and the mayor's office could be some kind of compromise, where some taxes are kept, others are lowered, and the overall amount of tax/revenue reduction is less steep but not stopped.

The Property Taxes are being hiked right now

Ray hasn't mentioned the recent effort by BRT to reassess some of the most expensive property in Philadelphia and how that is making out.

Also: I still think there is a lot of money, plenty of money, to be had through the Parking Authority. If only it could be taken out of Perzel's hands and put back under city control, but without everyone in Council then raiding it.

At least right now, the

At least right now, the property tax projections are relatively static until 2010-2011, when the first round of ten-year abatements expire. That is, even the Nutter administration doesn't foresee, project, or propose a revenue windfall from property tax reassessments/full valuation.

why compromise?

If no one can prove an immediate impact from cuts in real numbers (which no one can since city won't release numbers + economists in the field say benefits are unlikely) why compromise at all when the revenue picture is so gloomy?

I'd be more into experimentation if there was nothing to lose, but why cut business taxes until we know who will it benefit, how, and how much wage generation will come as a result?

Hmm...

I see. That's refreshing to know businesses such as Apple would not only never relocate their HQ here (are you kidding, with our matriculation rates?) but obviously won't even open a store here because of policies like this. :)

That's very progressive.

Do you think a company like Apple

with the billions it makes from cutting edge technology would make locational decisions based on a piddling little tax differential? That's not the kind of thinking that made it into what it is today. It's located in an area that promotes technology, and that has a pool of high powered thinkers and designers loving to live where they are. Companies like Apple would probably never move no matter what if they've found their niche location. But the Apples of the world will certainly not decide to move to a City with a rotten school system, declining public services, and a completely non-creative City government focused not on innovative ways to create wealth, but on bribing businesses with tax breaks.

Expenses

Silicon Valley is a perfect example of a place where the cost of doing business *dwarfs* that of Philadelphia. Yet, it seems to have no problem attracting + retaining businesses. Clearly, the pure cost of doing business- represented in taxes, real estate, utilities, etc.- is not the sole determining factor in how a business determines where to locate itself. Taxes are, however, an easy target for criticism, even as they fund the very things which make civilized society possible.

-Z

You are absolutely correct.

You are absolutely correct. Taxes is not the #1 reason why a business locates where it does.

This begs the question: what does Philadelphia fail to provide that makes it such a lackluster place to do business?

Perception

As anyone with even a passing familiarity with the human species should realize, humans very rarely make decisions on a purely logical basis. Richard Florida's work hints at this, in how he describes the importance of a 'creative class' in drawing other people to cities.

SF, NYC, Boston- all of these cities have a 'vibe' that attracts people and companies to them, regardless of cost. Philly's 'vibe,' like it or not, is still stuck in the early-20th century, big-iron (metaphorically speaking), industrial city. This isn't a vibe which attracts 21st century people or their employers.

The (apparent) death of Wireless Philadelphia could be a major blow, as it represented a big step to counteract the early-20th century vibe. But Philly needs more steps like this: gutsy, risky, potentially-rewarding ones. Nutter's a smart guy, and I trust that he's surrounded himself with more smart people; they, and/or we, need to think of more 'mold breakers' like WP.

-Z

Apple

with the billions it makes from cutting edge technology would make locational decisions based on a piddling little tax differential?

With the HQ, no. (And even EastChestnut, who is not above saying ridiculous things, says himself that this is ridiculous.)

But an Apple retail store? There's one in Ardmore, one in King of Prussia, and a new one in Cherry Hill. There are a ton of things that make doing business a pain in the behind in Philadelphia, despite the fact that we do have a lot of people, a lot of foot traffic, and a lot of income. And yes, considerably higher business taxes than our surrounding suburbs is one of them.

ok what about...

Diesel? West Elm? Puma? Addidas? Talbot's? Urban Oufitters? Gap? Brook's Brothers?

I mean Tim, are you really saying you think Apple is not selling computers in Center City because of taxes? I am open to it, but you are just speculating right?

I do think that it's no

I do think that it's no accident that the retail explosion in Center City, Manayunk, and elsewhere in the city coincides with the steady reduction of business taxes over the past 10+ years, and that the bulk of our neighborhood commercial corridors are still woefully underdeveloped in part because those businesses haven't expanded and others haven't followed their lead.

yeah i don't

i think it's because there was dedicated access to capital and lending provided by Mayor Rendell in CC, huge PR campaigns, plus, probably biggest of all a repopulation of downtowns and "hip" urban areas all over the country.

wrong answer

The "Philadelphia got cool" answer is as far from an analytic, numbers-based answer as you can get. Downtowns repopulated all over the country because there were new jobs there, especially for younger people -- in Boston, in Chicago, in New York and San Francisco. Philadelphia's job growth didn't take off in the same way, nor did its population, but retail came anyway. Besides, if that's the answer, it's easy to replicate: let's just have a big PR campaign, and the people will come!

The correct answer (for your position) would be that the expansion reflected the overall strength of the national economy rather than anything specific about Philadelphia's tax code. Come on -- I thought that you said that we'd all played this game before! :)

you threw me with that one

i forgot my part for a sec. i don't have numbers on hand, but i don't think i said young people moved here. there is a pretty measurable trend of empty nest suburbanites moving back to town and that's because white folks of a certain class are living longer, and want to be in smaller places that are more centrally located. and there is the whole NY spill over thing.

main point though: i don't think taxes factor in much.

[better?]

But you cite no numbers

ergo, it isn't happening.

Business should be grateful they are allowed to operate in the city. After all, that's the "P" in B-P-T, no?

yes

Sean, I don't really understand why setting up polemical arguments appeals to you so much. There literally have been, I'd guess, over 100 BPT posts/convos on here, and at least for my part, you'll see that I say exactly the same thing as you many times:

Honestly, those here who most stridently wave the anti-BPT cuts flag would better serve their concerns by demanding a wholesale change in the way L&I conducts its business. That how you get more small businesses, with more local jobs.

There is of course no part of the budget being discussed today that controls the process of substantively improving L & I. That's really done through the appointment of a head for that agency and that has not happened yet.

There is however a portion of today's budget that will reduce the gross receipts tax, taking the most money over time from larger businesses who either don't even have a physical presence in teh city or don't really need a cut. Some relief will be given to small businesses, but in pretty piddly amounts, when services, such as L & I and zoning suck.

How though can we expect anyone in the city, let alone Council, to focus on the real issue, when the rhetorical drum beat for business tax cuts is so loud, and relentless despite the lack of logic behind it or basis in numbers?

And it's funny, the local business man you cite is one who I knew before you even moved into the neighborhood. I can't tell you how many times he'd offer me a light for surreptitiously smoked cigarettes when I was age 17. And I agree with you, that his dealings with not just L & I, but also struggle to get access to capital to keep his business float, are much more indicative of what neighborhood business worry about. Not that fair taxation is not a valid concern, but it's certainly not the case that taxes universally force small business out of the city, if in any significant or trackable way).

But you're basing this on

a breakdown of BPT receipts by payor type that you don't have; just a total. The BPT tax receipts anticipated in FY07 were ~3x the amount of the receipts coming in from the Wage Tax at 378.9MM. It is significant revenue, but it's not a sum that cannot be offset by restructuring the city's debt load and cutting costs.

Praytell, suppose the city raises the BPT and business move out faster than the rate the expected receipts comes in. What shall you do then?

If you want to look the other way when the City runs the prolific public credit card for expenditures on City Council doesn't care about the ROI on investments into the public good; then you should hardly be surprised if the City increases its risk of falling insolvent on its obligations.

but thats not what's happening

raising the tax is not on the table at all. the question Council considers today is whether to further reduce it or delay reductions, and/or add new reductions.

the reality is that even if Council does keep reductions going, or introduces more, we'll see phased reductions, so small business won't get big savings year by year, though in the case of the gross receipts, the plan seems to be to phase it out (but remember, gross receipts obligations for small businesses are relatively small, so it's not like the elimination is going to create a sum that could be used to renovate a property or hire a new workers or whatever). a reduction or elimination does makes sense for small business, but from the numbers that have been released so far, it looks like that will benefit a large number of small businesses and a small number of larger ones, yet those larger ones pay 2/3 of the tax. and because of the uniformity clause, you can't target tax cuts to those who need em most--you have to give em to all.

plus, this is gonna give a huge break to businesses who aren't locatd in the city at all. that sure shoots a hole in this logic:

Praytell, suppose the city raises the BPT and business move out faster than the rate the expected receipts comes in. What shall you do then?

Where Would One Look...

for quantative information and feedback from mid-cap and small business that has left the city over the last 15-25 years? We have the estimates that place Philadelphia's personal tax burden at a high level, we have the job loss estimates from Labor, but I can only recall one WHYY Radio Times piece and another with Miss Marty where callers who claimed to be business owners were responding overwhelmingly to an open question that ran across the lines of "what makes doing business in the city undesireable and what can we do to fix it?"

One bit of information that might be helpful would be a listing of enterprises who closed their accounts over at the Revenue Department [because they've ceased operations and have no further need to submit remittances].

All we have to go on right now is sentiment; and in the business community it is negative.

Do we want to debate on the recent saga of Tastykake bakery wishing to close its plant and relocate out of the city to the suburbs? I believe it has since decided to relocate to the business park down at the Navy Yard; is that KOZ?

There's less talk because there's no disagreement

The other "costs of doing business" gets less ink (er, fewer pixels, keystrokes, whatever) because there's no real disagreement in the progressive community about them -- from the need to better educate our workforce or improve infrastructure to eliminating corruption and needless bureaucratic hurdles. You might get some minor flutters of disagreement about zoning reform or workforce housing or the finer points of neighborhood groups and councilmanic privilege, but there's a strong core of agreement.

Taxes in general and business taxes in particular split progressives in the blogosphere and the party in this city down the middle. So we argue about it a lot. I would call it the narcissism of small differences, but the differences are actually pretty substantial.

Ok, since no one else will say it

Congratulations to Michael and Council for reaching agreement on a budget that increases spending for the Community College, the rec department, the Art Museum, and police while allowing for tax reductions aimed at economic stimulus.

Congratulations too to those who steadfastly organize for quality of life issues and against service cuts. Yes, there are disagreements among progressives, but there is a lot of harmony too.

When Government is respectful and responsible, everyone gets heard, compromises (a beautiful word, not a dirty word) are struck, multiple initiatives move forward.

Cliches are sometimes appropriate: this is what democracy looks like.

Yes, but they're shooting the economic stimulus gun

with wildly bad aim, since, among other things, there are all kinds of out of city businesses getting the help that will never move into Philly. And because once again they've moved back the one tax reform that actually benefits working people -- the Cohen wage tax rebate. These are just bad choices, about which I will have more to say when I get details.

And one more P.S. The process really stinks. All of these amendments were revealed at the last minute, and, in fact, you needed to know someone in order to get their text. The public was absent from any real part of the deliberations, although a few of us got to testify who only happened to see the language we were asked to testify about.

This needs to be corrected next year, and hopefully we can find a way to make that point loud and clear.

You had me at "Yes"

And since I too value an open budget process, I'll second your call for improvements next year.

I won't ask whether you think that tax reform, if it could help yield jobs, could be said to benefit working people too (as well as non-working people who are seeking to convert). Let's just say that more jobs is a good goal for the city: Philadelphia Forward and the old Tax Reform Commission have their routes to get there, One Philadelphia and Robert Lynch have theirs, and a lot of Philly progressives like me suspect that somewhere 'twixt Mandel and Shapiro the best practice lies.

Now let's blow up L & I, no?

Why Apple is Not in Philly

As part of the Apple cult, I would love to see an Apple Store in Philadelphia. The key reason for them not locating here is likely that they probably want to be on Walnut Street near Rittenhouse Square and that there are limited options in this area. Apple will wait for the right location and building or building site rather than pick an inferior site. I cannot imagine that a company the size of Apple really cares about local taxes enough to not locate a store in a certain city.

Poor Wawa

Just as a supplement to Elp's point, rent on Walnut Street has skyrocketed (ah, remember those pre-Border's days) in the past 15 years, and the old 16/Walnut Wawa left cuz rent got too high.

Wawa hate you

Wawa owned the Dorchester space, which it closed. There was no rent or sublet. BPT wasn't the reason behind Wawa shutting down in this instance. Instead, it's gasoline.

The diaspora of customers who frequented the Dorchester switched to the Chestnut Street location which was a rental; it was packed with customers who no longer could go to the Rittenhouse location.

The rumor around town is that Wawa will close all of its remaining Center City locations in deference to car-friendly super Wawas which follow the corporate format as found outside Center City.

The "Comcast Wawa" at 17th and JFK is next on the chopping block. I work near here and noticed the building that it's in has been of recent interest in the RE market. As further evidence at the company's "secret" plan to ditch its urban locations... there are new Wawas at Aramingo and on Frankford Ave [oddly, the Frankford Ave. store doesn't even sell gas].

not dorchester

i am talking about 16/walnut. this was about 4 years ago.

OIC

Yes, I remember that store. That particular location probably was due to high rent. One wonders how McD can continue to operate on that same stretch of retail--there must be a lot of Big Macs consumed to pay the escalating rents.

The current strategy to abandon the remaining profitable stores isn't due to economic forces as much as it has more to do with the company's desire for a uniform brand, look and feel. Something inside me tells me the real driver behind the decision to close up shop is a lot more controversial than what you'd ever see on PRNewsWire; but that's neither here nor there.

I brought up the Apple scenario because it seems comical that the new store in Cherry Hill is not exactly what I would consider the quintessential Apple location within a 60s-era mall with a pothole-ridden parking lot. If another store opened in Wilmington, then that's even more proof that Apple corporate is avoiding us for a specific reason.

At present, I have to board the R5 to go visit an Apple store, and spend my money outside the city to shop there; which is not unusual--I buy lots of things online which are not subject to the NPT and GRT. Bundy and Springboard pay BPT out of their own pocket. I don't believe Apple contributes a dime to any city revenues as the resellers are the ones who pad the cost of the tax within their markup (Bundy, SB, Best Buy, etc); it's not relfected in the wholesale price.

digression

Wouldn't east Market St be a nice location for an Apple Store? Just saying.

Not East Market Street

In its present state, East Market Street would not be a likely choice for an Apple store. Apple stores in center city areas are located in trendy areas and/or in the heart of a business area. For example, a new Apple store is opening in Boston on Boylston Street across from the Prudential Center this week. East Market Street would likely only work if the Gimbel site or the Girard Estate block were redeveloped.

Of course

The proposal to level the 1100 block of Chestnut to Market would make an ideal location for such a store. Inga Saffron covered the proposal for the superblock site--which unfortunately the developer calls for the destruction of the Stephen Girard Building within its plans. My guess is that this development will never happen and the current landholder will probably give up and sell.

There's also the ACC proposal for the parking lot at 18th and JFK, which includes a proposal for a skyscraper taller than the Empire State Building, on top of a multi-colored glass retail podium to be the anchor for luxury retail shopping... a location that would please Apple.

And then again there's another proposal for a hotel-retail tower near 16th and Race, which that developer claimed they would be able to get Best Buy to open a Center City location. Add a BOSE store and Apple, and you'd have a "tech mecca" in Center City that would attract a lot of foot traffic.

All these ideas sound great, but developers have to pass through the hurdles of development in Philadelphia in order to make such dreams come true. TMK, only the ACC has come forward with a serious proposal and has approached the City--which is one of several thousand steps it will need to take to get a project of that mangnitude realized. They still have to schmooze LSNA, which is among the most progressive and open-minded civic in the city (so it may not be as tough as a sell as it would be for say... Old City), get permits, finish their plans, find contractors, approve their plans through the civic and L&I, have public hearings, etc. If that does happen, expect a building on the site no earlier than 2015.

But Apple still pays taxes to the City

for every computer they sell in town and they do have retail outlets here although not corporately owned. And if they moved here, their corporate tax would be calculated as a fraction of their worldwide sales. How big a deal do you think that would be?

Bottom line: we're just beginning to get a picture from the City's Revenue Department of who pays what in Philly biz taxes. This is completely the wrong time to be cutting them, when our services are at risk, we don't really know who is actually paying our taxes, and how much of a burden it really is on them.

Can you spell LIBERTARIAN?

Oh my God, I support Wally for PA House 182, because he's pro-gay rights and he didn't vote himself a payraise like Babette did. That must make me worse than Rush Limbaugh, Ray.

Get real.

Taxes, cost of living, + population

It's notable that New York City, Boston, + San Fransisco all have far higher costs of living when compared to Philadelphia. And cost of living includes far more than taxes; indeed, taxes are probably the smallest part of it. The largest part of cost of living is probably real estate, and real estate in Philly, even after the recent run-up, is a bargain when compared to NYC, Boston, or SF. The kicker is, I believe that NYC has *higher* taxes than Philly. Should NYC reduce its taxes?

The wage tax is more symbolic than substantial when it comes to people choosing whether or not to locate their business or homes in the city.

-Z

Compare Big Apples to Big Apples

New York City's tax burden would not have the same affect on business and population gain/loss as Philadelphia's. New York City has grown in population, has more wealthy individuals, is the business center of the world (at the very least, the North America) and has more magnetism than Philadelphia. In short, it can keep an audience (business and residents) captive easier than Philly.

Philadelphia is a bargain. But for who? The working and lower middle class families of this city are still jumping at the opportunity to leave. The First Councilmatic District is the only one to have a net gain in population--mostly in Center City and environs and mostly young professionals.

For someone like me, a single guy with no kids, the City is a bargain.

But, for too many, between the high taxes, significant schooling issues, high insurance rates, etc., it isn't.

Also, in terms of business, Philadelphia's business community is not captive. The problem with local and regional economies is, it is easy to move outside of the City. It is not easy to move outside the State or Country.

I am working to elect Larry Farnese to the General Assembly. Unless otherwise expressly stated, this and every comment or blog I post on YPP and any action I take hereon is solely attributable to me and not Farnese or Friends of Farnese

Oh come on Gaetano

We could all recite our parts in this debate by heart at this point. So you had to know that if you said this:

But, for too many, between the high taxes, significant schooling issues, high insurance rates, etc., it isn't.

I would say this: show.me.the.numbers.

What is the proof? And in its absence, when revenue looks baaaaad, why take the risk on something that may or may not create good-waged jobs?

Oh I totally agree with you

Oh I totally agree with you Ray, we have no problems with our schools--they are doing wonderful. And crime? What crime! Brazil has more crime than we have.

We need to get that income tax bill passed. I think we'll have to bump up the BRT department by about 1,000 positions just to handle the influx of paperwork and the customer support center that will be required to answer taxpayer questions.

what a gadfly!

you're such a card. i didn't even understand your point at first, then i reread it. i wasn't disputing crime or schooling as issues (as I am sure you knew), just taxes. i think gaetano knew what i meant because we have literally had this convo 917,000 times before.

Oh RLY?

i don't understand your point at all

Oh, I think you do.

There are many problems in

There are many problems in our city--and the tax burden is just one of them. We have a high tax burden. Everyone knows that.

But, we also have many failing schools. Do you disagree with that? What numbers would you like me to show you--the fact that over 50% of our students don't graduate from high school. Or, should I cite to the study on school safety where children are not being disciplined and thereby scaring the wits out of teachers, students and disrupting the system. I'd personally like to see our schools improve over all of the above as that is seemingly the number one issue related to why folks leave Philadelphia.

Related to car insurance. I can cite to my own insurance payment of almost $300.00 a month! That was the cheap rate!!!

If you notice above, I'm not advocating for anything more than an understanding of a complex issue--why residents and employers leave. Taxes are but one component. I think we need to improve each component.

Are you really contending that Philadelphia is a bargain for everyone who lives here?

I am working to elect Larry Farnese to the General Assembly. Unless otherwise expressly stated, this and every comment or blog I post on YPP and any action I take hereon is solely attributable to me and not Farnese or Friends of Farnese

You're conflating

The issue at hand is this: can we afford business tax cuts if the revenue stream in drying up?

Maybe we could if there was a benefit to them. But no one has been able to show us in numbers any proof. That's why I asked if you were serious as you started your comment off by saying:

New York City's tax burden would not have the same affect on business and population gain/loss as Philadelphia's.

That is a spurious statement. Philadelphia's population loss is directly related to job loss which had nothing to do with taxes and everything to do with de-industrialization.

And is Philadelphia's effective tax burden high compared to other cities? I can't remember what data has been provided on this, and it may be true, but if you include property taxes and property values, as Zorro points oiyt, you do better in Philly than almost anywhere else on the East Coast when it comes to real dollars spent.

Blah, blah, blah--I've said all this before. But the bottom line is that Council and the Mayor, and we their constituents, have to decide like tomorrow what will be prioritized in this year's budget: tax cuts with no obvious or measured benefit at the expense of services, like police, or not.

Alarmism

Ray, do you think Nutter pulled a bait-n-switch and is now ready to slash all the services spending in the budget and not think of the consequences? Is he really that dumb?

I've read your piece and thought it was a tad alarmist. On a scale of 0 to 10, how do you think tomorrow's session will seriously damage city services.

If the Mayor is not allowed to cut anything in the budget, what do you suggest he do? As you say in the OP... nothing?

I don't think

I don't think a numbers-based argument that justifies the reduction of business taxes as a wage and job generator has ever been put forward. If there was not a revenue hole (you do understand the $50 million thing--that is real, cash money and if we can't replace it, something gets cut), I'd be less opposed to trying.

I do think that small and medium businesses should not pay the gross receipts tax, but without a change in the state constitution, there's no way to just protect them unless Nutter is willing to test a uniform exemption in the courts. I'd be very happy if he tried this.

In the short term though, when all city departments have already ahd to tighten belts, and what our city really needs is aggressive investment in social infrastructure like police, afterschool, schools/CCP and affordable housing, I fail to see the rationale of more tax cuts.

Nutter's going to spend the City surplus

and that's how he's going to pay for the goodies he hands out. The deal is to let him start cutting the revenue base of the City through his BPT cuts, everone will get some bragging rights for service improvements, however minor, and everyone can worry about the consequences later.

Just desserts for decades of payola?

I don't see how this cutting will cause an economic calamity. We already had one with the loss of industrialization. There's hardly any industrial jobs left in the city as it is now. We tried the high tax scheme under Rizzo of all people, and it didn't work. People and businesses left. We've figured out how to slow down the loss, but have yet actually realized a significant citywide net gain in population. No? Do I need to pull out an almanac?

With decades of payola that was dispersed under councilmanic privileges (I'm talking about programs and public buildings for social-good functions), that didn't work; what's the harm in trying belt-tightening?

We could do what some deadbeats are doing and just refuse to pay down our debts entirely, default, and go into BK like Anaheim, CA. That might not be such a bad idea.

The City pension plan would fall under receivership; and if we are lucky enough--can wipe it off the books entirely.

The City pension plan would

The City pension plan would fall under receivership; and if we are lucky enough--can wipe it off the books entirely.

Classy.

Wouldn't you be happier debating with skinheads over at Phillyblog?

Please answer this.

This is a progressive website. You're coming here as an allegedly progressive person and saying it would be a good thing to leave over 30,000 former cops, firemen, social workers and other City employees of all kinds without the pension that is keeping them from roaming the streets? And that would be a good thing to exchange for business tax cuts that no one has ever proven the utility of, much less the equity of? I hear Dan's response and maybe it should be left at that. But I'd like to give you a chance to say it again, just to be clear. What's up? Do you mean it? And why don't you come out from your mask of anonymity when you say it. Let everyone know who you are when you're so ready to stick it to all those worthless former city workers.

Or maybe you only want to stick it to me since I'm one of them. But do you really want to hit all those others just to get to me? Really, I'd love for you to explain.

You might want to hear my

You might want to hear my response to this and also my identity, but Dan doesn't. So, I'll leave it at that.

It's a cocktail of factors that make the decisions for us

For people, and this is conjecture (but also common knowledge), private people would consider the most important reasons why to locate anywhere on the globe:
1. Schools, unless we're talking about DINKs or singles then this doesn't apply
2. Job prospects/income
3. Cost of housing

There's always some underlying reason why someone wants to move somewhere, but those 3 factors have to pass the smell test first before someone actually makes the jump. City services, quality of parks, accessibility to shopping, etc. come farther down on the list. Would I not consider a move to Seattle if my company offered it, if the city of Seattle had trouble fixing potholes or had many water main breaks? Of course not.

For small, mid-cap and large companies, they look at [not prioritized]:
1. Quality of workforce
2. Economic cost of location vs. present location
3. Accessibility to customers
4. Legal ramifications of the move (usually businesses cover up this language under the all-encompassing and vague word "risk")
And of course, No. 5: Where does the CEO/owner live?

Government cannot influence all of these factors positively, but it can influence them negatively. For instance, the justification for the expansion of the PCC was to get more convention business to Philadelphia and pump up our exposure. I strongly disagreed with that assertion and in the process, some historic buildings were destroyed to make a huge blank floor in the heart of CC even larger. Will Philadelphia profit from this? I doubt it. However, a private developer did come in recently and propose that the entire block bordered by 12th and Chestnut and 11th and Market be destroyed to make way for a complex of supertall buildings and sign on a number of quality tenants. The American Commerce Center proposal came in shortly thereafter with similar ideas, and yet another hotel tower near 16th and Race that claims they can get Best Buy to put a 2nd location in the city. That is encouraging.

So, how do you go about softening the blow to businesses that the tax cuts that they were hoping for with Nutter are no longer a possibility?

I would hate to see ourselves voluntarily restrict development to just those who manage to call in some favors and get a KOZ zoning or ask for a Councilmember to push a favoritism package; which is highly unfair (and illogical).

Simple

You listed a bunch of reasonable factors that individuals and business might consider. I don't get though how reducing business taxes impacts any of them.

If you did want to attract more suburban businesses (and remember many are attracted here, and do move in, especially with the newly vibrant CC), here's what I'd do:

First priority: significantly reduce violent crime. How? More police and you implement universal afterschool programs for all kids 18 and under.

Second: reduce highway and street congestion/improve SEPTA. This is crucial for a business that wants to gets its goods out or its workers in.

Third: do something with the school district. Not sure what to be honest: take it back, leave it state hands--either way you need to spend more $ per pupil and not sure city can do that, but maybe with a progressive wage tax it could.

Fourth: invest heavily in CCP. Skilled workers are the biggest need for new economy companies.

Fifth: improve L & I and zoning process.

Note: the Mayor is already committed to many of these. But his commitments can't be realized with out cash.

But business development alone is not gonna do it. The free market is just not that powerful. The city has to force open the building trades to people or color and women and any other Philadelphian who is chosen over someone from So. Jersey.

And it should turn over expiring property tax abatements not yet in five year plan to affordable housing trust fund and then aggressively encourage CDCs to build new rental units. WE have an affordable housing crisis.

Councilman Goode has talked about this a lot, but we also need to figure out how to get more capital into the hands of small business people and get more neighborhood level small store development going. There is plenty of will for this, but no way.

Just want to remind people

Just want to remind people of Stan Shapiro's post yesterday on the possible cutting/postponement of the Cohen Tax Rebate -- a tax credit for working families in the city. My friend Aaron Couch from the Philadelphia Independent Media Center (http://www.phillyimc.org) sent me a good call-to-action on the tax rebate and why it is under threat. Read Stan's post or Aaron's email below.

http://youngphillypolitics.com/cohen_tax_rebate_jeopardy_tomorrow

Dear Friends:

As many of you know, Mayor Nutter is prioritizing business tax cuts for corporations like Comcast and Walmart over needed services at a time when inequality is increasing, homelessness is increasing, and our school system is desperately underfunded.

The argument is that this will grow business but there is no public data to support this and studies show large corporations prioritize workforce and education over tax environment. The city's own finance director does not predict that these tax cuts will generate increased revenue through economic development.

This comes in spite of sensible alternatives like cutting taxes only for small businesses (yes there are ways to do this despite the uniformity clause) or only businesses located in the city.

What is worse is that the Cohen Tax cut (a tax credit for working families in the city) is on the chopping block. Ironically, Mayor Nutter appeared at a press conference with John Edwards lauding an effort to fight poverty by, among other things, expanding the earned income tax credit, he is pushing an effort to deep six its Philly equivalent.

Make no mistake, these tax cuts are part of an agenda that prioritizes the wealthy and upper middle class at the expense of solutions that benefit everyone else. A progressive Philadelphia seeks solutions to inequality and fights for socially just policies and a progressive tax structure.

Please come to council tomorrow, call the mayor or your council person, or email me back explaining how ignorant I am and how reagonimcs is the best way to grow a city in which 1/4 live in poverty etc. See below from One Philadelphia:

Tomorrow at 10 AM Council is poised to decide the fate of the Cohen tax cut, as well as the BPT.

The fate of the Cohen tax rebate remains up in the air. The Mayor is proposing to postpone it one year to 2014, from the already remote present date of 2013.

Wilson Goode is poised to offer an amendment that would kill that effort by the mayor. He thinks he has some amount of support for that effort and a chance to succeed. WE NEED TO SUPPORT HIM. Postponing the Cohen tax rebate is now a tried and true way to kill it. We have to fight that tactic. Please call any of the following Council people to make your views known that a vote to postpone is a vote to kill. Here are the members we think would be most likely to understand and support that message:

Bill Green
Bill Greenlee
Marion Tasco
Donna Reed Miller
Blondell Reynolds Brown
Jannie Blackwell
Curtis Jones
Maria Sanchez
Darrell Clarke

If we can get 8 of the 9 members listed above to support Goode, we'll save the rebate. Please call one or more of them NOW! You can get their phone numbers by going here: http://www.phila.gov/citycouncil/ and clicking on the name of the Councilperson you're calling.

Finally, please come to Council tomorrow morning at 9:30 AM to talk to the Councilmembers as they enter the Chambers. These things often don't get decided until the last minute, and your presence can make the difference.

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hannah sassaman
prometheusradioproject

building radio stations = awesome
http://www.prometheusradio.org

Hannah

thanks for highlighting this.

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