wage tax

Council DEMOCRATS poised to kill tax break for low-wage workers.

Isn’t it nice that we have a Democratic City Council by a margin of 15-2? That must mean that, like the federal and state governments, the City does something to make its income-based tax progressive. And, indeed, in 2004, City Council enacted such a break, enabling workers classified as working poor by the State to knock their wage tax down to 1.5%, a meaningful cut.

But Council really didn’t like it. To get this little piece of tax justice passed, its sponsor, the late, great, Councilman David Cohen, had to agree to phase it in over a six year period. Soon after Cohen’s death, multiple efforts were launched to repeal it outright. Although these were unsuccessful, the tax break was postponed three additional times, and the benefit itself was sharply reduced, to no more than 1% under the general rate of the tax.

As restructured, the wage tax credit is now scheduled to begin taking effect in 2016. But the restructuring and the delay did not reduce Mayor Nutter’s zeal for doing away with it altogether. With little fanfare he introduced a bill to repeal it altogether along with his budget for next year. Now it has been voted out of Committee to the floor of Council by a 9-8 vote.

Remember, the wage tax is about as regressive a tax as you can have based on income. It excludes all sources of income but wages. It is flat, levied currently at a rate of 3.93%, on a worker’s first and every other dollar of wages. No deductions, exemptions, credits or reductions of any kind apply for low wage workers. Upper income workers who deduct taxes from their federal taxes, however, may pay as much as a third less than the nominal rate.

This is not a City in which there is a general reluctance to cut taxes, at least not those that benefit the 1%. Just recently Council defined wages to exclude those paid to hedge fund managers. Since 1996, the rate of the wage tax has been cut 16 times to bring it down from 4.96% to its current rate. All of those cuts benefited the rich far more than the poor. That’s simple to see. A cut of 1% is worth $1,000 to someone earning $100,000, but only $100 to someone earning $10,000.

Why would Democrats fight the idea of giving low wage workers some additional bit of relief from this heavy tax burden in a town with a poverty rate exceeding 25%? Good question. Please call and ask them before a final vote is taken next Thursday. All we need is one of them to come to their senses and reject this war on the poor. When you talk to them, ask them what they think it means to be a Democrat in Philadelphia.

Here are the Democrats who voted to repeal this little piece of tax justice and decency:

Green (At Large)
Greenlee (At Large)
Henon (6th District)
Jones (4th District)
Reynolds Brown (At Large)
Tasco (9th District)
Clarke (5th District)

Also, two Republicans voted to repeal:

O'Neill (10th District)
Oh (At Large)

Ask them why any Democrat should vote for them. They got plenty of Democratic votes in the last election. (You can get contact info for Council members here.) You can find out who your District Councilperson is here.

And here are the 8 members who voted to keep the tax cut:

Bass (8th District)
Blackwell (3rd District)
Goode (At Large)
Johnson (2nd District)
Kenney (At Large)
O'Brien (At Large)
Quinones-Sanchez
Squilla (1st District)

Call and thank them. Note O’Brien: a Republican who did the right thing. How often can you say that?

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