Overburdened taxpayers won’t find a break in Mayor Parker’s budget | Editorial

If a budget is a statement of an elected official’s priorities, Mayor Cherelle L. Parker has sent the wrong message to city taxpayers.

Parker’s $6.29 billion budget focused on improving public safety and cleaning and greening the city. They are two important issues she campaigned on, and deserve attention. But what about overburdened taxpayers?

Parker dropped the ball by not continuing the incremental cuts to the city’s wage and business taxes, which are among the highest in the nation. For nearly 30 years, successive mayoral administrations have embraced the tax cuts as a cornerstone to make Philadelphia more competitive.

During the mayoral campaign, Parker said she supported incremental reductions to the wage and business taxes. She even went so far as to say she would like to see the wage tax eliminated.

Parker’s decision to reverse her campaign pledge to maintain the cuts is even more misguided given the city expects to end the current budget year with a $535 million surplus. That begs the question: If the city fails to reduce taxes when it’s flush with taxpayer money, when will it?

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The mayor has said that before prioritizing tax reform, she wants Harrisburg to raise the minimum wage to $15 an hour, and allow the city to tax residential and commercial properties at different rates.

That’s a triple bank shot that may or may not come to pass. In fact, efforts to tax residential and commercial properties at different rates have been floated unsuccessfully for at least a decade. If Parker is serious about getting help from Harrisburg, she should maintain the incremental wage and business tax cuts. Ending the cuts will give Parker even less leverage with state lawmakers.

Last month, City Council passed a resolution to create a new Tax Reform Commission to examine Philadelphia’s onerous tax structure. Council’s focus on tax reform is a welcome step, but will it amount to real change?

This is the fourth blue ribbon tax panel that has been created over the last 22 years. There is likely a file drawer in City Hall with past reports that contain the same conclusion: Philadelphians pay more in taxes than most other big city residents.

The problem is well-documented. What’s missing is the will to implement substantive change.

The wage tax of 3.75% for Philadelphians and 3.44% for workers who live outside the city is among the highest in the country. The wage tax has repeatedly been cited for driving out residents and businesses.

The rise of remote work spurred by the pandemic has made it easier for employees to relocate to more affordable areas. Philadelphia’s population has declined by more than 53,000 people over the last three years.

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Meanwhile, many companies continue to locate in the surrounding suburbs. Boomi, the fast-growing software maker, moved its headquarters from Berwyn to Conshohocken this year. Most of the Fortune 500 companies in the Philadelphia area are located outside the city. Philadelphia’s tax structure was viewed as a big reason why Amazon did not locate its second headquarters here.

The city’s tax burden hampers job growth. The lack of employment opportunities is inextricably linked to Philadelphia’s high poverty rate. Parker is right to focus on reducing crime and making the city cleaner. But attracting more jobs is an important piece in the effort to reduce crime and poverty.

The incremental cuts in the wage and business taxes do not amount to much in any given year, but make a difference over time. Since 1995, the city’s wage tax rate has decreased from 4.96% to 3.75% for residents.

If anything, Parker should be more aggressive about reducing these taxes. That will do more to create Parker’s so-called One Philly.