Down Goes The Wage Tax! Knock out the Philly Tax Monster!

If you saw a little extra spring in the strut of the Mummers this year, maybe it is because the Wage Tax cuts we all fought so hard for -- and won -- have arrived.

As of January 1st, the Wage Tax was cut a full 3% -- THE BIGGEST WAGE TAX CUT IN HISTORY! After next year's cut, the levy will be down to the lowest level it has been since 1976. This is a HUGE deal, especially when compared to recent modest trimmings the tax received. The cut that was just enacted reducing the resident rate from 4.4625% to 4.3310% (the non-resident rate goes from 3.8801% to 3.8197) is more of a reduction than all of the modest nibbling away of the tax the city has enacted in the past four years combined!

But the good news just gets better -- over the next decade, the local reductions combined with the cuts pursuants to the expansion of gambling in Pennsylvania will reduce the Wage Tax to below 3% -- the lowest it has been since before man first set foot on the moon.

ENJOY THE FRUITS OF OUR LABORS...the reductions will save the average Philadelphia worker more than $5,400 between 2005 and 2015 as the reductions reduce the barrier to employment growth, creating thousands of jobs.

Based on estimates of gambling revenues (which are estimated to begin in 2007), the Wage Tax will fall in stages:

Year -- Resident Rate -- Non-Resident Rate

2004 -- 4.4625% -- 3.8801%

2005 -- 4.3310% -- 3.8197%

2006 -- 4.3010% -- 3.7716%

2007 -- 3.8477% -- 3.5847%

2008 -- 3.8067% -- 3.5532%

2009 -- 3.7567% -- 3.5140%

2010 -- 3.6035% -- 3.4336%

2011 -- 3.4503% -- 3.3628%

2012 -- 3.2971% -- 3.2949%

2013 -- 3.1439% -- 3.2284%

2014 -- 2.9907% -- 3.1527%

2015 -- 2.8377% -- 3.0790%

As Center City District President Paul Levy declared in his Winter 2004 Center City Digest, "The process was acrimonious, the after-effects fractious, but a major obstacle to competitiveness was significantly lowered in 2004." (Winter 2004 Center City Digest)

The Wage Tax, which was first levied in 1939 as a "temporary" measure grew to be the tax that ate Philadelphia and became a huge incentive for firms and families to leave Philadelphia. Some even point to development in King of Prussia and the Route 202 business corridor and proclaim that they were built because of the Wage Tax. Once, a mere 1.5%, the tax was increased in 1961, 1966, 1970, 1972, 1977, and 1984 when it reached as high as 4.96% for residents and 4.3125% for non residents. Important, but modest cuts began in 1996 and now we are really hitting the tax with some serious body blows. (For more Wage Tax and Tax Reform history, see: The Story of Tax Reform In Philadelphia).

DOWN GOES THE WAGE TAX!

DOWN GOES THE WAGE TAX!

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