City Council Plays Politics While So Many Need Jobs

This tax reform story may be played out against a background of policy debate, but it has everything to do with politics and nothing to do with policy.  This issue has been debated and a plan has been drafted by the Tax Reform Commission, reviewed by the Mayor's transition team and Economic Summit, and demanded by the public -- but petty concerns over who will get credit for making it happen (and how that credit will play out as the 2007 elections approach) may doom any legislation to failure as the City Administration and some on City Council conspire stand in the way of tax reform. 


The opponents of tax reform always have a new excuse -- and they are always telling tax reformers that if we wait, they will do something in the future ("we'll do something in the fall," they said last spring, but now they say "let's wait until the spring.")  First, they questioned whether oppressive taxes chase jobs from Philadelphia...NOW THEY AGREE THAT TAXES HOLD PHILADELPHIA BACK AND THEY ARE TRIPPING OVER EACH OTHER TO DRAFT DIFFERENT TAX REFORM BILLS.  Then they wondered if we could "afford" tax reductions...NOW THEY AGREE WE CAN AFFORD THEM AND COMPETING WITH EACH OTHER TO DELIVER TAX REDUCTIONS.  Today, they say that they do not want to support a schedule of legislated tax reductions (even though employers need certainty about the future) because "locking in" future reductions could be financially disastrous down the road. 

But the opponents of tax reform are just feeding us another line just like their former excuses were well-rehearsed rationales.  The truth is that tax cuts ARE NOT "locked in" as they can be undone by simple Council vote at any time.  In fact, we currently have legislated cuts into the future on both the Wage and Business Privilege Tax -- the legislation we are currently debating would change one of those schedules.  The Stubborn Seven on City Council have voted for other expenditures (stadium finance, union raises, and bond issues) are all truly "locked in" as no act of Council and practically no act of God could even change them.

The city's state-appointed fiscal watchdog, the Pennsylvania Intergovernmental Cooperation Authority has addressed this issue, calling for tax reform concluding...

The City's ability to reduce business privilege tax rates was made clearer earlier this week when the City released its quarterly report for the first quarter of FY06.  The report showed that the Administration now projects that it will end FY06 with a $142.5 million fund balance, which is $120 million higher than the amount forecast in the approved FY06-FY10 Five-Year Plan.  That projected increased fund balance should enable the City to make important progress in attacking the structural problems it faces, including its uncompetitive tax structure.

One goal of business tax reduction is to attract new businesses to the City; a demonstrated five-year commitment is more likely to influence businesses weighing the decision of where to locate as they consider a long-term commitment to the City.  In addition, it is fiscally responsible to lock in five years of rate cuts since the tax reduction schedule adopted by the City will be included in the next Five-Year Plan the City submits to PICA in the Spring.

We cannot let petty personal politics stand between Philadelphia and tax reform and job growth.  Every day, more and more emails, letters, faxes, and phone calls tell our elected officials to stop squabbling over who will get credit and to start delivering tax reform.  Email Council (Right Now) to urge them to say YES to tax reform and NO to petty politics.