Tax Reform Push Focuses On City Council Legislation

What do we want? TAX REFORM!  When do we want it? NOW!

The chant is a fun one, but we really want to implement the recommendations of the Tax Reform Commission.  The Tax Reform Commission established that:

• Philadelphia taxes more than other cities
• Philadelphia taxes what other cities do not
• Philadelphia taxes unfairly

The Tax Reform Commission’s package of complementary recommendations will:

• Dramatically reduce the Wage Tax
• Eliminate the Business Privilege Tax
• Ensure that Real Estate Taxes are understandable and fair
• Create jobs and increase investment in every neighborhood

The legislation summarized below is pending in City Council to implement the recommendations of the Tax Reform Commission (Visit City Council's website to view the actual legislation; visit www.philadelphiataxreform.org to read the full final report of the Tax Reform Commission).  These bills will be heard:

Monday, May 10, 2004
9:30 am
City Hall room 400

If you want to help make sure City Council understands that we must make tax reform a priority, click here to send your elected officials an instant fax or find phone numbers to contact them individually, then come to the hearing to show your support.  If you want to testify, please contact Philadelphia Forward at 215.563.3881. 

Tax Reform Commission Bills Pending Before City Council

Bill 040009
>Cut the Wage Tax in increments to 3.25% for residents and non residents in 2014
>Make the reductions in January instead of July to match the tax year simplify the tax system

Bill 040010
>Phase out the Business Privilege Tax in increments until it is eliminated totally in 2015

Bill 040011
>Make the Real Estate Tax Assessment System fair and accurate by assessing at 100% of property value
>Make the Real Estate Assessment System more fair by separating the Appeals and Assessment Functions
>Establish Assessment Practice Principles to improve the Real Estate Assessment system
>Enact Real Estate Tax Buffering so taxes do not rise sharply in any one year

Bill 040012
>Phase in (over five years) the ability for partnerships to fully deduct payments to partners against their Business Privilege Tax liability so partnerships are no longer taxed higher than corporate competitors

Bill 040013
>Enact budget-based Real Estate Taxation so elected officials set tax rates after assessments are performed to create accountability in the Real Estate Tax System

Bill 040014
>Establish two estimated payment dates for paying the Business Privilege Tax so taxpayers no longer have to pay their full obligation on one day

Bill 040015
>Enact Land-Value Taxation to reduce Real Estate Taxes on structures and increase Real Estate Taxes on land to encourage development and discourage speculation

Bill 040016
>Repeal the Real Estate Non-Utilization Tax as it has never been collected due to its questionable legality

Bill 040017
>Extend Net Operating Loss Carryforward so that the city’s relatively short carryforward period no longer makes Philadelphia an unattractive place to start a business that may begin with years of losses before becoming profitable

Bill 040018
>Establish quarterly real estate tax payments so that taxpayers who do not pay their taxes through their monthly mortgage payment no longer have to pay their full obligation on one day
>Eliminate the need for the city to borrow against future real estate taxes, which would save the city money

Bill 040019
>Close Realty Transfer Tax loopholes to make the tax more equitable and generate additional revenues to the city

Bill 040020
>Establish discounts for early payers and penalties for late payers necessary to enact quarterly Real Estate Tax payments
>Apply tax payments to current year’s liability so taxpayers who are making tax payments but may still owe some back taxes are no longer excluded from participating in the state’s property tax rebate program

Bill 040021
>Unify refund and assessment periods so the city and taxpayers have equal rights for auditing/seeking refunds

What else do we want?

The legislation listed above would implement most of the Tax Reform Commission’s recommendations.  To completely enact the Tax Reform Commission’s blueprint for change, the following additional steps would have to be taken:

The Mayor must:
>Establish by Executive Order a Taxpayers’ Advocate to increase fairness and taxpayer representation in the assessment process
>Adopt Single-Sales Factor Apportionment so that the Net Income component of businesses’ Business Privilege Tax liability is based solely on sales, which would make Philadelphia more attractive to firms that export their goods and services beyond the city borders
>Invest at least $1 million in Greater Philadelphia Urban Affairs Coalition's Campaign for Working Families to help return up to $150 million in annual federal and state tax credits currently not received by eligible low-income Philadelphians

The General Assembly of the Commonwealth of Pennsylvania must:
>Make a technical change to state law to allow the city to extend the net operating loss carryforward
>Make a technical change to state law to complement the elimination of the Business Privilege Tax