Technical.ly Philly

Civic

May. 6, 2013 12:30 pm

Since 1970 Philly lost 25% of its jobs; Boston, NYC, DC grew: fix taxes [EVENT]

In that 40 year span, D.C. employment has jumped by a quarter, Boston by 18 percent and New York City by nearly 15 percent. In stark contrast, Philadelphia has seen a decline -- for every four jobs here in 1970, one has disappeared. Maybe it really is worth blaming taxes.

The first of two panels that comprised a Philadelphia Tax Symposium from Pew Charitable Trusts and Temple University's Center for Regional Politics. This panel featured,from left, Rob Dubow, the city's finance director, Robert Inman, a Wharton economics professor, Paul Levy, the Center City District CEO, Joel Naroff, president of Naroff Economic Advisors and Stephen Tang, the CEO of the University City Science Center.

Full Disclosure: Joseph Mclaughlin of Temple's Center for Regional Politics was the adviser of a senior thesis from this reporter.

Since the post-industrial pre-dawn of 1970, the big U.S. Northeast success cities of record have seen double digit growth in workforce.

In that 40 year span, D.C. employment has jumped by a quarter, Boston by 18 percent and New York City by nearly 15 percent. In stark contrast, Philadelphia has seen a decline — for every four jobs here in 1970, one has disappeared.

If all those cities have had their problems with public education, poverty, crime, blight and gentrification, like Philadelphia, maybe all this hand-wringing about this city’s tax structure is worth the focus.

That was one big idea that was discussed throughout a pair of panel discussions paired together as a symposium on Philadelphia taxes held Friday in partnership between the Pew Charitable Trusts and the Center for Regional Politics at Temple University.

That stark data and the extrapolated tax blame were from Center City District CEO Paul Levy, who was just one of five panel members and not the moderator, but took to clicking through slides throughout the discussion nonetheless.

“I want to direct our attention to this slide again,” Levy would interject.

The factors for Philly lagging behind its neighbors are varied — and likely historically rooted — but panelists seemed to focus heartily on what you’ve heard before: Philadelphia relies famously more on wage than property taxes than other cities.

So low property taxes has made Philadelphia more competitive regionally, but the move to taxing more on property is necessary, particularly now that, as a recent report has shown, development-focused abatement had its major impact already. (It can go wrong at the other extreme — as Baltimore is experiencing, as its high property taxes are the problem there.)

So, as has become the most common reference throughout Philadelphia tax discussions, Philadelphia needs to continue to move toward taxing most heavily on what can’t move (property) and not what can (businesses, wage and sales).

Other big takeaways we spotted:

  • Putting jobs beyond the reach of easy mass transit reinforces poverty: Paul Levy, as many of those in poverty are without cars. Jobs in the transit corridor of the city and its nearest environs create broader access.
  • One-off tax breaks pick winners and are based on bets for growth industries, said Levy. So though software or video game business or incentive exceptions are interesting, it’s better to lower the rate overall, he argued.
  • Philly is good incubating new ideas, but when they scale to production, they leave and we don’t capture the “payoff:” said Wharton’s Robert Inman. He was talking about the Science Center and it seemed to suggest the spinoff of university talent and Exit Interview reality.
  • Economists love property taxes because they tie services (schools, environment, real estate value) to cost, and houses don’t move, said Inman.
  • Cities are in a marketplace, said Inman. If you offer $1.10 of service for $1 of tax, I’m in. If less, no. So in this competitive environment of attraction and retain, this matters.
  • We should look at the PILOT program that is so celebrated in Boston, said Inman, which encourages universities and nonprofits to make payments to cover the city services they use, while retaining their tax-free status. Tang, of the university-backed Science Center, cautioned to think about the many ways these big schools give back: police forces, job creation, etc.
  • Despite big job gains in Boston, DC and NYC that Philly hasn’t, those public schools aren’t regarded as much better, said Levy, so taxes are the culprit.
  • ‘Revenue neutral’ is a political phrase to avoid controversy, said economic adviser Joel Naroff. The city’s major property tax reassessment shouldn’t be revenue neutral but should actually seek more revenue from property taxes to move forward with the balance re-structuring between property and wage taxes, said Inman, who joked that as a tenured professor he could make such an unpopular claim.
  • The City of Philadelphia has 17 different taxes, excluding other local fees and licenses. This contrasts to seven in Boston, according to Tom Ginsberg from Pew.
  • Just six of the country’s 30 largest cities have property, sales and income tax, said Ginsberg. Philadelphia is one of them.

What’s next for tax reform?

In addition to the on-going Actual Value Initiative for property taxes, in July 2014, wage and sales tax rate cuts are due to resume and later next year other tax exemptions for startup businesses, among other changes, are due.

Read more from the Philadelphia Citypaper and NewsWorks and Next City.

Find video of the event here.

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Christopher Wink

Christopher Wink is a cofounder and Editorial Director of Technical.ly, the local technology news network. Previously, Wink worked for a homeless advocacy nonprofit and was a freelance reporter for a variety of publications. He writes regularly about news innovation and best business practices on his personal blog here. The bicycle commuter loves cities, urban politics and squabbling about neighborhood boundaries.

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  • Michael Moore

    The period from 1970 to now has seen explosive growth in the financial services industry and their congressional lobbying. This alone could account for much of the job growth since New York and Boston are major centers for banking and insurance.

    • technicallym

      Philadelphia has had a banking and insurance footprint, though it’s contracted through acquisitions and consolidations. That appears to be the point: what new industry would drive job growth in the city proper?
      -cgw

  • Frank Rizzo

    Philly has the highest taxes and the lowest job growth, and this has been the case for 50 years. Yet many still don’t see the correlation between the two.

    Oh sure, it’s something else. It can’t be the high taxes and totally un-friendly business climate – wait, unless you’ve got a Pol like Nutter pulling for you vis a vis GSK. Hey, how did that deal work out with GSK – Nutter gives them special tax breaks to stay in the City at all, and their old building gets sold to a non-profit, which won’t pay taxes. Gee, sounds good to me.

    In a high tax and regulatory environment like Philly, everything has to run through City hall, to get the special breaks, etc., in order to do business here. This is not an efficient use of capital. And it is a corrupt and corrupting system. The only winners here are anointed by our political class.

  • Frank Rizzo

    What we really need to do in addition to slashing taxes, is to put our City Government, and especially our bloated School District, on a big fat diet. Stop wasting money. Throwing more money at losing enterprises is just a further waste of taxpayer money. We need reform now. Our City is the most corrupt piece of junk City government in the US.

  • citizan

    This is also due to the decline of population in Philadelphia. Tax reform should begin with tax incentive to live/own a home in the city, and city hall should focus more on tax evasion to balance the budget. It’s not tax itself, but how tax is enforced. We should encourage people to move to the city, and foster the environment which allows for business to grow.

  • thegreengrass

    Isn’t this why they started property reassessments in the first place?