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Councilman Jim Kenney on tax policy amid a recession

Councilman Jim Kenney was a staunch opponent of the city tax reform proposal from Councilman Bill Green and Councilwoman Maria Quinones Sanchez. Later this month, revised plans from Green and Sanchez are expected, ahead of Mayor Nutter’s budget address. So, in chatting with Councilman Kenney in February, we brought up his issues with the tax […]

Councilman Jim Kenney outsources his social strategy. Inquirer file photo

Councilman Jim Kenney was a staunch opponent of the city tax reform proposal from Councilman Bill Green and Councilwoman Maria Quinones Sanchez.
Later this month, revised plans from Green and Sanchez are expected, ahead of Mayor Nutter’s budget address. So, in chatting with Councilman Kenney in February, we brought up his issues with the tax proposal. Below, with light editing for length and clarity, are his thoughts:
Where did you stand on the Green-Sanchez tax legislation?
I was not in favor of that legislation, and I thought it was dangerous how they wanted to reorganize and revamp the business privilege tax in the big picture of it.

In what way?
Their overall approach was flawed in that the five or six year period that they are thinking in this laboratory is the real world. I can’t have hotels close in this ‘let’s see if it works’ kind of thing. We’re in a service economy, and service economies are normally low profit margins. If you’re going to quadruple or quintuple the gross receipts portion of the tax, with a low margin business, you’re going to put them out of business. It does help law firms and accounting firms. but I don’t think they need a lot of help right now.
When you have a business with a profit margin of one to four percent, they get devastated because they’re paying on the gross receipts four or five times under that scenario, and their net profits are not as high so they’re not getting any benefit from that [being reduced]. I think when you have major law firms and their partners, they will make out well. Small margin business won’t.
Is there a way to reduce burdensome city taxes?
If the economy can sustain it, absolutely.
This is what is frustrating being in this particular government in this partnicular time. We raised real estate taxes and sales taxes one time, and we don’t hear the end of it. I’ve been here twenty years, we have been reducing taxes from 1995 through last year. We’ve had incremental, not major, but incremental and consistent reductions in business and wage taxes. And now we hit, well, we were in a depression, we had to sustain core services, and hopefully in 2013, we can get back to that schedule and if the economy is more robust, we can excelerate that schedule, but somehow that we’re viewed as these big taxesrs, it’s laughable.
We’ve done nothing but reduce taxes for the bulk of the time I’ve been here.
So the tax policy we’ve seen is the best evil?
Did I want to vote for a nine percent real estate tax increase, no, but I also didn’t want to lay off 200 firefighters or do what Camden is doing.
When it comes to cutting these taxes, if you can’t afford it, then don’t do it, until you don’t do it, then people complain.
I’m waiting for this time of year next year with Gov. Christie. I want to see all of those wonderful sound bytes of ‘I’m a tough guy,’ and ‘Get these public employees and kick them in line’ and ‘We’re not providing funds for schools.’ Well, guess who’s paying for schools: your local property taxes. It’s like a trickle down tax increase. I want to see if he is as popular next year at this time as he is this year. Because sometimes your big tough policy will have an impact like, ‘oh they can’t plow the snow,’ or they won’t have as many police officers or as many teachers.
It’s a zero sum game. So you do what you can, but it’s our goal to make Philadelphia a good place to do business.

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