The Philadelphia Inquirer had an interesting story this weekend about Philadelphia’s wage tax. It talked about recent wage tax collection data and the story it tells; while employment and population continue to shrink (albeit slowly) incomes in Philadelphia are going up. The last four years for which the City has complete data – 2001 through 2004 – indicate that private-sector jobs in Philadelphia decreased approximately 4.3 percent. The wage tax rate paid by residents and commuters also went down, as it has annually since 1996. However, aggregate wage tax revenue increase during that same period by over $60 million. These figures suggest that the “Philadelphia story is no longer one of straight-line loss in employment and people, but rather of an evolving city, gradually becoming home to higher-paying jobs and higher-earning residents.” However, Philadelphia's recent gains are apparently concentrated in sectors dominated by non-profit employers such as colleges and hospitals. Other industry sectors are either static or decreasing in Philadelphia, but growing elsewhere in the region. Firms that create such jobs are for-profit and subject to the City's tax on gross receipts and profits – the Business Privilege Tax. This tax receipt data suggests that such for-profits are apprehensive about investing in Philadelphia. What’s the solution? Continued incremental wage tax reductions and a wholesale reengineering of the business privilege tax, with a gradual phase out of the gross receipts portion. Philadelphia Forward and about a million other people have been talking about it for years; the question has been asked and answered, with anecdotal and empirical evidence proving the point over and over again.
Tuesday, April 26, 2005
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