Taylor Tax Reform Bill Passes the Finance Committee
-- The House Finance Committee has unanimously passed legislation sponsored by Rep. John Taylor (R-Philadelphia) to fuel job growth in Philadelphia.
“Since 1970, Philadelphia has lost more than a quarter of its jobs,” Taylor said. “And while the severe job loss has ended, job and wage growth in the city has been identical to what it was in 2003, and still lower than in 1990. Almost 40 percent of the working residents of the Philadelphia neighborhoods need to reverse their commute to the suburbs to find work.”
To address this situation, a broad coalition of business, labor and civic groups, along with the Tax Commissions of both 2003 and 2009, have concluded that in order to grow the number of jobs in Philadelphia, the city must reduce wage and business taxes and shift to greater reliance on the real estate tax for businesses.
Currently, the Uniformity Clause of the state Constitution requires that all taxes in the Commonwealth be applied uniformly among the same class of subjects. Taylor’s legislation—House Bill 1871-- will permit Philadelphia to impose taxes on real estate used for business purposes at a tax rate that exceeds the tax rate applicable to other real estate. That rate cannot vary by more than 15 percent from the rate applicable to other real estate.
Most importantly, Philadelphia must then reduce the aggregate revenues of wage and business taxes by the amount of any real estate tax revenues attributable to the rate variance.
“Unless and until we remove that barrier, and the city’s wage tax is dramatically and fairly reduced, Philadelphia will continue to lag behind our competitors and the nation as a whole,” said David Thornburgh, president and CEO, Committee of Seventy, while testifying before the committee recently in Philadelphia. “Without a fundamental resetting of our competitive landscape, our prospects to escape the dubious distinction as the nation’s poorest big city are dim.”
“All too often our local elected officials have attempted to fix budget gaps by increasing taxes,” testified David McFarland, chairman of the Building Owners’ & Managers’ Association of Philadelphia. “Unfortunately, they have continually taxed items which are considered portable-- wages and businesses. The truth of the matter is, while these short-term solutions often fill the gap for a year, they are also the greatest contributor to further job erosion. Taxing your way out of a problem is not good business in the long run.”
“This (legislation) will help Philadelphia lower its dependency on wage and business taxes and create a stronger climate for growth,” testified Varsovia Fernandez, senior vice president at Customers Bank. “Given the economics in the City of Philadelphia, I’d think that enabling legislation that helps its people and businesses thrive by lowering the wage tax, and increase jobs by as much as 50,000 in the next decade, would create a much-needed balance against the city’s operating budget and poverty.”
The bill now moves to the whole House for a vote.
Representative John Taylor
Pennsylvania House of Representatives
Media Contact: David Foster