It's Our City is a project that uses TV, Radio and Web
to promote civic engagement in the Philadelphia region.Good News: Lower Philly Wage Taxes in 2009
Wednesday, January 21st, 2009 at 3:46 pm - by Stephanie Marudas. Filed under: Budget, Economy, Politics.
Like it or not, you’re stuck with the wage tax if you live in Philadelphia, or live outside the city but work 
here. Yeah, it’s a raw deal. But it’s part of the price we pay to live and/or work here. Back in October, we asked you why you choose to stay in Philadelphia, why you’ve already left, and why you might leave. Some of you told us that you quit working and living here altogether because of the wage tax.
But there’s a bit of good news in the city’s effort to offer its residents some tax relief, and possibly get some of you to move back or work here again. The wage tax is falling and is scheduled to do so in the years to come, of course that’s if the politicians don’t get in the way.
Check out the table below containing data from the city’s revenue department about Philadelphia’s wage tax rates. It shows you the latest round of reductions. Notice how the wage tax rate has dropped from one year ago.
| Schedule | Wage Tax Rate for Residents living in Philly | Wage Tax Rate for Non-Residents living outside Philly |
| 1/1/09 - 12/31/09 | 3.93% (.0393) | 3.50% (.035) |
| 7/1/08 - 12/31/08 | 3.98% (.0398) | 3.5392% (.035392) |
| 1/1/08 - 6/30/08 | 4.219% (.04129) | 3.7242% (.037242) |
The wage tax rate for city residents is higher because it includes a 1.5% tax for PICA (Pennsylvania Intergovernmental Cooperation Authority). Technically, the wage tax this year for residents is 2.43%. But factor in the 1.5% PICA tax and that’s how you get the magic 3.93% figure. Over the next four years, the wage tax is scheduled to fall. So that by 2013, city residents will be paying a 3.6% wage tax and non-residents will be taxed at 3.25%.
Local tax reform advocate, Brett Mandel of Philadelphia Forward, points out that Philadelphia’s ability to institute the latest wage tax reductions comes in part from state money generated by casino revenues from slots parlors in places like Bensalem, Chester and the Poconos. If Philadelphia were to open casinos, which the state has mandated, Mandel says the revenues generated could help provide property tax relief across the state and increase the city’s wage tax reductions. Whether you buy into this policy or not, the connection between wage tax reductions and casinos is an interesting one. In certain cases, it might pit some citizens against their own interests. For example, you might not support the idea of having casinos; but at the same time, you’re paying less in wage taxes.
You might be wondering if the latest budget crisis facing Philadelphia will affect the wage tax reductions. It does. Mayor Michael Nutter has decided to delay any city-subsidized wage tax reductions until 2015. But in the meantime, state money is expected to keep coming into the city for the scheduled wage tax reductions laid out in the City Code under Section 19-1502. (Remember to factor in the 1.5% PICA tax when you are looking at the wage tax reductions for city-residents).
Did you know?
The Philadelphia wage tax was enacted in 1939 by state lawmakers. It was designed as a temporary nominal tax to generate revenue for the city at the tail end of the Depression. But after the Depression ended, the city kept the tax and increased its value. Today, seventy years later, Philadelphia relies on the wage tax for more than 50% of all local tax revenues. Besides Philly, not too many other cities impose a local income tax.
January 21st, 2009 at 4:06 pm
How do the wage tax reductions effect the BPT and NPT?
I’m self-employed and would love to see some relief in that area.
January 21st, 2009 at 4:26 pm
@vcm: According to the Tax Commission’s 2003 report (which I keep on my shelf for light reading), the Net Profits Tax “continues to be subject to the same tax rates as those imposed upon resident and nonresident earners.” So it looks like you will see the same relief for that.
The BPT, however, with his Net Income and Gross Receipts components are separate and while they have come down substantially since the tax decreases began in the 90s, further reductions were also put on hold until 2015 because of the city’s financial difficulties.
January 21st, 2009 at 5:16 pm
The lowering of the wage tax due to casino revenues is not necessarily good news. One has to factor in the financial costs of having slots parlors. If the financial costs outweigh the the wage tax reduction, then it is bad news. Many people have opined that, in fact, the costs outweigh the benefits.
January 22nd, 2009 at 11:19 am
@Paul Boni: This would seem to be the classic tale of the individual vs. the common good. For example, an individual would actually SEE the effect of the wage tax reduction on his or her paycheck. As a members of the citizenry of Philadelphia, the negative effects of the casino would be much harder to quantify especially if they live far away from the sites, live in strong neighborhoods that are relatively safe and continue to get their trash picked up on time. I’m not saying this attitude is right, just that unless we figure out a way for citizens to see the costs of casinos taken out of their own paychecks, it will be an uphill battle to get them to forgo the wage tax relief.
January 26th, 2009 at 11:11 am
In the end, are not Casinos an indirect form of a wage tax? Closer to the point, is it not a wage tax on the least able to pay?
A gambler in the Galleria, won’t be some rich businessman from Hong Kong dropping a million bucks at the baccarat table. It’s people on their way home from work on the El, stopping off to lose $5 or $20 a couple of days a week.
I wish people would consider the real possibility that gambling represents a shift if wage taxes from the better-off to the worse off; the desperate. It’s sad.
January 26th, 2009 at 12:25 pm
@Joshua. Gambling is still a choice made by adults. So it is not a tax in that way. But I think you are correct in suggesting that wealthy people don’t often play slots (they have the stock market) so the people shelling out the most money in casinos tend to be the poor. Maybe the best way for anti-casino activists to win their war would be to wage an “good money management” campaign on the casino’s most likely customers. If you reduce the demand, then casino developers and lawmakers will see less revenue potential here.
June 27th, 2009 at 11:25 am
[...] CHARLES BARKLEY VOWS TO QUIT GAMBLING CLAIMS HE PAID $400,000 GAMBLING DEBTS AFTER VEGAS LAWSUIT CASINO SUED | Binside TV I’ve got a weakness at Calling All WingnutsPlanning to Quit Your Job and Start Your Own Business? | A to Z Business BlogYou can ensure a good gamblingâ
October 29th, 2009 at 3:30 pm
[...] Poker And Money ManagementVideo Poker And Money Management Part2 Sports Handicapping and Money Management - Part 4 | Online casino play moneyFree online casino money - no deposit bonuses » Blog Archive » Strategies to win Online Casinos GamesMy Investor Blog » Blog Archive » Is the stock market like a casino? A comment on Gartner’s latest Magic Quadrant for Data Integration at Talend blogGood News: Lower Philly Wage Taxes in 2009 | Its Our City | WHYY [...]