Philadelphia City Councilmembers Kendra Brooks and Jamie Gauthier joined Massachusetts Senator Elizabeth Warren, and local union leaders today in calling for a wealth tax on Philadelphia residents who hold stocks and bonds.
The bill would revive an old statewide Personal Property Tax at a rate of 0.4%. Under the tax, someone holding $1,000 worth of stock would pay $4, for example.
The tax would apply to all Philadelphia residents, but the idea is that it would mostly affect the wealthiest, who are much more likely to directly own stocks or bonds. The tax would not affect retirement accounts, pensions, or bank checking or savings accounts. Federal Reserve data from 2021 shows that the wealthiest 10% of Americans hold almost 90% of the stock on the market.
The wealth tax would make the richest residents pay taxes to fund services for those most in need, said Brooks, who lives in Nicetown.
“The long shadow of trickle-down economics haunts my community to this day,” she said. “You can see it in the widening racial wealth gap, you can see it in the way billionaires have increased their wealth over the pandemic, while my neighbors are on the brink of eviction.”
The City Council members point out the city budget has fallen by $220 million from 2020 to 2021, leading to cuts in homeless services, street cleaning, and public libraries. They estimate that the hundreds of millions of dollars from the tax would be able to fund at least homeless services, libraries, and the parks department, based on the city’s 2021 budget.
Councilmember Jamie Gauthier said she sees the impact of losing these services everyday in west and southwest Philadelphia, which she represents.
“Fixing these issues requires resources and that’s exactly what the wealth tax will bring to our communities that are most in need,” she said. “I want to be very clear that this is not charity — it’s what Philadelphians and Black and Brown Philadelphians in particular are owed.”
As Billy Penn’s Jordan Levy explained, the Personal Property Tax in Pennsylvania goes back to 1913, from an even older policy that taxed “intangible and tangible personal property.” Legislators changed the law so individual counties could decide whether or not to enforce it; Philadelphia chose to keep the tax. Companies challenged the tax in the 1990s, leading to a U.S. Supreme Court decision that a policy in North Carolina was unconstitutional because it exempted businesses based in-state and run by state residents. Pennsylvania had a similar exemption; a judge ruled the exemption illegal but not the tax, and Philadelphia and most counties just chose not to enforce it.
Brooks had called for bringing back the tax in 2020, but that never got a hearing. Brooks said there is a broader base of support for the bill this time, including from two local municipal employee unions, whose leaders were at the press conference, as well as Massachusetts Senator Elizabeth Warren.
Warren said she is working on similar legislation at the federal level, and said that President Biden’s proposed minimum tax on billionaires is a good sign. The wealth tax supporters also point to similar efforts in California and Washington state as a sign that this is not a unique policy idea.
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