Are Philadelphia’s taxes so brutal that they’re chasing away residents?
A Pew Charitable Trusts report shows the tax burden on city residents has sunk since 2000, making it more competitive with the Pennsylvania and New Jersey suburbs.
“Philadelphians are still more heavily taxed than most of their suburban peers, the towns around the city,” says Thomas Ginsberg, lead author of the report. “But the tax gap between the city and the suburbs as a group has shrunk dramatically.”
During the same period, Ginsberg said the residential tax burden for a hypothetical middle-class family living and working in the suburbs increased.
Their neighbors who work in the city are hit the hardest.
“As it turns out, the commuters from New Jersey or the Pennsylvania side have a heavier tax burden than a Philadelphia resident,” he said.
Ginsberg stresses that he studied taxes paid by a hypothetical median-income family, so the findings don’t apply to everyone.
How did things improve for Philadelphians? First, the city lowered its wage taxes from 2000 to 2009. Second, Philadelphia’s property assessments didn’t keep up with rising home prices, so the city’s effective property tax rate dropped.
“Our research certainly shows that the property-tax system in Philadelphia, and the state of, perhaps, trouble that it’s gotten into, was absolutely a major driver in the city’s shrinking tax burden,” Ginsberg said.
This spring, Mayor Michael Nutter proposed overhauling the city’s broken property tax system by reassessing all properties in Philadelphia. But City Council decided to delay the plan for a year.
Mayoral spokesman Mark McDonald says the report is good news for the city, but it’s not time to declare victory. The administration still wants to see wage and business taxes drop, he says.