Philadelphia’s Last, Best Chance to Lift Ourselves Out of Poverty
Over the next couple of weeks, Mayor Cherelle Parker and City Council will decide if they’ll do something historic for the city’s most vulnerable citizens. They need to seize this important moment.
A bold business tax overhaul could lift thousands out of poverty in Philadelphia / Photograph by Elevated Angles for Visit Philadelphia
For many years Philadelphia has had the dubious distinction of being “the poorest big city in America.” Our poverty rate is more than 20 percent — four points higher than Chicago, five points higher than Dallas, seven points higher than Phoenix.
We’ve held the poverty title so long it’s started to feel inevitable, like there’s nothing we can do about it.
But that’s wrong.
In fact, our public officials currently have before them a once-in-a-generation opportunity to lift our poorest residents up for good — and if they don’t seize it, I’m afraid things are only going to get much, much worse in Philadelphia.
As readers of this column know, I’m a member of the Tax Reform Commission that was created by City Council. We spent months doing research and came to one clear conclusion: Philadelphia’s high tax rates — in particular, our high business income and receipts tax (BIRT) — have for decades driven large and small companies out of Philadelphia. Some businesses choose competitor cities like New York or Boston. Others simply opt for our own suburbs. Either way, we lose.
It’s why Philadelphia has lagged far behind other places in job creation; it’s why our commercial real estate tax base is contracting (which threatens funding for our schools); and ultimately it’s a major reason that one in five of our residents are poor.
The best cure for poverty is a good-paying job, and because of our tax structure, our city simply doesn’t have enough of them.
Over the next couple of weeks, City Council and Mayor Cherelle Parker will be in final discussions about whether to accept the Tax Reform Commission’s proposed solutions to these problems. They include our firm recommendation to completely eliminate, over the next 10 years, the “net income” portion of our business taxes.
I urge Council and Mayor Parker, in the strongest possible terms, to seize this massive opportunity.
For starters, there isn’t likely to be another chance to do it any time soon. The last tax reform commission was more than 20 years ago, and it’s hard to see the issue coming up again for at least a decade.
More importantly, unless bold steps are taken right now, our situation is only going to get worse. Since COVID, we’ve seen a continuing and accelerating deterioration of Philadelphia’s neighborhood commercial corridors and our commercial office real estate sector, in part because of our tax structure. Almost no leases are being signed from businesses wanting to locate in the city, and existing businesses are downsizing their leases. Those trends are ominous.
What’s more, recent federal funding cuts pose a direct threat to our “eds and meds” sector, which provide so much of our current employment. If we lose those jobs, we need to work even harder to attract private businesses here.
If we don’t, it’s not hard to see a rapid spiral downward. More residents leaving the city (already almost half of Philadelphians reverse commute to the suburbs). More businesses following them. Tax revenue falling farther. Budgets for city services — and schools — being cut. Our poverty rate growing.
Lately I’ve heard talk about a possible compromise deal being reached, in which the net receipts tax would be lowered very slowly but not eliminated. That kind of negotiated approach might work in private business, but my years on City Council proved to me that half-measures rarely work when it comes to public policy — if you want real results, you have to be all in. I fear that a mere reduction in the business tax will mean we’ll have less tax revenue — but still won’t attract the businesses and jobs we need.
Every day I walk and drive around Philadelphia and see people who are struggling — anxious about providing for their kids, nervous about covering the rent, fearful of what a medical emergency could mean not just to their health but to their finances.
Our public officials have an opportunity to change those families’ lives — for good — by ensuring there are more and better jobs right here in our city. Please don’t pass up the opportunity to make a difference.
