- Pennsylvania Among 'Terrible 10' Most Regressive Tax States
- February 4 Non-Partisan Training: HOW TO RUN FOR ELECTION BOARD IN 2013: HOW TO RUN FOR COMMITTEEPERSON IN 2014
- Republican Governors Opt-In to Medicaid Expansion
- The Reports of Unions' Death Are Greatly Exaggerated
- Ask Allyson Schwartz to run for Governor
- Mind the gap: Opting Out of Medicaid Expansion Leaves Low-income Families Behind
- Jan. 14 Workshop:HOW TO RUN FOR ELECTION BOARD IN 2013; HOW TO RUN FOR COMMITTEEPERSON IN 2014
- Seth Williams on Guns, Jasmine Rivera on School Closures @PFC Meetup Wednesday
- PA Revenue Strong Midway Through Year; Tax Cut Could Have Big Impact
- What to Make of the Fiscal Cliff Deal?
Tax Cuts, Open Government, and Reality-Based Decision Making
Dear Mayor Nutter and City Council,
We in Philadelphia are gladly watching the beginning of the Nutter administration. I, for one, am especially heartened by the sense that we are entering a period in Philadelphia where we use reality-based decision making. Think about it: Outcome-based budgeting. A 311 system and Citi-Stat. Open records and open government.
A new day, indeed.
However, this reality-based lawmaking and open government is about to get a test, and it the test comes in the form of (wait for it, wait for it, wait for it….) business tax cuts. Here is where the rubber meets the road.
As most know, the BPT is made up of two parts- receipts and profit. Councilman Goode just introduced a bill to eliminate the receipts portion of the tax. This is by far the smallest of the taxes, at just
.19% 1415% (versus 6.5% for profits). The receipts part of the tax is a symbol, because people have to pay it whether they make money or not. The bill will probably pass as of today, as will a bill to significantly cut the larger tax on corporate profits. Even the most rosy scenario of tax cuts predict that at least in the short term, there will be a decrease in revenue.
Why do we cut business taxes? Most times, it is talked about as a way to grow jobs, especially in the context of small businesses. Given that general business location decisions of big corporations put emphases away from taxes and tax packages, and towards services, workforce education, etc., we can assume that tax cuts are aimed to help small businesses. And, Brett Mandel, et. al., have done an admirable job of getting small business people up in arms about the devilish BPT.
I agree that if you presented a small business with enough money to hire an additional person, to invest in new equipment, etc., then a tax cut may make sense. On the other hand, if the typical BPT payer is not getting much of a break, and the City and small businesses could desperately use a 1)more user friendly City Hall and 2) better and more services (think the surcharge that the Center City District businesses pay), then it may make sense to forget cutting business taxes, and instead invest more in our City.
So, here is where the open-records, and reality-based decision making comes into play:
Before we make a decision on whether to cut business taxes, we should know how much each business actually pays to the City each year. (As we know from the Vince Fumo property tax fiasco, how much each person pays in property taxes is a public record.) Is a small businessperson actually saving enough money to re-invest in their business, or to hire additional workers? Without having real statistics, how would we know?
So, before we decide to cut business taxes or not, we should know how much every business- from big old Comcast to the smallest person just opening up shop, pays in taxes to the City each year. This may shock you, but under the previous Mayor, the Commerce Department generally refused to provide these numbers. I guess they thought it was their business only. But, with a new Mayor focused on transparency and the like, I am hoping things change.
Until we know these numbers- and see just how much business people will actually benefit from a tax cut (as opposed to our biggest firms)- we can not use reality based decision making.
I suspect very few people- from City Council, to the new Commerce Director to Small Businesspeople themselves- actually get what these numbers are. But, before we simply start cutting taxes, shouldn’t we make sure that these basic questions are answered? If there is a real privacy issue, the actual business names themselves can be redacted. But, either way, all we need is something that should be quite simple: some sort of excel/dbf type file, with a business, and the amount of each tax that it paid per year. We can analyze it from that.
It is a new day in Philadelphia. A day for open government. And a day when we can make budgetary decisions with our eyes wide open. Let’s see those numbers before we start tax cutting.