Business Privilege Tax

The Embarassingly Out-Of-Touch Inquirer Editorial Board

In an Inquirer editorial yesterday scolding City Council for taking a second look at tax cuts, the Inky editorial board showed how embarrassingly out of touch they are with everyday Philadelphians.

First, in a nutshell, the Inquirer wrote an editorial that demanded that- fiscal realities be damned- the City better keep cutting business taxes. The editorial was kind of high-comedy.

First, here is the background though: reading between the lines, the City budget is in very bad shape, much worse than projected in Nutter's first budget proposal. The pension bond issue isn't happening, transfer tax revenues aren't coming in, and the City is faced with a basic reality: in a shrinking economy, its pretty hard to cut taxes and not cut services. So, that is the context of this editorial (and the closed door budget sessions for Nutter).

The funny thing is that the editorial doesn't particularly make logical sense. It simply wants to have it both ways. For example, there are passages like this:

It's time for the heavy lifting that's missing in the Nutter administration's first stab at the budget. With good reason, the $4 billion budget was described as crowd-pleasing. It proposed smart new investments that should be retained in some form - for police and fire protection, parks, the community college, and more.

Cool, smart new investments, great! (Which means increased spending...) But, of course, it also says things like this:

But now that the economy is faltering, there is some talk at City Hall of halting the tax cuts. That's the worst message Mayor Nutter and City Council could send to workers, businesses and residents.

Ending the meager wage- and business-tax cuts already on the books - as well as failing to push ahead with the business cuts proposed by the mayor - would signal that the city is headed in the wrong direction.

Instead, Nutter and Council need to take a hard look at the spending side of the ledger.

The paper even acknowledges that Nutter is already cutting spending 3 to 5 percent across City budgets, says we need to spend more in certain areas, then simply demands Nutter figure it out with increased 'efficiencies.' What efficiencies are they talking about? The efficiencies of taking back the money we were going to spend on Fairmount Park? Laying off some social workers? The editorial board doesn't say.

Since we are not in la-la land, and each city department is already cutting 3 to 5 percent from their spending, the blunt reality is that these savings can come from one thing: service cuts. (The Ed. Board is also clearly getting ready to go after the Unions in negotiations, so get ready for that when it happens. But that isn't now, so, the cuts couldn't even in theory come from attacking city workers.)

So, after I read the editorial, I sat here wondering if there is any way I could see how the Inquirer's priorities measure up against actual people in the City of Philadelphia. So, using these new fangled internets, and a search engine thingamabob, I used the google, and typed in "Philadelphia Priorities."

Well I'll Be A Monkeys Uncle! The very first thing that came up on the google is an actual poll by the Economy League of Philadelphia (funded by those communists at the Chamber of Commerce)- that asks Philadelphians about their priorities. And, it even specifically talks about what Philadelphians think about the debate over taxes verses services.

Shiver my timbers, look at what the heading says:

Taxes and Spending: Most Unwilling to Reduce Services to Cut Taxes

Most Philadelphians would favor maintaining the current level of taxes and services in the city, but more than one third would prefer “more city services, even if that meant taxes would have to be raised.” Only 10 percent would prefer “lower taxes, even if that meant city services would have to be cut.”

Surely that must be an error, so I looked a little deeper at the numbers:

If you had to choose, which of the following would you favor:

  • More city services, even if that meant taxes would have to be raised: 38%
  • Lower taxes, even if that meant city services would have to be cut: 10%
  • Maintaining the current level of taxes and services: 45%
  • Unsure/No Answer: 7%

Great Caesar's Ghost! In other words, almost 4 times as many Philadelphians would rather see taxes raised for more services, than cut for less. And, by a margin of 83% to 10%, Philadelphians would prefer at minimum to keep current taxes while not cutting services.

And since business tax cuts are all the rage, it would have been even crazier if the people were asked specifically about business taxes... Heavens To Betsy!, they were asked that too:

If Philadelphia taxes were to be cut, almost equal numbers would like to see the wage tax and the real estate tax cut; few would cut the taxes on businesses. If taxes had to be raised, however, a majority would prefer the taxes on businesses be raised. This is true of Democrats, Republicans, and Independents alike.

So, the Inquirer Editorial board is bizarrely out of touch with the overwhelming majority of Philadelphians? And, for that, they are attacking City Council for apparently having some common sense?

Goodnight Irene!

Crusading Inky Goes Over the Top

If there were a Pulitzer Prize awarded for callous stupidity, the Inquirer came up with a runaway winner in its Sunday editorial on City tax cuts.

As far as the idiotorial (sic?) is concerned, the Business Privilege tax cuts proposed by the Mayor in his budget simply must be enacted. Nevertheless, and horror of horrors, it seems that “there is some talk at City Hall of halting the tax cuts.” Imagine! People talk of such things! At City Hall!

Yes, the Inkies admit, “Nutter and Council need to plug holes in the budget that opened in recent weeks.” Yes, the Nutter budget proposed “smart new investments that should be retained in some form – for police and fire protection, parks, the community college, and more.”

The administration comes out swinging for the BPT cuts, Maria Quinones Sanchez is at bat for everyone else

As sad as I am that Irv lost last May, I am proportionately that happy that Maria is in City Council advocating for her district and all the people in this city who keep being left behind as this city's rising tide lifts only some boats.

City Council signaled yesterday that Mayor Nutter would have a difficult time deep-sixing already approved wage-tax cuts for the working poor to help pay for his proposed business-tax cuts.

At least five Council members said in a budget hearing yesterday that they flat-out opposed or were deeply skeptical of calls to eliminate the so-called David Cohen tax credit, which was championed by the former city councilman, who died two years ago.

"With an acknowledged rate of 25 percent of our citizens in poverty, I'm not satisfied that we're presenting a budget where we are more aggressive on our business-tax cuts," said Councilwoman Maria Quiñones Sanchez.

So far, the budget is good in many ways, and generally restrained. But that doesn't mean that criticism should be muted if it is due. Stan has been prescient on this:

Cohen's low-income tax credit isn't slated to go into effect until 2013, and its impact on the city's current five-year plan - the subject of yesterday's hearing - is minimal. But after the tax credit has been phased in, it will cost the city about $80.8 million in 2016, and the annual cost will continue to go up.

"It starts to take off and become a very sizable cost," said Steve Agostini, the Nutter administration's budget director. "You know, if folks want to . . . debate that, that's entirely legitimate, but we just want them to understand there's a price tag associated with it."

The administration's view is that its broader plan for wage-tax relief will benefit lower-income residents, in addition to other taxpayers. The city's wage tax was at 4.96 percent when the Cohen tax credit was adopted. Scheduled reductions to the tax rate and statewide casino revenue are expected to lower that rate to 3.11 percent by 2013.

Council members asked whether it would be possible to slow the city's scheduled wage-tax reduction rate in order to fund the tax credit for the working poor. Nutter's representatives acknowledged that was possible.

And I think priorities are a valid subject for debate and criticism.

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