Letter by John J. Dougherty talking about Philadelphia’s overtaxed businesses and residents, our mayor’s lack of leadership, and a desperate need for change to ensure the survival of our city.

By John J. Dougherty

What happened to the Michael Nutter who crusaded for reform on City Council?

Instead of a “new day and new way,” Philadelphia is stuck in neutral, with less transparency and little improvement from the status quo. Taxes increased for five of the last six years, if you factor in “temporary” sales and property taxes that are now permanent. Worse, Philadelphians are paying more for government, but receiving fewer services than we did under Mayor John Street. Our infrastructure is falling apart, and our city struggles to attract and retain jobs.

Philadelphia needs forward-thinking, growth-oriented leadership to position our city for a stronger future. Detroit’s recent bankruptcy shows what happens when a city stops growing and continues to hemorrhage its tax base with no significant investment or leadership.

If Philadelphia continues to grow and diversify its economy, it will not face Detroit’s fate. However, if we are going to encourage economic development and expand the tax base, we need leadership committed to doing things differently.

Labor and pension costs are often blamed for Philadelphia’s financial challenges, but these obligations were fairly negotiated, are manageable, and must be honored. Instead of responsibly managing these costs, however, Mayor Nutter wastes millions on six-figure salaries for deputies. He balances the budget on the backs of the rank and file who have worked without a contract for five years. He squanders millions in legal fees to spitefully and unsuccessfully fight the firefighters’ arbitration award.

Our city cannot tax its way to prosperity, nor can it default on its obligations. Raising taxes or slashing services every year will only drive more taxpayers out of the city. Instead, we need to overhaul our tax structure to make Philadelphia a more attractive place to do business.

Philadelphia’s population is growing again, proving that people are willing to pay the wage tax and enjoy the quality of life in many neighborhoods. Though the city has made progress in reducing its wage tax, we continue to have a vicious business tax structure that scares away jobs while generating a relatively small amount of revenue.

Our city struggles with retaining jobs and attracting large employers. There is no demand for new office construction, rents are the same as in the 1980s, and more residents are commuting to jobs in the suburbs. If we want to attract more jobs, our leaders need to focus less on minuscule reductions in the wage tax, and more on eliminating our city’s unfair tax on business profits – the dreaded net income tax.

Like Detroit, Philadelphia is one of the few cities that taxes business profits, and we do so at a very high rate of 6.45 percent. Firms can enjoy the benefits of the Philadelphia region without being located in Center City. This growth-killing tax ensures that few businesses would headquarter or grow within the city limits.

Philadelphia cannot afford to keep this tax, nor can it prosper if taxes continue to drive away employers. We need to eliminate the net income tax if we ever hope to reverse the flow of commuters and jobs from the city to the suburbs.

Now is the time for the business and labor communities to join together and demand the phaseout of this tax. Until we get smarter leadership in City Hall, this may be the single most important policy change we could make to increase employment opportunities, boost demand for office space, and expand our city’s tax base. Unless we take this important step, Philadelphia – like Detroit – will continue to struggle with retaining jobs, meeting our obligations, and maintaining what’s left of our city services.

John J. Dougherty is the business manager of the International Brotherhood of Electrical Workers, Local 98, and a lifelong Philadelphia resident. Email him at jdougherty98@gmail.com.