Mayor Kenney joined business groups, construction and janitors’ union leaders, and state legislators from both parties Friday to endorse a tax-reform plan backed by Center City’s biggest office landlord.
Current state law requires a one-rate-fits-all local property tax.
The mayor’s goal is to “cut the business-receipts tax in half,” he said, and “reduce everyone’s wage tax below 3 percent.” The city currently levies taxes of 0.1415 percent on business receipts, 6.41 percent on business profits, 3.9102 percent on city residents’ wages, and 3.4828 percent on commuters who work in the city.
Kenney and other proponents say lower business and wage taxes will attract employers, bulking up Philadelphia’s anemic job growth, which has trailed that of other large U.S. cities in recent decades.
About 560,000 people work in Philadelphia, fewer than in the early 1990s. The recent downtown revival has been built around new apartments and restaurants, but new jobs have not kept pace, and more new residents are commuting to jobs in the suburbs or even New York, as if Center City were a bedroom community.
High-rise towers can’t move to the suburbs, but the law and accounting firms still based in the city may follow other companies out of town if their taxes stay high, the mayor said. “We want to keep them.”
It’s time to “shift the burden from wage and business taxes to commercial real estate,” said Jerry Sweeney, chief executive of Brandywine Realty Trust, a Radnor company that owns several of the tallest office buildings in Center City and University City.
Sweeney has calculated that the benefit his properties enjoy from relatively low property taxes is more than canceled by high business and wage taxes that push employers toward the suburbs, making it harder to find tenants. Because of weak corporate demand here, office rents are less than half those of other big northeastern U.S. cities.
Brandywine has been able to secure tax breaks for tenants of projects such as the Cira Centre, next to 30th Street Station. But now it’s time to “stop relying on exemptions,” Sweeney said.
“This is not an easy project,” warned Taylor, noting that complex issues can take a long time to pass in Harrisburg. Reform is more likely if it’s tied to business and wage tax cuts, an idea that other towns are starting to find attractive, he said.
But Council President Darrell L. Clarke objects to forcibly linking higher business property taxes with tax cuts.
“The city should have autonomy to set its own tax policy,” said Clarke’s spokeswoman, Jane Roh.
John “Johnny Doc” Dougherty, Building and Construction Trades Council leader, said he and other union leaders are asking suburban lawmakers to back the plan, which would benefit suburban commuters whose city wage taxes would be cut.
Taylor and State Rep. Martina White (R., Phila.) joined Keller and Rep. Dwight Evans (D., Phila.) and State Sen. Anthony Williams (D., Phila.) in calling on their Harrisburg colleagues to back the changes.
Williams called the group a “fantastic coalition,” broader than previous bipartisan efforts.
Latino and African American chamber of commerce groups also were represented Friday.
In a statement, Joe Grace, vice president of state and local advocacy for the Greater Philadelphia Chamber of Commerce, said, “The Chamber believes the plan put forward . . . is an aspirational one that makes sense in the long term for our city as a catalyst for growth and job creation.”
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