Report: Philly becoming less taxing

Posted: September 20, 2012

Living in Philadelphia's suburbs has become a more taxing experience since the millennium began, and a relatively less taxing one in the city.

That's the conclusion of a just-released study of Philadelphia and 236 neighboring towns on both sides of the Delaware River by the Pew Charitable Trusts.

It found that a hypothetical middle-class Philadelphia family paid out 12.9 percent of its income in state and local taxes in 2012, down from 13.5 percent in 2000.

By contrast, the overall tax burden in the New Jersey and Pennsylvania suburbs increased from 9.8 percent to 12.2 percent in the same period.

The upshot, Pew said, is that the city has erased some of the competitive tax advantages enjoyed by its neighbors.

The burden figures were calculated for a family of four making $60,000 annually living in a house worth $186,000 - a standard income-to-home value spread.

That is hardly a one-size-fits-all model.

"Our findings are not reflective of real families," said Thomas Ginsberg, the report's author. He added the study didn't look at issues such as business taxes, other fees, or the quality of municipal services and schools.

It attempted to measure the percentage of income that Philadelphians and suburbanites spent on property, wage and sales taxes purchases certain state and local taxes in 2000 and 2012.

Why did the burden gap between the city and the suburbs narrow? Suburban real estate taxes have risen more robustly than the city's, and while some towns have added earned-income taxes or raised rates, the city has lowered its wage tax slightly.

Although not widely known, Philadelphia's property taxes are among the lowest in the region, although residents can pay wildly different rates as the result of a dysfunctional and incomprehensible tax system. The majority of its revenue is generated by the wage tax.

The study found that the heftiest tax burdens are borne by suburban commuters, who pay higher property taxes where they live and get hit up by Philadelphia's wage tax.

However, the workforce commuting to Philadelphia represents a dwindling minority in the neighboring counties. An analysis by the Delaware Valley Regional Planning Commission puts that number at about 11 percent, half what it was in 1970.

The study dealt only with relative tax advantages. "The analysis also does not reflect whether residents are getting their money's worth," it said.

The suburban burden numbers got an upward boost from property-tax rates in eastern Delaware County, which are among the highest in the country. The list included towns such as Darby and Collingdale, where $186,000 homes are scarce.

Since the Pew results were not weighted by population, Darby would carry the same weight as Lower Merion Township, about five times its size.

Working to hold down the suburban burden figure would be the inclusion of Pine Valley and Tavistock, N.J., which essentially are incorporated golf courses. Their burden figures were among the lowest in the region.

Ginsberg said that economists who reviewed the report found the methodology sound.

They concurred with the basic conclusion that the tax advantages of living the suburbs versus the city aren't what they used to be.


Contact Anthony R. Wood at 610-313-8210 or twood@phillynews.com.

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