DN Editorial: Suddenly, city's screwed-up tax system's looking good

Posted: September 21, 2012

SOMETIMES being a genius is nothing more than screwing up and making it look like that's what you intended all along.

In which case, Philadelphia is a total genius for not having fixed its broken property-tax system over the past few decades. The result, according to a new report by the Pew Research Initiative, is that the city is now much more competitive on local tax burdens with surrounding municipalities.

In fact, according to the study, the tax gap between the city and the suburbs has diminished to the point of nearly disappearing.

The significance of this news can't be underestimated, since the narrative of "our high city taxes drive out businesses and residents and kill our growth" is as much of who we are as hoagies and pretzels.

But a funny thing happened on the way to 2012: Taxes on suburban income and property have risen as towns - Pew's report surveyed 237 municipalities in Pennsylvania and New Jersey - have struggled with fiscal challenges following the 2008 recession. So have our taxes, but a few factors have served to even out the differences: The city has continued to tax on low property assessments and has failed to capitalize on rising values. Also, a schedule of reductions in the wage tax has made some inroads into narrowing the gap between Philadelphia and our neighbors.

There should be both excitement and caution in this news. The excitement should lead to the city pushing the message that our taxes, coupled with other advantages of urban life, make the city more attractive than ever. This is the time for city leaders to exploit this news, especially those whose job it is to attract business and jobs.

But there's a danger, too: With the fixing of the property-tax system through the Actual-Value Initiative, some might be tempted to see the report as an excuse to jack up property taxes just to be more even with the region. That's not to say there isn't a compelling arugment for higher property taxes. In fact, the tax-reform talk in recent years has suggested that the city should shift more of its tax burden to properties, rather than to businesses and incomes. The Center City district issued a call for tax reform in April, and its chief, Paul Levy, has made an argument that many echo: We have to shift from taxing things that move (businesses, jobs, workers) to things that don't (houses).

But as we have argued more than once, all of this must be done strategically, according to a cohesive plan.

The Pew report is cause to celebrate. But it's also time for the city to act smartly. It would be nice for the city to be a tax genius, but this time on purpose.  

Keeping abreast

 

Hooters' traditional business model looks to be a bust. Hooters pioneered the "breastaurant" concept 40 years ago, but sales are falling.

So, they have spent 10 months revamping its menu. The number of salads has doubled, and mixed greens have replaced iceberg lettuce.

This is supposedly an effort to appeal to women, but we're not so sure. We think it's aimed at the same men who say they read Playboy for the articles, and who can now say they go to Hooters for the spinach.

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