If you work in Philadelphia you pay it. If you live in Philadelphia and work on the moon, you pay it.
It's the dreaded, Philadelphia wage tax. But is it such a big deal any more?
D-Mac at Philadelphia Will Do pointed out that the announcement that Verizon would be relocating several hundred suburban Philadelphia jobs to their building at 9th and Race (welcome to the neighborhood!) did little more than lower the take home pay of those workers by 3.7 percent (assuming they don't already live in the city).
According to KYW 1060's Mike Dunn, Verizon Pennsylvania President Bill Peterson doesn't think that's such a big deal:
I think the opportunity to work in these new buildings that have been rehabbed, to be part of the city, to work downtown, is going to be very exciting for people. I think they're really going to like it. I think our employees are going to be very pleased.
Granted, this is just one company which already had a presence in the city and was making the move so that it could sell off the suburban properties, but it does bring up a larger point.
Back when the wage tax reductions started in the mid 90s, the city had just begun to go through its "Renaissance" period. The downtown was a bit dirtier, emptier and, frankly, pretty boring. Gas prices were lower so that driving to a suburban office from a suburban home was far less expensive than it is today.
Things have changed. A downtown office worker can enjoy a wide selection of cultural amenities and a nearly unparalleled dining experience at the end of the work day. Gas prices are through the roof to the point that even short daily commutes can add up quickly. Meanwhile, development continues unabated and traffic along inter-suburban routes has turned those short commutes into frustrating stop-and-go joyless rides. All of which makes that 3.7 percent (and falling still) not so bad. Heck, a lot of suburban governments are starting to levy their own personal income taxes, making the difference in take home pay even less than that 3.7 percent.
So it seems that, as far as competition with the surrounding suburbs is concerned, the wage tax may be fading as a deterrent for businesses to locate here and people to live here.
Can the time be far off when it becomes less of a drag on our ability to compete with other metropolitan regions?
Comments (61)
How would Bill Petersen know that its not a big deal for these Verizon workers. It sounds like the majority of these people are in customer service probably making under $30,000.00 a year. I'm sure that since Mr. Petersen is president of Verizon, the 3.7 percent tax wouldn't be a big deal to him since he is probably making well over six figures. If I was only making 30k a year, I would be really angry about taking a 3.7 percent pay cut not to mention the money that you will have to fork over to septa in order to get to work in the city. The bottom line is this. If those idiots that call themselves politicians in Harrisburg rescind the sterling act which they were responsible for creating, maybe more companies would move into the city creating more income for the city in the way of business taxes. Harrisburg should put the city on a 10 year plan to get their financial house in order. The ills of the city should not be put on the backs of the people who live in the suburbs. Why should people who work in the city and live in the suburbs be responsible for paying both city wage and pa state income tax. If you live in New Jersey and work in Philadelphia you are only reponsible for city wage tax. It just goes to show you how poorly the city and state are run. Then you have that nitwit Gov. Rendell offering to put up $50 million dollars to build a soccer stadium in Chester, yet the state has no money for property tax relief. Unbelievable, especially when you consider the fact that nobody watches professional soccer in this area.
Posted by Mark Martello | January 23, 2008 8:16 PM
Geez, so much anger. I thought there was money for property tax relief. The same money that is supposed to lower the wage tax to 3.77%. Still, it is a large chunk of money and does matter. I think it's a bit premature to announce it does matter, particularly if Philly has any interest in being middle class friendly.
Posted by El | January 23, 2008 10:20 PM
Mark,
Philadelphia residents pay PA income tax just like everybody else in the Commonwealth Further, relocation of a worksite to Center City may likely make it more accesible to public transportation, thus creating a cheaper commute after consideration of fuel at over $3.00 per gallon and parking costs.
Posted by Anonymous | January 23, 2008 11:22 PM
If the city keeps the wage tax, it needs to put more of it into funding the school district. If it lowers it too much, it will have to raise property taxes.
I imagine there's a balance somewhere in there. Unfortunately, it's as much about how people perceive one tax or another, as it is about what works in a fiscal sense. Income taxes tend to hold more of a stigma than property taxes, even though property taxes are levied on unrealized gains, just because they see them come out of their paycheck instead of paying them as part of a mortgage escrow that's lumped in with the amortized loan payment.
Posted by Anonymous | January 23, 2008 11:36 PM
While I do not disagree with some type of wage tax - I disagree with the HIGH wage tax...while a wage may be necessary - there should wage be no connection between a wage tax and the cultural amenities a noted.." downtown office worker can enjoy a wide selection of cultural amenities and a nearly unparalleled dining experience at the end of the work day. Gas prices are through the roof to the point that even short daily commutes can add up quickly. Meanwhile, development continues unabated and traffic along inter-suburban routes has turned those short commutes into frustrating stop-and-go joyless rides. All of which makes that 3.7 percent (and falling still) not so bad. Those shole be reason to visit the city and NOT tax the workers here
Posted by Anonymous | January 24, 2008 10:23 AM
"If the city keeps the wage tax, it needs to put more of it into funding the school district. If it lowers it too much, it will have to raise property taxes."
The city has not raised property taxes in OVER 12 YEARS!!!
Meanwhile us wholie in the suburbs see our school property taxes rise $200-$500 a year, EVERY year AND watch Harrisburg give us less and less money every year, while paying for nearly 60% of the Philadelphia School District's budget and barely 20% of ours!
There is due cause for anger if you know the facts!
Posted by grill | January 24, 2008 10:47 AM
sorry but that's wrong. my property taxes go up every year and i live in philly.
Posted by Anonymous | January 24, 2008 12:56 PM
Hmmm..lower the city wage taxes so people making money might actually want to live here. There's a novel idea (republican idea mind you) that it's taken Democrats 50 years in power to realize. However, I'm sure they are thinking we'll just lower the city wage tax then beg and cry for more money from the state and the federal government, b/c "we need to fund our programs". Just another example of a city full of "artists" and lazy bums living in the city, who think it's their right and the governments responsibility to take money from sensible suburbanites who have decided not to live in Philadelphia and fork over 4-5% of their income so city hall and squander it. The only way Mayor Street and now Nutter have been able to and will continue to be able to turn this city around is by continuing to act and think like a republican and lower taxes. Have a look at NYC to see what a decade of republican leadership can do. You freaking idiots...
Posted by Anonymous | January 24, 2008 1:04 PM
Tax and budgetary decisions based on "theory" and "philosophy" (aka basic economics) are infinintely more important at the state and city level than they are at the federal level (not to say they're not important at the Federal level). As a simple comparison of the US economy under Jimmy Carter compared to Ronald Reagan would make apparent.
The reason being that there are 49 other states and many other cities which Americans can choose to start businesses, work and live. Keeping taxes high and/or raising taxes (income, property, corporate or otherwise) discourgages businesses from staying or starting and middle and upper class working families from living in your city or state. This results in a loss of tax revenue because the only people living in your city now are criminals and welfare seekers. Little money coming in and lots of money going out (to continue buying Democrats votes) = Philadelphia (Murder capital, 30% poverty rate and pathetic government services i.e. Philly police and SEPTA). Ask New Jersey how high taxes have worked out for them. Where 60% percent of people who live in the state want to leave.
Posted by Anonymous | January 24, 2008 2:59 PM
Maybe the wage tax is less of a "big deal" to single or single-income families with lower incomes. After all, the more your income rises, the more they take away. If you lived and worked in NJ, for example, you would pay maybe $4,000 more in property taxes. So if the wage tax (resident rate) adds up to more than $2,000 each for a two-income family, it's time to move. That's roughly $49,000 per person. Could this be the real reason only 21% of the residents of Philadelphia have bachelor's degrees? The wage tax encourages people who are making higher incomes to leave.
Posted by Anon2 | February 6, 2008 2:11 AM
this is old news by now but funny. Combined, my wife and I pay under $4000 a year in wage taxes. Our property tax bill is less than $500 a year. If we moved to the suburbs and we both worked in the suburbs we would pay the same or more in property taxes and then it would cost us about $14000 a year to keep two cars on the road. I can see suburbanites grumbling about the wage tax if they work here but if you live in the city the bills have to get paid one way or the other. Why would you want to pay taxes on your house as opposed to your income? Retiring is a lot less comfortable when you're paying $400 a month in taxes on your house.
Posted by oporter | September 3, 2008 3:10 PM
For those of you who feel the Wage Tax is acceptable, you seriously need some real world education.
I don't care if this city has strippers at every street corner, it is not work 4% of my pay. Just because most of this dirty, filthy dungeon of a city is comprised of the unemployed, uneducated or artists, it is not my job to support them.
I came from the southwest where we don't pay a state tax, let a lone a wage tax. That means thousands of dollars in my pocket instead of paying for a bloated city budget.
Sad thing is I enjoy Philadelphia, but will move because of the is tax. No city is nice enough to separate me from thousands of dollars of my money.
Posted by Not From Here | February 9, 2009 9:51 PM
For those of you who feel the Wage Tax is acceptable, you seriously need some real world education.
I don't care if this city has strippers at every street corner, it is not worth 4% of my pay. Just because most of this dirty, filthy dungeon of a city is comprised of the unemployed, uneducated or artists, it is not my job to support them.
I came from the southwest where we don't pay a state tax, let a lone a wage tax. That means thousands of dollars in my pocket instead of paying for a bloated city budget.
Sad thing is I enjoy Philadelphia, but will move because of the is tax. No city is nice enough to separate me from thousands of dollars of my money.
Posted by Not From Here | February 9, 2009 9:51 PM
For those of you who feel the Wage Tax is acceptable, you seriously need some real world education.
I don't care if this city has strippers at every street corner, it is not worth 4% of my pay. Just because most of this dirty, filthy dungeon of a city is comprised of the unemployed, uneducated or artists, it is not my job to support them.
I came from the southwest where we don't pay a state tax, let a lone a wage tax. That means thousands of dollars in my pocket instead of paying for a bloated city budget.
Sad thing is I enjoy Philadelphia, but will move because of the tax. No city is nice enough to separate me from thousands of dollars of my money.
Posted by Not From Here | February 9, 2009 9:51 PM
Are you kidding me... I just found out about this tax because I work in NJ and never knew about the tax, neither did my employer... now I owe over 7k in city taxes alone and thats just to catch up after that I have the pleasure of forking over 4% of my gross income to the city of philadelphia , all for what? high crime, crappy schools, terrible roads, congested traffic, and high realestate prices (at least for in any decent neighborhood)
Add it up people. 25+% federal income tax, 3.1% state tax, and city tax at 4% WTF! So now I have to fork over 32% off the top before I even get my money! then after property tax, gasoline tax,sales tax, ect what do we have left , maybe half of my check to divie up for mortgage payments, car payments, auto insurance, tolls, gas, food, clothing, not to mention the high utilities like water, electric and dont get me started on pgw's high prices for crappy service. screw it Im out of this city, good luck to all you ppl stupid enough to stay have fun giving your $ up to be squandered away.
Posted by ....... | April 22, 2009 5:15 PM
Moving...Just not moving to Philly. I'm moving to Philadelphia just outside the city because I don't want to pay 8k a year to live there. I used to live in NYC and people actually live there(stay overnight). Until they get rid of that tax it's just keeping people like me in the suburbs or NJ.
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