Press Release on Philadelphia Budget Crisis

Philadelphia: Realizing Our Potential

PHILADELPHIA'S BUDGET CRISIS: EVERYONE'S RIGHT

Philadelphia, November 7, 2008:  Mayor Nutter's budget announcement yesterday is not a total surprise since traditional reaction to an economic downturn in government has always been to cut services, lay off workers, and rethink taxes.   Yet, there are other alternative financing solutions, which appear to have been disregarded or not adequately explored - not offered a seat at the table.

Making the city and citizens face hard facts is a challenge for Mayor Nutter.  Recessions mean less tax revenue, particularly from business taxes. Along with the BPT, these slack revenues are also based on the taxation of choices: renting a car, staying in a Philly hotel, buying something nice, etc. These vanishing tax receipts create small but deadly holes in the budget.

Many disagree on the basics of what a city faced by hard times should do.  Advocates for safer streets, clean streets, libraries, culture, and public health stand for stable revenue streams to fund vital – at times lifesaving – programs.  Tax reform advocates, such as the Inquirer, editorialize against freezing the tax cuts in the name of inter-city competitiveness.   Both positions are correct, but the false dichotomy of "either/or" prevents true common ground, and a solution to this apparent budget mess.

The Henry George Foundation of America agrees there is danger in budget cuts, but cannot agree that the only sources of revenue for these essentials are the tax freezes outlined in Mayor Nutter's announcement.  

If all options were indeed on the table, then we'd suggest that the city could come together and ask that revenues be raised from the one resource that is barely nicked by taxation: land values.

Through reforming the property tax, a tax on land value is a stable and progressive.  No economist of any repute denies that a tax on land value makes the most economic sense.  For years, Penn’s Professor Robert Inman has asked the city to institute this simple, efficient and just tax.

Removing the tax on buildings and improvements, and the tax penalty for construction is removed without blowing holes in the budget.  The Henry George Foundation of America is able to provide comprehensive data, which prove that a land value tax, applied even with the current assessments would provide tax relief for homeowners in the most at-risk parts of the city, while providing a mechanism for revenue streams that can flow even in recessionary periods. For example, instead of 82.64 mills on land and buildings, we could bring in the same revenue with 54.22 mills on houses and other buildings and 173.68 on land values.  It works where used, and Philadelphia cannot ignore an idea that can help us through hard times and beyond.

If all options are indeed on the table, then the land value tax deserves a seat at that table.

That which is unjust can really profit no one; that which is just can really harm no one.

Contact: Barbara Maloney

1518 Walnut Street, Suite 604

Philadelphia, PA 19102

215.545.6004

manager@urbantools.org