Philadelphia Inquirer quotes Scott Drenkard on Local Tax Burdens

September 21, 2012

By Anthony R. Wood, Inquirer Staff Writer

Hidden in a dysfunctional and incomprehensible system is a little-known fact: Philadelphia's property taxes are among the lowest in the region.

Thanks to those relatively low levies and a 14 percent drop in the wage tax, Philadelphia has become a less taxing place since the millennium began, while the suburbs have become more taxing.

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

It found that a hypothetical middle-class Philadelphia family in 2012 paid 12.9 percent of its income in state and local wage, real estate, and sales taxes - its tax burden. In 2000, that figure was 13.5 percent.

By contrast, the average tax burden in the Pennsylvania suburbs increased from 9.8 percent to 12.2 percent in the same period - leaving suburbanites only slightly better off than residents of the city. In South Jersey, the rate increased from 9.9 percent in 2000 to 11.3 percent in 2011, the most recent available figure.

Given the upward trend in suburban taxes, "I'm not really surprised at the findings," said Scott Drenkard, economist at the national Tax Foundation, a Washington research group. "I think the story overall is an accurate one."

The upshot of the narrowing gap in tax burdens, the Pew report said, is that the city has erased some of the competitive tax advantages long enjoyed by its neighbors.

The study, however, was confined to taxes, and did not consider issues such as business levies, other fees, or the quality of municipal services and schools. "The analysis also does not reflect whether residents are getting their money's worth," the report said.

The tax-burden figures were calculated for a family of four making $60,000 annually and living in a house worth $186,000 - a standard income-to-home value spread. But that is hardly a one-size-fits-all model.

"Our findings are not reflective of real families," said Thomas Ginsberg, the report's author.

For the model family, Pew attempted to measure the percentage of income that Philadelphians and suburbanites spent on property, wage, and sales taxes in 2000 and 2012.

Why did the gap between the city and the suburbs tighten? 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 lowered its wage tax from 4.6 percent in 2000 to 3.9 percent in 2012. The wage tax remains the source of the bulk of the city's tax revenues.


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