Thursday, February 6, 2014

Councilman Oh Introduces a Tax Reform Bill to Reduce Wage/Net Profit Taxes

City_Seal_ColorPHILADELPHIA CITY COUNCIL

             OFFICE OF

COUNCILMAN-AT-LARGE

             DAVID OH

 

    Press Release

__________________________________________

FOR IMMEDIATE RELEASE

 

Contact: Chris Pienkowski, (215) 686-3452 orchris.pienkowski@phila.gov

 

Councilman David Oh Introduces a Tax Reform Bill to Reduce Wage and Net Profit Taxes on Residents of Philadelphia without Increasing Other Taxes

 

Philadelphia, PA – City Councilman At-Large David Oh introduced a bill on Thursday to reduce the wage tax for employees and the net profits tax for individuals who are residents of Philadelphia by $100 million over ten years. And he has done so without raising other taxes to off-set the reduction.

 

“My bill reduces wage tax for employees and net profit tax for individuals that will see the rate go from 3.92% in 2014 to 2.09% in 2025. With the median household income in Philadelphia being $34,207, the annual wage and PICA tax being paid is $1,340. The reductions that I am advocating along with the conclusion of the PICA tax in 2023 will result in a savings to the average family of $626 per year” says Oh. “When more Philadelphians have more disposable income in their pockets, they will spend more money at local stores and businesses. In addition, employers will have a greater opportunity to retain both high quality talent coming from our colleges and universities to become residents of Philadelphia along with every other worker currently living in the city. This is the most practical way to drive our economy and benefit our residents without increasing taxes.”

 

Experts agree that the Philadelphia tax system is too complex and unfriendly to businesses and the residents who live and work in the city. In fact, in 2003 and again in 2009, Tax Reform Commissions were established and provided a series of recommendations to simplify the tax system in our City, but none of these recommendations have been implemented. Of these recommendations in both reports were the need to reduce the personal wage and net profit taxes on individuals.

 

In recent hearings on making Philadelphia a more globally competitive city, Professor Robert Inman of the Wharton School at the University of Pennsylvania stated “Even a slight reduction of wage taxes could result in adding roughly 5,000 jobs per year to the City.”

 

“Business owners and economic experts have consistently testified that the wage tax is so detrimental, and that by reducing it, we would actually add jobs and grow the economy of the City” said Councilman Oh. “After studying this issue I believe that my solution of reducing these taxes can be accomplished without raising different taxes. And that is the kind of reform our City needs in order to grow.”

 

During the last budget cycle, Councilman Oh found $48 million in potential savings that he believes will be there again this year and allow an initial individual tax reduction of the same amount. And with the mandated program-based budget going into effect in 2015, he believes that an accelerated reduction schedule of these taxes is completely reasonable and sustainable.

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