ELEPHANT CORNER: Levy Says The Wrong Taxes Are Killing Philly Jobs

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Last Thursday the Philadelphia Republican Party held its February 2014 edition of its breakfast series. The guest speaker was PAUL LEVY, the CEO of the Center City District. Levy addressed a standing room only crowd in the Bell Room at the Racquet Club of Philadelphia. Most of Levy’s presentation covered research done or supported by the CCD and the Central Philadelphia Development Corp., an advocacy and planning organization supported by the downtown business community of which Levy is also the CEO. The overall theme of his presentation, in my words, is: how the City of Philadelphia became one of the poorest large cities in the US and some things that can be done to correct that phenomenon. According to the CCD, 27% of Philadelphians live below the poverty line.

Levy’s organization is a $20 million downtown-management district, which provides security, cleaning, place marketing, promotion, planning and capital improvement services for the central business district of Philadelphia. He noted the Center City is thriving. People, especially young professionals, are moving into the city, as they want an urban lifestyle. He noted 44% of all jobs in Philadelphia are in the CCD. To put this in perspective, there are 203 jobs per acre in CCD and 4.7 per acre in the rest of the city. And it is this lack of jobs in the rest of the city that is a major cause of our high poverty rate.

WAGE AND BUSINESS profit taxes have been unnaturally strangling Phila.’s job market for decades, argued Center City Dist. President Paul Levy before Republican Breakfast Speaker Series at Racquet Club.

WAGE AND BUSINESS profit taxes have been unnaturally strangling Phila.’s job market for decades, argued Center City Dist. President Paul Levy before Republican Breakfast Speaker Series at Racquet Club.

According to a CCD publication “Center City Reports: Pathways to Job Growth”, unemployment in Philadelphia was 10% in October 2013, higher than in the other four other major Northeast cities of Boston, New York, Baltimore and Washington. In 1970, 43% of the jobs in the greater Philadelphia area were in the City of Philadelphia. In 2011, Philadelphia’s share of area jobs dropped to 23%. Levy believes our tax structure led to the exodus of the employers to the suburbs and to the fact most new companies to the area look to office and industrial space outside of the city. Roughly 36% of Philadelphia residents work outside of the city, and anyone who is on the Schuylkill Expressway at 8:00 a.m. is not surprised by this statistic. Traffic is as heavy going out of the city as approaching town.

Levy believes our tax structure was and remains a problem for job expansion in the city. The City’s revenues are more heavily reliant on businesses and employee taxes, and less so on real estate taxes than other major cities. Levy noted this tax system worked well in the early 1900s when it was more difficult for companies to move their brick-and-mortar businesses and when there was not adequate transportation for employees to live far from work. Now, since businesses and people can more easily get up and move, they have done so.

He said small businesses which have in recent years have been the largest source of new jobs across the country have been on the rise in Philadelphia. However, he does not believe this is all good news. Levy believes many of these new small businesses have arisen because the proprietors would have preferred to work for others but could not find jobs. Supporting this theory are statistics showing only 19% of proprietors in Philadelphia have employees (on a par with Detroit). However, 40% of proprietorships in Washington hire workers.

Levy also believes that another retardant to job growth is our lack of skilled or trainable workers. Our schools are not producing people who can be easily absorbed into the workforce. Among the five major cities in the Northeast, we have the largest percentage of people with a high-school diploma or less. He, like I, believes that the problems with public education cannot be solved by throwing more money at the current flawed system.

He also noted briefly the burden placed on Philadelphia’s finances by municipal-employee pension obligations could prevent resources from being directed to actual education and job growth.

COUNCILMAN DAVID OH is familiar with Levy’s research on Philadelphia’s tax problem. He continues to push forward in true elephant fashion. Recently he introduced a bill that will reduce the wage tax from the current 3.92% to 2.09% over 10 years without raising other taxes. He also called for hearings to get a status update of the enhanced tax-collection efforts that the Nutter administration was supposed to put in place a year ago.

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