Local business leaders, under the banner of the Philadelphia Growth Coalition, are advocating for broad tax reform in Philadelphia to encourage job growth and development in the city. Though calls for tax reform in Philadelphia have been longstanding, the recent proposal has seemed to gain some momentum. Despite the progress, though, significant legal issues linger that put into question the prospects for real reform.

The Plan

Supported by groups including the African American Chamber of Commerce, Brandywine Realty Trust, Central Philadelphia Development Corp. and the Greater Philadelphia Chamber of Commerce, the Philadelphia Growth Coalition hopes to reduce the tax burden on local businesses in such a way as to spur economic growth while being revenue-neutral as to the city budget (and eventually revenue-positive). Their tax reform proposal consists of three major components: a steady, multiyear reduction in the city wage tax and business income and receipts tax, and an increase in the city property tax, but only as to commercial property.

The first element of the Philadelphia Growth Coalition's tax reform proposal is to lower the wage tax from its current rate of 3.92 percent for residents to a rate of 3 percent by 2025. For nonresidents, the aim is to lower the tax from a rate of 3.49 percent to 2.50 percent by 2025. In support of the reduction, the coalition cites that Philadelphia has the highest wage tax of the 50 largest cities in the United States for those making over $100,000 a year.

The second element of the tax reform proposal is to reduce the net income portion of the business income and receipts tax from its current rate of 6.41 percent to a rate of 3 percent by 2025. According to supporters of such a decrease, a lower business income and receipts tax would encourage companies to locate in Philadelphia by lowering the cost of doing business in the city.