Tax Cuts Cut?

(May 2011)

If the Mayor has his way this year, Philadelphia will not reduce its oppressive Wage Tax for the first time in more than a decade and a half.  Mayor Nutter has proposed legislation to eliminate planned cuts to the Wage Tax in each of the next five years and freeze the current rate in place forever.  However, Nutter Administration officials quickly note that their proposed Five-Year Financial Plan assumes Wage Tax cuts will re-start in coming years (small cuts enabled by the state generated by gaming-related revenues could resume next year and the Mayor promises to cut deeper when the economic recovery is complete). 


Still, the legislation to end Wage Tax reductions is threatening.  When former Mayor John Street wanted to consider Wage Tax cuts on a year-by-year basis, then-Councilman Nutter demanded a five-year schedule of cuts, saying that legislation was necessary to demonstrate the city's commitment to tax reform.  Now, as Mayor, Nutter says "Trust me.  I’ll cut the Wage Tax in the future." 


But can we trust him? 


In the very same legislation that would end the Wage Tax cuts, Nutter would break his promise to implement long-delayed Wage Tax refunds for low-income residents.  If the Mayor's proposed legislation becomes law, those refunds would not be scheduled until after the end of Nutter's second term, when they would be up to a new mayor to implement. 


I don't know about City Council, but given Nutter's history of making (and breaking) tax promises, I would certainly feel better about the future of Wage Tax cuts if they were written into legislation.