Curtis Jones On Business Tax Reform: “It’s A Wild-Ass Guess”

Photo by Matt PetrilloAfter seven hours of testimony from a lot of smart, important-sounding people, the city is no closer to reaching a consensus about the efficacy of a business tax reform plan currently before Council.

Curtis Jones summed up the whole debate pretty succinctly: “A lot of this is the WAG theory,” the councilman said. “It’s a wild-ass guess.”

The reform, written by Councilmembers Bill Green and Maria Quiñones-Sánchez, would raise taxes on business revenue and eliminate the tax on profits (For more precise details, check out the Committee of Seventy’s “In The Know” write-up). The plan is controversial because the mayor, if he gets his way, would do the exact opposite and eliminate the tax on revenue.

Pros and cons lined up to testify about the proposed reform. Suffice to say there were no real surprises: Industries that would save money under the new tax structure were for the changes, while those who would pay more were against them, for the most part. Manufacturing companies and accountants for small businesses lined up in support of bill, while speakers from the construction and hotel industries spoke out against it. There was much interesting testimony, but very little of it particularly revealing, except that the phrase ”Taking business to the other side of City Line Avenue” to the suburbs where the tax codes are more friendly, seems to have become Philadelphia’s answer to LeBron James taking his talents to South Beach.

Both sides of the debate accused the other of supporting trickle-down Reaganomics, propping up wealthy companies while hoping the benefits reach the rest of the city. At one point, City Controller Alan Butkovitz, who opposes the bill, compared Philadelphia to Venezuela for its unpredictability for businesses. Butkoviz cited an editorial by renowned Penn finance Professor Robert Inman that appeared in the Inquirer yesterday claiming that raising the gross receipts tax could cost the city an astounding 75,000 jobs.

“I do appreciate that you have a perspective,” Green said wryly when given a chance to address Butkovitz. Green pointed out that Inman’s analysis ignored the elimination of the profits tax, which presumably would lead to the creation of large numbers of jobs.

Former Tax Reform Commission member Brett Mandell had a clever take on the mayor’s office suggesting the tax debate would be better held during the budget processs next spring: “When the administration doesn’t want to have a debate, they always say there’s a better time to have the debate later,” he said. Mandell refused to be pinned down supporting or opposing the bill, instead holding the position that business taxes in general are a big problem in Philadelphia.

As the testimonies dragged on past 3:30, Jones broke up the monotony by passing out Snickers Minis to the Council members and the audience, a welcome sugar boost for those exhausted from learning about tax code all day. The hearing would continue until 5:30, and didn’t even get to perhaps the two most important testimonies, which were pushed back to this afternoon: Those of Finance Director Rob Dubow, who led the city’s study of the reform, and Stephen Mullin of Econsult, who helped Green and Sánchez come up with their numbers.

A fundamental frustration among several Councilmembers was that Green and the city are claiming completely opposite reactions by Philadelphia’s economy if the bill goes through, job utopia or job armageddon, and no one knows who to believe. Joe Mahoney, executive vice president of the Greater Philadelphia Chamber of Commerce, cited just that problem when staking out the chamber’s opposition to the bill. “We question how a genuine, thoughtful discussion can take place when there is such disagreement over the numbers,” he said. Or, as Jones put it, it seems like we’re just making wild-ass guesses.

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