Property Tax Hikes Hurt Poor The Most

As Philadelphia's mayor and city council consider taxes or other measures to fill a $102 million gap at city schools, data shows that more taxes will hurt lower-income families the most financially.

A new tax on soda might not get approved in council, despite Mayor Michael Nutter's support. A 3.5 percent property tax hike and a parking-rate raise were the other measures discussed as ways to help get money to the schools, who are struggling with a state-funding cut.

Ironically, Philadelphia lost control of its own school system to the state in 2001, as part of an agreement to end an ugly dispute over state funding of the school system, and the school district's $200 million deficit.

Fox 29 had Paul Vallas, the former schools CEO, on this week, and he said that fact that Philadelphia test scores have risen for nine years in a row is getting lost in the budget debate.

Low test scores, along with a huge budget gap, were two big reasons that the city of Philadelphia lost control of its own school district in late 2001.

But today, a $292 million cut in state funding for Philadelphia's schools puts the School Reform Commission about $629 million in debt (combined with stimulus cuts and rising costs).

After huge layoffs and spending cuts by the district, another $102 million worth of cuts remain.

As we've discussed in several articles in recent days, an annual study from the District of Columbia shows that Philadelphia already has the highest tax burden on lower income families among major 51 U.S. cities.

In fact, in surveys since 2005 from the District, Philadelphia has ranked as the most tax-oppressive city on lower-income families, among 51 major cities.

Add to that the fact that 70 percent of Philadelphia public school students live below the poverty line, and any new tax increases will only make the situation financially worse for the families the city is trying to help.

The DC study showed that 38 percent of the local tax burden on lower-income families in Philadelphia came from property taxes - a much higher proportion than other income groups.

The city's high wage tax is also a huge burden in lower income families.

Unlike most other cities, Philadelphia combines a flat local wage tax with a flat state tax - meaning that Philadelphia citizens pay a combined 6.9 percent in income taxes, no matter what income bracket.

The second-highest local/state tax rate was in Louisville, with a 5.3 percent rate.

Only three of the 51 cities in the DC study have a flat tax. Most other cities have a graduated tax that taxes richer people at a higher rate than poorer people.