Congratulations, Philadelphia! Your Property Taxes Are Going Up. Again. Forever.

Image from NBC10

 

After a marathon day of negotiations, City Council voted last week to temporarily raise property taxes by 3.85% to help raise $53M for our city’s broken school district. And yesterday, by an 11-6 vote, Council passed the final measure to raise property taxes in Philadelphia. Again. By again, we refer to the “temporary” ten-percent tax increase passed last year, which is not temporary at all if you take a peek at the City’s 2011 Five-Year Plan (With special thanks to Brett Mandel for uncovering this). According to the bill passed last year, the ten-percent tax hike would sunset after two years, but the plan shows expected revenues from property taxes to remain constant or rise over the coming years. So it doesn’t look like last year’s tax hike is going anywhere, and we’re not holding our breath that this newest property tax will be going away either.

Our problem with raising property taxes isn’t so much a moral objection to the idea of increasing taxes so much as it is a serious concern about whether it’s appropriate or fair to raise taxes across the board in a city where the property tax system is so fundamentally broken (Just like the School District!). As a fun exercise, take a look at the website for the Office of Property Assessment. Check out the property taxes on your block or in your building. What you’re very likely to find is a range of assessments and subsequent tax burdens that are completely out of whack with each other. You could find two similar houses on the same block with one owner paying three to five times more than his neighbor. If you raise property taxes across the entire city, the difference between those two neighbors becomes more pronounced and even less fair.

As an example, let’s take Owner 1, who pays $1,000 annually and Owner 2, who pays $3,500 annually. Let’s say, for the sake of this exercise, that if there were a fair property tax system in Philadelphia, both would be on the hook for $2,200 per year. So Owner 1 is underpaying by $1,200 per year, and Owner 2 is overpaying by $1,300 per year.That’s a $2,500 spread.

Raising taxes over two years by 14%, Owner 1’s new burden is $1,140, Owner 2’s new burden is $3,990, and the correct tax number for both of them goes up $2,508. Owner 1 is now underpaying by $1,368, and Owner 2 is overpaying by $1,482. The spread goes up to $2850.

The City has been promising to fix the property tax assessments for years, but Council and Mayors have reliably passed the buck. Well folks, the more you raise taxes, the less fair you make the system. The less fair you make the system, the tougher it’s gonna be to fix. Ugh, this gives us a headache.

But we do have some good news for City Council: SUMMER BREAK TIL SEPTEMBER 8TH!!! WOOOO!!!

For more information about why the newest property taxes are unfair, read this. For info on the effort to reform the BRT in 2010, read this. For additional background on property taxes and more, read many of these.

And for the thing that worries us the most, consider this: This might be just the opening that John Street has been waiting for. <Shudder>