Testimony Given at May 5, 2021 Public Hearing on City Budget by Stan Shapiro on behalf of Philly Neighborhood Networks and the Philadelphia Public Banking Coalition
The City is now at a crossroads. Having just elected a new President who explicitly rejected trickle down economics, our Mayor has offered a budget founded on that very same philosophy. The President is right and the Mayor is wrong.
This is not the time to be cutting taxes for big business on the basis that some day, in some way, those cuts will induce the rich to spread their windfall around to those who really need help. Why not cut out the middle man and just directly provide the help that’s needed to those who have the need? In these budget hearings members of Council have identified clearly what is really called for, a vast expansion of programs that help the black and brown residents of our town who have born the brunt of the pandemic. The Administration responded by claiming that would require cutting other City services. No, that is not true. The Mayor has proposed well north of $300 million in tax cuts. That money is what should be used to fund the badly needed programs so many Council members have appropriately called for.
To be clear, corporate tax cuts do not promote economic growth or equity. If they did, Philadelphia, which has been steadily cutting taxes since the Rendell administration, would be the most prosperous city in the country. We all know the reality. It is the poorest big city in the country.
The tax cuts proposed by the Mayor, apart from being the wrong solution at the wrong time, tilt even more toward the undeserving wealthy than similar cuts did in the past. City Council exempted the first $100,000 of receipts from the BIRT a few years ago. That means that two thirds of all businesses in the City don’t pay the tax, so the Mayor’s tax cut would do them absolutely no good. The wage tax now has been abolished for those eligible for State tax forgiveness. So the poor people of this City will get no benefit from the Mayor’s proposed wage tax cut either. Meanwhile the Mayor proposes to further cut those things that would benefit them.
What businesses in the City need are customers with disposable income. Let’s invest in things which increase income by increasing job preparedness. We should start by increasing support for pre-school, K-12 education and community college. Also, we need expanded programs for returning citizens to get them job ready, affordable housing to give workers and their families lasting roots, and increased day care availability. Finally, let’s use the money targeted for tax cuts for summer youth programs that put dollars into pockets. From there, those dollars will travel to and among local businesses. What we need is lift up, not trickle down.
In terms of what business needs, there are ways to cut costs for small business instead of cutting taxes they don’t pay. I’m happy to note that 12 members of this Council cosponsored Councilmember Green’s legislation that would foster one of them, a Philadelphia Public Bank. One of the primary missions of the bank will be to cut lending costs to small, neighborhood businesses and co-ops, thus letting these businesses keep their profits rather than pay the bankers’ tax, otherwise known as interest. An allocation of $750,000 toward the costs of an implementation study would go a long way to advancing the date that the bank can open for business, and can start to help businesses in impacted communities.Thank you members for your time and attention and for your inspiring willingness to buck the conventional wisdom that there’s no problem that massive tax cuts for the rich can’t cure.