Former City Council member, #AllanDomb, recently published a post on LinkedIn that called out the City of Philadelphia for having a tax policy that is a repellent to businesses. Almost half of the people living in the City leave every day to go to work outside the city. The half that remains in the city every day mostly work for nonprofits who don’t pay taxes. How did we get to this point?
Since I have been in the business world, I have consistently heard the following pitch for Philadelphia, “We are conveniently located half-way between New York City and Washington, D.C., and our cost of living is cheaper.”
Guess what, being conveniently located isn’t a selling point when your two closest neighbors are destination cities that companies need to have a presence in.
If you are in finance, fashion, advertising, tech, law, or accounting, you have to have a major presence in New York, regardless of the cost. If you deal with the government, such as defense contractors, lobbyists, or lawyers, you need to be in Washington, D.C., regardless of the cost.
The problem is, no industry needs to be in Philadelphia so cost –including taxes — is a major factor when deciding if a company wants to locate here. Unlike NYC and DC, we are not a destination city. And we have been too expensive for most companies. Unless we are providing major tax incentives like KOZs, firms aren’t locating here.
Cities are like businesses; they face competition from other jurisdictions for taxpayers including individuals and companies. While we are doing a great job attracting young residents who love city life, we are failing miserably at attracting and retaining companies and the high-paying jobs they bring with them. And we need those jobs.
Good businesses pivot when they are underachieving and failing. It’s time for Philadelphia to pivot.
It’s time to go back to the drawing board and figure out how we can restructure our tax system so that companies who have other location choices decide that Philadelphia is the best place for them.