Philadelphia is the largest city in Pennsylvania. The name “Philadelphia” came from Greek origin meaning brotherly love. It is an old city with a rich historical background related to the declaration of independence of the U.S.A. William Penn founded the city on 27th October 1682.
Philadelphia is well-known as one of the highest-taxed cities in America. The city’s Revenue Department collects various taxes from its residents to support its regular works and school district. The city also collects water charges with other payments besides property tax, income tax, wage tax, beverage tax, and sales tax.
High Taxation Habit
Pennsylvania was under British rule previously, which introduced taxation in Philadelphia for the first time. Hundreds of years passed by since America was independent of foreign control. America didn’t forget to collect taxes from its people, not for foreign countries but for domestic uses. After 1939, The taxation rates went up almost every year by passing different state laws.
Critical Maintenances of Old Infrastructures
As Philadelphia is an old city, its roads and buildings are mostly worn out by time and due to overuse. They need urgent repair and reconstruction. Every year the streets require repaving and fixing potholes for further use. Roads are damaged frequently from terrible weather conditions and heavy transportation systems.
Many government and residential buildings need massive repairs. Broken houses with scattered garbage are a common scenario in Philadelphia. Many schools are toxic, damaged, and unusable. Those schools’ environment is not safe for public health. Sometimes schools get closed due to a lack of maintenance. Low tax revenues create low-budget issues.
The city government needs more money to manage city tasks than its annual collected revenues. Sometimes city officials spend more money on less productive matters. Corruption also occurs in different ways. For example, city officials sometimes use government vehicles for personal usage.
Pennsylvania made several laws to collect more money through taxes on different fields. The city property tax is not too high like many other big cities in the United States, but the sales tax, beverage tax, and wage taxes are noticeable.
In Philadelphia, many neighborhoods have gang violence and homeless issues, which create anxiety and unsafe living conditions for ordinary people. People don’t want to move there from other places. As housing prices are comparatively lower than in many other cities, the city cannot collect high property taxes from those houses.
Though Philadelphia earns a low amount of revenues from property taxes, homeowners still feel burdensome. Sometimes they cannot afford to keep their properties and become homeless. Unable to pay mortgages and property tax on time, some owners damage their properties to collect insurance money. Nobody wants to be in a burnt-down rotten neighborhood though the homes cost less.
Unable to Get Enough Revenues from the Sales Tax
Sales tax is collected mainly from the final consumers. All commercial businesses, small or big, charge their customers an extra amount of money for the city’s and state’s sales taxes. Though Philadelphia is called the city of brotherly love, love is rarely found in many neighborhoods. Corruptions, crimes, drug abuses, and violence are very common there. People don’t think about others’ lives and well-being.
Stores and other small businesses are very tough to operate due to criminal activities like robberies at gunpoint, which result in many stores closing, a lack of jobs to earn a daily livelihood, poverty, homelessness, drug addiction, and gang activities. As a result, the state government cannot receive enough revenues from Philadelphia’s commercial businesses’ sales tax.
The city’s socio-economic conditions are not so good. Many households rely on different benefit programs. “The Pennsylvania Department of Human Services” offers a variety of benefits to residents of Pennsylvania who need help.
People’s eligibility to have any government assistance depends on Federal Poverty Income Guidelines. As the city and state governments don’t create money, benefit programs for the needy are fulfilled from their collected tax revenues. Philadelphia needs a lot of Federal monetary support in improving the daily living conditions of its poor residents.
From the above circumstances, Philadelphia has imposed high tax rates on hourly wages to get more annual revenues. The poor working class is suffering from its massive impacts. They become more impoverished or stay at the same spot in society. The rich people get exemptions in their businesses as investors and become more prosperous. They know the loopholes to avoid high taxes.
High Income Tax
Philadelphia residents usually pay more city taxes than many other big cities in the US. Residents have to pay taxes for every single purchase. The city sales tax rate is 2%, and the state tax rate is 6%. Combinedly, Philadelphia collects revenues of at least 8% as sales tax. The household income tax rate is 7%, and the wage tax rate is 3.07%.
Philadelphia earned 44% of its annual revenues only from the residents’ income taxes when the hourly wage rate was less than $15. In 2022, the city’s minimum hourly wage rate has increased up to $15, considering residents’ economic conditions. Many families are poor and live under the poverty line.
During the 2020 coronavirus pandemic season, many people became jobless as businesses closed. They used to live on weekly or monthly paychecks and later survived on unemployment insurance benefits from the state and Federal governments. That is a reason for high taxation in recent years in Philadelphia.