Philly Tax Problems

Hard on the heels of a report that half of Detroit property owners are not paying property taxes comes the story out of Philadelphia that delinquencies in that city are depressing home values and costing the government hundreds of millions in lost revenue. A Philadelphia Inquirer investigation found that home values are being depressed by over 20 percent because of the failure of 15 percent of properties to pay real estate taxes. Overall, this has lowered the total assessed value by nearly $10 billion in the City.

What’s worse, 59 percent of the unpaid tax bills are accounted for by landlords, speculators and investors who do not live on site. In Detroit the motivation not to pay taxes is driven in part by the failure of the City to provide adequate, if any, services to property owners. Of course, Philadelphia is generally in somewhat better shape financially than Detroit but unchecked, the rising trend of unpaid taxes will lead to chaos as those who pay higher and higher taxes on declining property values join the ranks of those who refuse to pay taxes.

Philadelphia needs to get a tight rein on its spending. The school system which is funded in part by City taxes already has to borrow money to pay its bills-never a good sign. Philadelphia benefits from being able to tax commuters, something it alone in Pennsylvania is allowed to do. But that is a two edged sword in that it has undoubtedly driven many jobs out of the City.

Philadelphia has a ring of protection in the form of wealthy surrounding counties that help support its economy. However, profligacy and poor financial management and a desire to make suburbanites pay for its inabilities to manage its affairs prudently will inevitably lead to a severe crisis. Look at Detroit, Oakland and other cities for proof of what happens when lack of discipline and political correctness take over the government.