In 2004, after years of negotiations and politicking, the fiery but aging Councilman David Cohen rammed through City Council (and past a mayoral veto) what he believed was one of his most important achievements: a wage-tax rebate for the working poor.
Cohen died in October 2005 at age 90. By January 2006 the attempts to repeal the Cohen rebate had begun.
Since then, the rebate has been delayed and diluted. Now, Mayor Michael Nutter and City Council are in the thick of the third and perhaps most-plausible-yet repeal campaign. Whether the Cohen rebate is conclusively wiped from the tax code this Council term (perhaps even by the time you read this) or it survives until the next, seemingly inexorable, repeal effort, history suggests that tax relief for low-income Philadelphians may remain out of reach.
The question — in a poor city, governed by a heavily Democratic leadership with presumably progressive values — may be: Why?
The late councilman’s daughter, Sherrie Cohen, a community activist who herself has unsuccessfully run for Council, has spent much of the last eight years attempting to defend her father’s legacy.
She says the explanation for the perennial attacks on the bill is simple: “It’s just not a priority of those in power to do what they can for low-income people. All sorts of other tax cuts are viewed as, ‘Well, this is an investment. Let’s not tax a business; they’ll create more jobs.’ But this is also a stimulus to the economy, as well as to the people who need this most. And that’s not a priority for our councilpeople, most of whom are members of the Democratic Party.”
Plus, she says, “there’s always budget issues” — and the ever-delayed Cohen credit is an expedient place to cut: It’s money low-income Philadelphians don’t even realize they’re missing.
That was true in 2006, when then-Mayor John Street first pushed for repeal — to a general outcry: Councilman James Kenney com-pared it to “smacking David Cohen in the grave,” while then-Councilman Nutter pledged to block the repeal — and again in ’08, when Mayor Nutter launched his own repeal campaign, arguing that it was the key to clearing the way to restart across-the-board wage-tax cuts. Both efforts were defeated, but the Cohen rebate was postponed, to fiscal 2017.
Now, Nutter is looking to resume across-the-board tax cuts in fiscal 2014, which begins next July. So, he says, the Cohen rebate has to go.
“Wage taxes are too high, period. We believe the fair thing to do is to bring it down for everyone,” explains Jane Roh, spokeswoman for Council President Darrell Clarke.
But Steve Herzenberg of the Keystone Re-search Center says targeted relief would be the truly fair thing. “The Philadelphia tax system is one of the most inequitable in the country, and it’s particularly unfair to people on the low end,” he says.
The administration argues across-the-board relief “will increase the city’s economic competitiveness and spur growth,” and Budget Director Rebecca Rhynhart says the city’s research supports that. But Herzenberg expects the impact of across-the-board tax cuts would be negligible.
By contrast, he says, the Cohen rebate could provide a real stimulus, since poor people tend to spend more of any tax relief they receive, and less of the benefit would leak outside the city to commuters. Keystone figures 66 cents of each dollar of targeted relief will be spent in Philly, compared with 25 cents on the dollar of across-the-board tax cuts.
Jonathan Stein, a Community Legal Services lawyer who’s advocating to preserve the Cohen credit, says, at the least, the two tax cuts should be compared side by side in hearings. As it is, he says, “There’s no real debate. These are serious policies of equity and economic impact, and [the decision] shouldn’t be made in this very low-visibility way.”
In mid-June, Council’s Com-mittee of the Whole approved the repeal with a one-vote margin; however, it was held last week, offering a glimmer of hope to its proponents. They’re spreading the word that there are not only economic benefits, but savings to be had: The Cohen rebate, they say, would cost $54 million over five years; the blanket cut, $80 million.
But Councilwoman Marian Tasco says it’s just bad timing.
“This stuff comes on the heels of a real downturn in the market,” she says. But “circumstances change. I find in this business you can always come back.”
Sherrie Cohen doubts that. After all, stopping a repeal takes just nine votes; enacting a new targeted rebate could well require 12 — to overrule yet another mayoral veto. And anyway, she says, “people in our city need economic relief sooner than later.”
The problem, Herzenberg worries, is that those people are not the point of this debate at all.
“This is a question of politics versus policy,” he says. “The folks that this would benefit … don’t give a lot to political campaigns. So, clearly, some elected officials are judging an across-the-board cut to be better politics. I haven’t heard a convincing argument that it’s better policy.”
