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Allan Domb stopped by AL DÍA to discuss his wage-tax relief bill on Nov. 19. Photo: Michelle Myers. AL DÍA News.
Allan Domb stopped by AL DÍA to discuss his wage-tax relief bill on Nov. 19. Photo: Michelle Myers. AL DÍA News.

Philadelphia has a potential wage tax relief bill for low-income residents that could pass in another week

Councilmember Allan Domb says his new bill could benefit up to 60,000 households across the city.

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When Councilmember Allan Domb decided to run for office four years ago, he had three goals measured by the 100,000: create 100,000 new jobs, bring 100,000 new people to the city and take 100,000 people out of poverty.

Domb, like most Philadelphians struggled to understand Philadelphia’s status of the “poorest big city in America.”

He characterizes his early approach at finding a solution to a beloved American game. 

“You know in football, you can go up the middle or an end-around?” said Domb, citing two popular offensive plays in American football. “I tried to go up the middle and there was no passageway. I had no blockers.” 

But four years in, in May of 2019, Domb tasked his staff to do some research on the city’s tax history.

What they found he could only characterize as “an embarrassment.” 

In addition to a history of taxing its low-income residents more than most cities in the country, Philly also has the highest wage tax.

“The wage tax is probably the worst for lower income people because it is a flat rate,” said Domb.

At approximately 3.8%, it leads the nation and the city relies on it for 44% of its total revenue (by far the most of any income source for the city).

Numbers-wise, Mayor Jim Kenney’s 2020 budget projects approximately $4.9 billion in revenue, with $2.2 billion expected to come from the wage tax. 

With that in mind, Domb introduced a wage tax relief bill in September that would greatly increase the amount of wage tax low-income Philadelphians could recoup every year through its Income-based Wage Tax Refund program.

City residents must provide documentation of their eligibility for PA’s tax forgiveness program before being eligible for the refund.

Right now, only 0.5% of city residents’ wage taxes can be refunded with the program.

“People don’t pay attention to it,” said Domb.

Under his new bill, which passed favorably out of City Council’s Finance Committee on Nov. 13, that percentage would rise to 2.3% next year and potentially refund all of the 3.8% by 2024 — when the city’s PICA bond runs out.

He thinks it could also help up to 60,000 households, or 100,000 people.

According to a chart produced by Domb’s office, the refunds would range from approximately $360 to $1,700 depending on the amount of dependents. 

Domb also believes his bill is different from previous efforts to combat poverty because it’s not implementing a new program on tax-payer dollars to produce results.

“It would be better for us to just allow them to not be taxed, and give them the money back,” he said. 

In terms of support, Councilmembers María Quiñones-Sánchez and Jannie Blackwell also back the legislation.

However, the Mayor’s Office has yet to support the bill and initially came out against it.

Domb says their initial concern surrounded the program’s estimated cost to the city.

“They thought $25 million, which was their estimate of cost, was a lot of money,” he said.

To counter, Domb’s office estimated it will take only two additional staff members in Philadelphia’s Department of Revenue to implement.

“Two people to help 60,000 households? I think that’s a great investment,” said Domb.

The bill will be potentially up for passage when City Council reconvenes Thursday, Dec. 5.

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