Tags: taxes
Tags: taxes
September 1, 2007
Tags: taxes
The prosperity of a region is dependent upon its economic vitality; therefore, it is crucial to evaluate indicators such as employment, income, and tax revenue to determine the strength of a city and region’s economy. All across the country, cities like Philadelphia that formerly flourished as industrial economies have shifted to a service-driven economy.
Employment
A region’s economy is driven by the growth or decline of jobs in the inner core of its cities. The state of the economy attracts (or hinders) investment from employees, developers, and residents. Therefore, local governments need to instill creative solutions to ensure employment increases. The image below illustrates Philadelphia’s employment decrease from 2000 to 2004. The years 2005 and 2006, happily, show an upswing in these numbers.
Personal Income
Personal income reflects the wealth and spending capacity of households. In 2005, the Median Household Income was $32,573 in Philadelphia, $44,537 in Pennsylvania, and $46,242 in the United States.
The graph of Personal Income Per Capita shows that Pennsylvania and the United States are almost identical in their values. The Greater Philadelphia region per capita income ranges are slightly higher at $35,000-$45,000. Philadelphia follows the general trends of increasing personal income, but it is still the lower than the region, state, and nation.
Population
Even though Philadelphia’s population declined from 2000 to 2006, the rate at which it decreased is slowing. In 2001, the city’s population fell by 1 percent, while in 2006 it decreased by 0.5 percent. On the other hand, growth rates in other regions have been stable with the degree of variation never greater than 0.2 percent. The nation’s population has been growing steadily at 1 percent, while the surrounding regions and Pennsylvania have increased between 0 and 0.5 percent.
Since 2000, 31 percent of Pennsylvania’s population has consistently lived in the 5-county region. Thus, people are choosing to stay in our region – participating in the same labor market, rooting for the same sports teams, and coping with the same weather, but still choosing to leave the City of Philadelphia.
Tax Revenue
With relatively stable tax rates, tax revenue increases belie a growing tax base and signal increased economic vitality. Philadelphia has achieved annual revenue increases throughout the last decade despite, or perhaps due to, incremental rate reductions. Although tax rates were lower, the tax base grew, potential as a result of the lower rates. The graphic below shows the types of taxes that finance general city operations through the General Fund.
Source: City of Philadelphia Operating Budget Briefs FY 2007 and Proposed FY 2008
For FY 2005, the US collected $7,652.08 in taxes (per capita), Pennsylvania gathered $2,084.13, and Philadelphia generated $1,531.44. While the federal government fluctuated slightly in taxes collected per capita, the city and state have both displayed ongoing incremental growth.
Source: PA Dept of Revenue, U.S. Dept of Internal Revenue, City of Philadelphia Budget Briefs
Unemployment
Unemployment poses a challenge for the City of Philadelphia. Though the city’s rate rises and falls in the same pattern as the region, state, and nation, Philadelphia finds itself consistently 2 percentage points above the other benchmarks. Providing jobs for those already seeking opportunities is as important, if not more important, than creating new jobs.
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