By Julian Walker
Times Staff Writer

After public opposition helped to kill Mayor John F. Street’s plan to halt annual incremental cuts in the city wage tax, City Councilman David Cohen thinks that more cuts make fiscal sense for the city.
Unlike a slight majority of his Council colleagues who voted in May to postpone consideration of a Cohen-sponsored bill that would give an additional wage-tax break to low-income city workers, the veteran councilman isn’t satisfied with just one tax-cutting victory.
Last week, Cohen organized a Center City planning session that brought together a host of civic-minded folks to discuss the foundations of what he hopes will be a public advocacy campaign that pressures local lawmakers to support the measure.
The recent fervor caused by the wage-tax debate leads Cohen (D-at large) to believe that if enough people take up the cause of the working poor, Council members who oppose the measure will be unable to maintain that unpopular position in an election year.
“I hope this is the beginning of a movement to politically mobilize the city in a way that’s never been seen, a real participatory effort,” he said. “This is just one example of why it is so important to get involved in every phase of city government.”
During a six-year period, the Cohen bill would reduce the wage tax from 4.54 percent to 1.5 percent for the working poor who meet eligibility guidelines.
It is modeled after a Pennsylvania Department of Revenue program called “Tax Back.” In fact, the income guidelines for eligibility in both programs are identical.
A married couple with one child who earn $22,500 annually, for example, would receive a full refund of their state taxes.
A similar federal government program — the Earned Income Tax Credit — directs $30 billion each year to low-income people.
Such tax breaks, Cohen contends, will do much to bolster the local economy because recipients are likely to spend those dollars in the city on goods and services.
“Some people will say that this program is too costly; that it will reduce the ability to deliver city services,” he said, responding to common criticisms of the bill. “Those claims are false. If it passes, it will strengthen Philadelphia and make a tremendous difference in the life of a worker making fifteen- to twenty-thousand dollars a year.
“And it gives to those who work hard only to earn a low wage,” Cohen continued. “It will impart dignity to those people: to the single parent, the family wage earner, the senior citizen who works part time. These people are entitled to fairness and equity in society, and that’s all we’re saying in this bill. There is no dignity to work if your work doesn’t produce enough income to provide the basic necessities for your family.”
Cohen said that his bill could provide further incentive for folks to leave welfare because it makes the transition financially feasible.
Many former recipients who leave welfare to enter the workforce realize that their salaries cannot sustain their families and the lower paying jobs they took don’t provide minimum medical benefits, Cohen said.
However, there is concern among some officials about the city’s ability to finance the tax cut.
The Street administration fears it could cost as much as $200 million over five years.
City Controller Jonathan Saidel doesn’t offer as bleak a picture, but he believes that the $110 million it will cost the city is too high.
Both men, therefore, oppose the measure, as does the Pennsylvania Intergovernmental Cooperation Authority, the state agency that oversees city finances. The Greater Philadelphia Chamber of Commerce supports it.
As evidence that Philadelphia has enough fiscal health to support the bill, Cohen points to recent reports that the city generated $36 million more in revenue than anticipated during the past fiscal year.
Those reports, city budget director Rob Dubow told the Times on Monday, misrepresent the city’s actual revenue.
The $36 million figure, said Dubow, actually is more like $12 million (with much of that coming from one-time real estate transfer levies) and only represents tax revenue. Complete revenue figures for the past fiscal year will not be known until late August.
Cohen, meanwhile, also suggests that participation in the program — pointing to the relatively low levels of enrollment in the sister state and federal tax-relief programs — will fall well below projections by the administration and the controller’s office.
According to Cohen legislative aide Tim Kearney, both the federal and state programs, “have been stagnant at fifty percent participation for years.”
To affirm that point, Kearney notes that former city Recreation Commissioner Michael DiBerardinis heads a program, Campaign for Working Families, whose goal is to register up to 50,000 eligible Philadelphians for the federal program.
“Even if this become law, we still have the heavy burden of educating people about the program,” said Kearney. “Nobody files a city tax return form, so this is going to be a whole new thing that we have to teach folks.”
Kearney estimates that low-income folks who apply for all three programs could reap as much as $3,000 each year at tax time.
Data indicates that the windfall for qualifiers is indeed beneficial.
Internal Revenue Service spokesman William Cressman explained that 19 million American tax payers claimed the EITC in 2000, receiving more than $31 billion in returns, amounting to $1,631 per claimant.
Kent Wissinger, a spokesman for the Pennsylvania Department of Revenue, said that 1,221,122 commonwealth tax payers filed during the same tax cycle.
State participation rates were not available as the Times went to press this week, but if federal figures are an indicator, people are aware of the programs.
Cressman said it is estimated that 75 percent of eligible taxpayers file for the tax rebate.
At the session, Cohen, joined by Councilman Angel Ortiz (D-at large), asked attendees to contact the offices of Councilwomen Jannie Blackwell (D-3rd dist.), Donna Reed Miller (D-8th dist.), Blondell Reynolds-Brown (D-at large) and Councilman Frank Rizzo (R-at large) to express their support for the bill.
Those councilmembers are the ones believed to be most sympathetic to the issue, though Cohen characterized the bill as “having such clear merit it ought to pass unanimously.
“There is not a single Council district among the ten of them where there aren’t thousands of people who are eligible,” he said. “There is no rich district in the city.”
Three of the Northeast’s district councilmembers — Joan Krajewski (D-6th dist.), Rick Mariano (D-7th dist.) and Brian O’Neill (R-10th dist.) — in May voted to table Cohen’s bill.
Councilwoman Marian Tasco (D-9th dist.), whose district includes Lawndale and Crescentville, voted against tabling the measure.
Krajewski aide Chris Creelman said that all things considered — a weak national economy and ongoing and pending contract negotiations with city workers — the councilwoman felt it best not to commit to another expensive tax cut on the heels of the wage-tax debate.
“Joan’s not against it and we’re not saying that Joan doesn’t have lower-income people in her district. But we’re concerned about where the money for all these needs comes from,” Creelman said. “We’re concerned that it will fall on the middle class, which is what most of the people in Joan’s district are.”
Creelman said Krajewski prefers to wait for the formation of the Tax Reform Commission early next year.
The commission was proposed by a resolution from Councilman Michael Nutter (D-4th dist.).
If city voters approve its creation in the November election, commission members will be appointed in January and then study all city taxes for one year before making recommendations to mitigate the city’s oppressive tax structure.
Neither Mariano — an original co-sponsor of the Cohen measure — nor O’Neill returned several calls seeking comment.
At least one Northeast group, the Dungan Civic Association, supports the measure and sent a representative to the recent session.
Ortiz said that councilmembers must be aware of the public demand for the tax-cut bill for it to gain passage.
“This is an issue about working-class individuals. Unfortunately, working people don’t have as much influence because they don’t contribute to political campaigns. The only thing I see that works is when masses of people appear on the day of a hearing or a vote,” said Ortiz.
“We’re not going to win this just because we’re right,” Ortiz said. “We win this fight when we are able to mobilize people. That is the only thing that is going to change people’s minds, because they know if they vote the wrong way, people will leave with the wrong impression about them in an election year.”