the Pittsburgh Problem (Philadelphia, Penn: lease, neighborhood, contractors)

[JoeLeaphorn]

Do the math. There are about 900,000 non-city residents of the County and immediate surrounding areas. Assuming that the mean income is about $25,000, that means that a 3% wage tax would raise about $675 million.

If that tax did not exist, consumers would be spending some, even most, of that money on discretionary purchases in their neighborhoods or in nearby retail business districts. It would not be concentrated. It would be consumers voting with their feet as to what services and goods they wanted to purchase.

This would translate into service and sales positions for others who, in turn, would spend some of their income on discretionary practices.

Or, you collect that money in the form of taxes, and centralize the distribution of it in government. Where does it go?

Well, some of it would surely remain in the community. But the City and County also have collective purchasing agreements including partnership agreements with the state. Some of these limit the vendors able to sell goods and services to the City and County. Many of these approved distributors/vendors are NOT based in Western Pennsylvania including most technology purchases.

So what you have done is taken money from the community and spent it on goods and services provided by another community. In a good economy, that may make some sense but it doesn't make sense for our region, right now.

What does make sense is closing the loopholes by which non-profits do not pay taxes even when they have record revenues. What also makes sense is to change to a pay as you go system for municipal budgets so that future liabilities are funded from existing not future revenues. If that were law, it would limit the ability of powerful unions to negotiate which guaranteed benefits whether or not the revenue existed to pay for them.

[BrianTH]

First, I didn't propose the City levy a full 3% wage tax on non-residents working in the City, let alone on all non-residents in the Pittsburgh area. I was just pointing out that under the status quo, non-residents working in the City aren't paying anywhere close to the same amount in user fees as residents are paying in wage taxes, so non-residents working in the city could pay a bit more in user fees and still be nowhere close to paying the same taxes as residents. Hence, complaints about non-residents potentially having "equal responsibilities" to residents simply aren't grounded in reality: no one is proposing anything close to that hypothetical situation.

Second, we are talking about raising revenues to help pay for pensions. Those are basically transfer payments, and have nothing in particular to do with the City's vendors: they also just translate into personal consumption. And as I noted before, it turns out that many people collecting City pensions actually live outside the City these days. Of course some of those people live nowhere near Pittsburgh at all, but many live in the surrounding area. In that sense, the net transfer in terms of geographic regions is actually less than it would superficially appear, with some of the transfer actually taking place between working-age people and pensioners in the same areas.

[JoeLeaphorn]

Read my lips: No taxation without representation, period!

Second, you prove my point. Increasing taxes on non-residents to pay for pensions means that I am paying for services that I am not using and never used. How is that fair?

Furthermore, it changes the terms under which I made my decision to live where I lived and doing that without my ability to register my feelings with a vote (by going to the legislature to get permission to tax me) is immoral.

I have an obligation to pay for those things which I have, contractually, obligated myself to pay. Nothing more. I have no obligations to the city save those obligations to which I have willingly committed. To change the rules after the game has started is unjust.

[BrianTH]

Originally Posted by JoeLeaphorn

Read my lips: No taxation without representation, period!

And yet by your own admission you are already paying user fees to the City without representation.

Second, you prove my point. Increasing taxes on non-residents to pay for pensions means that I am paying for services that I am not using and never used. How is that fair?

First, as a person who works in the City, you do in fact use many City services, whether you want to admit it or not. Second, as I said above, the "fair" thing would be to reach back in time and charge past users and residents more in fees and taxes in order to fully fund the pensions (and if they refused, then to renegotiate entirely). But that "fair" thing isn't possible, since we don't have a time machine available. So the practical question is how to distribute what is an "unfair" burden in that sense, and everyone with a stake in the long-term health of the City should take on part of that burden. That includes non-residents working in the City, whether they want to admit they have a stake in the City or not.

Furthermore, it changes the terms under which I made my decision to live where I lived and doing that without my ability to register my feelings with a vote (by going to the legislature to get permission to tax me) is immoral.

Again, you already chose to subject yourself to these fees, immoral or not. So in the words of a famous joke, we have already established what you are willing to do, and now are just negotiating about price.

I have an obligation to pay for those things which I have, contractually, obligated myself to pay. Nothing more. I have no obligations to the city save those obligations to which I have willingly committed. To change the rules after the game has started is unjust.

First, every time you use the City's resources, directly or indirectly, you sign onto an implied social contract to help maintain the health of the City. As I noted above, if you don't like the terms of that contract, you are free to try to isolate yourself from the City, but you aren't free to claim you can benefit from the City without paying something.

Second, your contract idea works both ways: in no plausible interpretation of this contract did the City guarantee you that things like the fees for non-residents working in the City would never change. In that sense, this contract is perpetually up for renegotiation, and while you are again free to break off negotiations and stop using the City's resources, the City has no obligation to continuing letting you use its resources for any particular price.

In short, you don't have the right to go into a store and buy something for the price you paid last week. Similarly, you don't have the right to work in the City for the price you paid last year. The only right you have is to refuse to work in the City if you don't like the price they are charging.

[JoeLeaphorn]

When I am in the city, I pay the taxes associated with the services that I consume. As the owner of the office, I pay property tax on the building which goes to the city and to a school district where I don't send my kids. Those are my implied social contracts. If the city doesn't charge enough for these, they should charge more in order to meet their expenses but, of course, if they did that they'd probably push more businesses to move just like the County's tax structure resulted in the migration of retail to Cranberry and industrial/commercial to Southpointe.

I also pay taxes to my municipality and I pay for garbage, sewage and water, as well as property taxes to the school district to which my children attend.

No, the easy thing to do is to try and spread the pain, but this is not the right thing to do.

As for the "benefits" provided by the city (and I argue that I pay for those through the taxes and fees that I already pay), the fact is that my business is, essentially, a virtual business. My customers don't care that I live and work near Pittsburgh, if anything, that is a handicap since my competitors are located in larger cities.

I used to be able to fly direct to most of my client sites and I used to be able to fly clients to my offices without them having to change flights in Charlotte, Philly, Chicago, Dayton or Detroit. I can't do that, anymore, which makes me less competitive than those business located in cities with more direct flights.

On top of it all, I see visionless leaders wasting money on short term feel good projects while ignoring the future of our region. I see a municipal planning process which has destroyed thousands of acres of woodlands and fields and left formerly vibrant retail and commercial districts with empty storefronts and decaying parking lots. I see a regional transportation planning group that thinks that it is still a good idea to build more highways (which will allow even more people to move out of the city, affordably).

I see our leaders with their hands in the pockets of the biggest non-profits in the area who, by the way, don't pay taxes on some of the most valuable real estate in the city. I see an airport with a closed Concourse and fewer flights, in part, because of onerous user fees.

I see a company like Seagate, that can't even make a financial success of employing 175 people a 10 minute drive from Carnegie Mellon University. I see Oakland which is choked with traffic because no one has a vision of a better transportation solution than creating one way streets.

And you want me to pay for that? Forget it. I made the decision to move out of the city (after living in it for 19 years), because I concluded that there were better values, elsewhere.

[JoeLeaphorn]

Here is another example of what is wrong with the politics of Pittsburgh:

Ravenstahl removes head of Stadium Authority

The boy-king mayor has fired a member of the stadium authority board because she dared to state that the prices that the authority asked for the sale of taxpayer-owned properties was too low (it was), and that the proposed design of the facilities to be built there were too ugly (which they are).

We already have a eyesore parking garage next to the Ft. Duquesne Bridge and another one going up near the casino. We have a casino which looks better at night (as does most new Pittsburgh construction), which is supposed to be a economic engine (when, in fact, it will most likely be a redistributor of wealth in the region, and not one that favors economic growth).

So, with the city hemorrhaging money, the mayor decides to fire somebody who says that they could have gotten more money for the property that we owned while, at the same time, asking us to cough up more.

What Chutzpah!

This kid can't take criticism. So why the heck did he run for office?

[pman]

what services is Joe using that he isn't paying for. specifically? Progressives the country over make this argument but I've never seen any real proof. Perhaps pittsburgh coudl shift its taxes, such as a 1.5% for work, 1.5% for residency menaing any whose jobs is in Pitt pays 1.5% tax while anyone who lives there pays 1.5%, anyone who does both pays 3%. If that brought in more revenue, perhaps it could reduce the parking tax. I've always felt it's somewhat wrong for city's to make too much money on parking because then it makes them dependent on parking, thus reduces their impetus to improve transit. Moreover, parking can effectively be taxed through property tax and zoning, IMO. At any rate, I think Joe makes several good points and one should study Philadelphia closely because much of what you are arguing for exists there and it's just pused people even further out from the city core. Their suburbs will also never vote for regional government. OTOH, Rendell has alreayd tackled, to some extent, education funding (though that's running into problems now that the state is broke).

[BrianTH]

Originally Posted by pman

what services is Joe using that he isn't paying for. specifically?

As aside, I didn't say he isn't paying anything for them already: just the opposite, I'm noting he already is paying for City services despite his claim that this is an immoral state of affairs. But anyway, anyone working in the City is a beneficiary of police, fire, EMS, public works, and so on--all the basic services that make up a huge portion of the City's budget. Now of course working residents benefit even more, because they both work and reside here.

Perhaps pittsburgh coudl shift its taxes, such as a 1.5% for work, 1.5% for residency menaing any whose jobs is in Pitt pays 1.5% tax while anyone who lives there pays 1.5%, anyone who does both pays 3%. If that brought in more revenue, perhaps it could reduce the parking tax.

I assume that would bring in a lot more revenue, since I believe over half the jobs in the City are worked by people living outside the City, and most of them are only paying the $52.

I've always felt it's somewhat wrong for city's to make too much money on parking because then it makes them dependent on parking, thus reduces their impetus to improve transit. Moreover, parking can effectively be taxed through property tax and zoning, IMO.

I agree--as I have noted before, I'm in favor of privatizing parking even aside from the revenue issues.

At any rate, I think Joe makes several good points and one should study Philadelphia closely because much of what you are arguing for exists there and it's just pused people even further out from the city core.

I think it is fair enough to raise practical objections (I was mostly addressing Joe's moral objections). And I certainly think policymakers should study other cities. On the other hand, Pittsburgh as it stands has something of an outlier situation in that it has lots of people working in the two central business areas (Greater Downtown and Oakland, the latter of which itself is spreading farther into the East End), and yet the City is pretty small in size as far as boundaries are concerned. So this is really a particularly stark example of a central city providing a lot of economic benefit to non-residents, and I honestly don't see how it can possibly sustain an acceptable level of services without either expanding the political boundaries in some way or continuing to raise revenues from non-residents.

[JoeLeaphorn]

I don't see how you can tax anyone's wages or salaries on the basis of where they work as long as their municipality can do the same. I have a vote in the operation of my municipality but not where I work.

As for police and fire protection, I don't buy that argument for the following reasons:

First, the same is true wherever you go. You come to my municipality and I pay for the police protection that protects you. The difference is that my municipality takes bids for police and fire service from other municipalities and, by and large, we get a good deal. The city doesn't deal.

Second, this is the "cost of doing business". If Pittsburgh was Baghdad who would work or play there? If the revenues aren't enough to pay for these, raise property taxes, raise the sales tax, raise the ticket tax, whatever, but raise it on the people using the service. Nobody wants to do that because it would make more activities more expensive but the alternative is that I have already paid for a stadium for which I cannot get tickets for at least 20 years which means that I don't go to games which means that I don't get drunk at tailgaters. So if I'm sitting in my suburban home not causing traffic or behavior problems, why should I be subsidizing those who are?

Third, by and large, the people who come into the city to work are not bringing crime with them. They are already adding to the city economy by subdizing city businesses and their employers and property owners are already paying what has been determined to be a fare amount for the services that they consume.

The real issue is that 300,000 people would rather tax the remaining 900,000 than themselves. Vote with your feet, then. I don't see too many suburbanites saying that they want their taxes raised so that they help support the city. You would think that there would be at least a few suburban liberals stepping up to the task.

[pman]

Originally Posted by BrianTH

is a beneficiary of police, fire, EMS, public works, and so on--all the basic services that make up a huge portion of the City's budget. Now of course working residents benefit even more, because they both work and reside here.

I would imagine the use of a small fraction of a resident's, particularly fire and police. public works are tougher. who uses them and for what? what's the net benefit?

Originally Posted by BrianTH

I think it is fair enough to raise practical objections (I was mostly addressing Joe's moral objections).

moral objections have merit as well. user fee taxes are more acceptable because people can choose to pay them. it's worth noting that people can also choose to locate their companies and choose jobs where no tax is paid to the city, which is what most do in Philadelphia where a substantial commtuer tax exists.

Originally Posted by BrianTH

And I certainly think policymakers should study other cities. On the other hand, Pittsburgh as it stands has something of an outlier situation in that it has lots of people working in the two central business areas (Greater Downtown and Oakland, the latter of which itself is spreading farther into the East End)

Actually, Pittsburgh and Philadelphia are very much the same here, as Philadelphia has west market and university city (where Drexel, Penn, and their health systems are located).

Originally Posted by BrianTH

and yet the City is pretty small in size as far as boundaries are concerned. So this is really a particularly stark example of a central city providing a lot of economic benefit to non-residents, and I honestly don't see how it can possibly sustain an acceptable level of services without either expanding the political boundaries in some way or continuing to raise revenues from non-residents.

you are assuming those two areas are cost centers for the city. they very well could be profit centers. the cost centers are likely lower and middle class enclaves where family sizes are larger and there are problems with crime. those neighborhoods likely use more school service, police, EMS, and prisons, etc. I don't have an issue with moving more funding to the state for education though, as noted earlier.

back to the tax proposal. the city could implement your parking proposal (selling off parking assets) and my tax proposal but use the money to lower business taxes rather than parking taxes. as such, it's penalizing businesses less for locating in pittsburgh. froma revenue standpoint, you're hoping that revenue wil increase as you tax commuters at a "low rate" but reduce the burden on the company who needs to decide to locate there. Also, AFAIK, cbusiness location companies choose metros, then choose where to locate within the metro once the area has been chosen.

Lastly, Pittsburgh needs to do a better job of luring people downtown. It has one of the most underutilized downtowns in the country (imbedded in that sentiment is the feeling that its downtown is worth using). all the buildings are there, if you can get people living in them, you will improve the performance of this "profit center." I think they've already taken some significant steps in doing that.