King Edwin wants to impose a 40% earned income tax hike on everyone, even those who live outside of Allentown. Is it any wonder he calls it the City Without Limits?PPL, the Queen City's largest employer, thinks this is a bad idea that will make it more difficult to recruit talent. But what the hell do they know?
Pro-business PaCAN has issued this news release:
"Wednesday night, the mayor of Allentown and City Council is expected to discuss a plan to increase the Earned Income Tax by 40% and apply the tax to all city workers, regardless of where they live. Yet some outlets still view this city boss as a reformer. It is the height of historical revisionism that Ed Pawlowski, Card Check supporter, is viewed as a champion of pension reform. His proposed budget solution to this crisis is to tax the income of every dollar earned within city limits to pay for the pension costs he’s inflated as a matter of policy since the day he flew in from Chicago.
"'Business owners cannot be blamed for setting up their shops and offices outside of Allentown to protect their families’ and their employees’ wages,' said Matt Balazik, Managing Director of PaCAN. 'The men and women who work private sector jobs in Allentown are in disbelief that as they’re struggling to look after their own retirement and family security, the government wants to tax their wages and subsidize the failed leadership downtown by paying for the pensions of public employees who make on average 40 percent more in salary and benefits than they do.'
"'If Mayor Pawlowski intends to emulate Philadelphia’s business climate, he should take a look at the results. Simply taking a drive down City Ave., on the border between Philadelphia and Montgomery County, it’s plain to see what side of the street the moneymakers have decided to locate and in many cases relocate. By driving employers out of Allentown, not only will his earned income tax proposal have negative long- and medium-term consequences, but it will also immediately reduce the property values on which most of his budget is based,' adds Balazik.
30 comments:
Bernie-
PPL has been threatening Allentown officials for more than a decade.
Now, our question is, can any taxpayer be required to pay this
tax twice, once where they live and also in Allentown?
Does Pawlowski have any idea how to manage the city? Crime and violence mark almost every downtown block.
Even last summer's cell phone ban is an example of Pawlowski's poor
administrative management style. Bethlehem within days of its cell phone ban posted signs at most of its city entrances notifying motorists of the new law. In Allentown, six months later, we're still waiting.
i looked this group up. this is one of those shady groups that takes corporate money for political campaigns and doesn't disclose. whoever is up for reelection next year might have a problem.
Bernie-
You raise an interesting political question. Will Allentown's mayor commit fraud if the EIT increase is approved? Here's why. One would suspect economic development grants require communities to pledge to do their best to encourage new job growth and business development in exchange for funding? Therefore, for Pawlowski now to attempt to increase a tax that does just the opposite, can't he be charged with fraud?
First, I know the guys behind PaCAN. Anybody in politics in the Lehigh Valley does. They genuinely care about what their doing and they work hard to provide businesses an uncompromising voice, unlike some business groups that say one thing and support candidates who do another. There is nothing shady about them.
Second, it's only expected the national mood which threw out many Democrats this year would reach the local level. King Eddie is out of touch and this plan of his will seal the fate of Allentown as a failed city. I'm glad it's on your side of the river.
Who is PaCan?
PaCan is a conservative, pro-business group. I link to them on my blog.
I hope that you Allentownians do not have to suffer this increase.
I come from Easton where our earned income tax was increased 125% several years ago. The effect has been a disaster on the community. People move away, do not look to live here. There are few job creations. We pay 1.75% with .50 going to the school district, the highest in the lehigh valley. Our rates far exceed what is proposed in atown. W also have the highest millage rate of 25 mills.
People including the blogger say things are great over there because you have no budget crises. Yeah, with our high taxes who would have a crisis. Give me debate and conflict and hopefully lower taxes.
This is going to create an interesting rift. PPL has been a modestly generous supporter of downtown revitalization work in Allentown. Does this tax increase threaten their continued support? It appears that Pawlowski may have over-estimated his strength with some of Allentown's business community. If PaCan speaks for PPL, Butz and others that have their headquarters in teh city limits, then the mayor may have a problem. I'd like to know more clearly if PaCan is speaking for these groups or not.
I do not believe PaCan speaks for PPL or Butz.
It's certainly not surprising to hear apocalyptic rhetoric from business organizations at the prospect of tax increases, as it happens literally every time a tax increase is on the table. But Bernie, you were at the same municipal finance Brown Bag I was at, and know full well that cities have a major structural fiscal problem in that earned income tax payers keep moving further and further out into first and second class townships. Second class townships get the bulk of their revenue from earned income taxes, while core cities depend on an entirely different and less stable source - property taxes. It's a sad fact about PA's fractured system of local government that rich people are allowed to self-segregate and not contribute anything to older core cities, leaving those places to rot. The right thing to do is set up a county-wide tax base, with tax dollars allocated to the places where they are needed most. This is unquestionably a step in the right direction. Allentown needs a new source of revenue, and they should take it from where the money actually is.
Jon, No question that EIT is more fair than property tax, and this should be used more. But I have a problem using an EIT imposed on outsiders to pay the pensions for the City workforce. I have a bigger problem when this is imposed on people who are already paying EITs where they live.
Bernie -
There are several issues at play:
First is the fact that an EIT increase is expressly prohibited by Allentown's Home Rule Charter. The Mayor is claiming that the 2009 pension bill allows the increase, but I still don't think it supercedes the Charter. It will certainly get a costly legal challenge if Council passes it.
Second, as today's Morning Call article shows, passing the increase in EIT will have a negative effect on businesses in the city. It will also make other businesses think twice before locating here.
Just last Wednesday the Mayor stated that his EIT proposal will impact only individuals and not affect businesses. That was a ridiculous statemenet that defied common sense. If nothing else, the PPL statement in this morning's paper should put to rest that lie.
As to PP&L "threatening city officials", I couldn't disagree more. They have shown a strong commitment to downtown Allentown by building and remaining in the city when I'm sure it would have been easy for them to leave. If anything, they have been too quiet regarding many of the other detrimental policies of this Administration.
I hope City Hall realizes how important PP&L is. I would hate to try to fill the hole left behind if PPL were to move.
PPL is certainly a most valid criticism of the proposed EIT increase. without PPL, hamilton street may as well shut down. i am curious about this PA-Can; are they more than two guys with an organization? how long have they been in existence? have they been a factor in any previous debate?
PACAN is an organization of very committed conservatives, They are honest and dedicated to good government. They are pro business
and the information they disseminate is factual, well reseached and documented. I trust their work
Jon, you're wrong on property taxes - they are very stable. You keep confusing transfer taxes with property taxes, two completely different taxes.
Here is a link to Allentown's budget that shows this over the past 5 years:
http://www.allentownpa.gov/Portals/0/files/Finance/budget/proposed2011/B%202011%20Prpsd%20Bdgt%20GF_20101105131701.pdf
anon 11:03, i don't doubt their sincerity or disagree with them on this issue. they appear to be two guys who started a private pro business lobby within the past 18 months or so, and they ask for donations. have they had any results or influence?
These guys ran attack ads against Democrat House Reps supporting the Marcellus Shale tax. It set a serious tone in the Democrat Caucus and Ed Rendell didn't get his tax on Marcellus Shale.
I hope they roll out a program targeting Democrats in Allentown.
PaCAN has field representatives all around the state. Their membership is confidential so that their is no customer backlash from the businesses being in a conservative organization; this confidentiality is guaranteed by their non-profit 501(c)4 status. The organization is non-partisan, though it is fiscally conservative in nature.
The point is well made; this tax will be a major disincentive for businesses to relocate or continue operation in the city. Pawlowski would be cutting spending and lowering taxes if he were truly concerned about the future prosperity of the city.
Finds it deplorable Allentown Mayor Pawlowski intends to pay the city's insane pension deficit by taxing employees who work in Allentown but do not live there. He intends to bilk out-of-towners for $8 million per year! Plus, this is a tax on those who cannot vote for or against Mayor or Council members. Taxation without representation!
clicking on christopher welker, who commented at 2:14, takes you to the PA- Can. apparently this blogger label was custom made for the purpose of self promotion. perhaps bernie knows more about them?
check the state law on this.
city is only allowed to use this tax if it is a distressed city under the Pension Act, Act 205. And, it must be used immediately upon notification of distress determination. (not five years after)
legislature's intent was to tax non residents for pension shortfalls based on the philosophy of going after former city residents who deserted their responsibility ( I doubt whether that is true today since Atown's pension problems were recent creations). There never is a case of paying double under Pa. Law. The only one having problems on getting credit would be NJ residents. It's up to their state tax code. They probably lose.
Jon Geeting said:
"...earned income tax payers keep moving further and further out into first and second class townships."
******************************
Jon -
Do you think there's a reason for that?
If not, look at Allentown. Government there ceased to be accountable to taxpayers a while ago. Politicians serve the union interests that fund their campaigns and taxpayers in Allentown are viewed as endless sources of revenue.
Please explain to me why suburbanites should subsidize that.
Mr. Molovinsky,
I am one of the field representatives for PaCAN. I operate in the 10th congressional district and work mostly out of Milton, PA. I linked to the website so that people could see for themselves what PaCAN stands for. Just to clarify, Our focus is on small- to medium-sized businesses, not corporations.
"apparently this blogger label was custom made for the purpose of self promotion. perhaps bernie knows more about them?"
This is entirely appropriate in my view. Perhaps Christopher is promoting his organization, but he is also stating who he is, and I appreciate that.
Anon 3:33, Really appreciate your informed comment.
Is it time for Pawlowski to resign?
Geeting grunted:
"It's a sad fact about PA's fractured system of local government that rich people are allowed to self-segregate...."
How dare free people exercise freedom to move as they wish in Geeting's twisted world of constant coveting. He actually worked segregation (read: racism) into the discussion. Despicable, but typical tactic. The old Irish saying applies. What does one expect from a pig but a grunt.
christopher, thank you for the clarification
Even last summer's cell phone ban is an example of Pawlowski's poor
administrative management style. Bethlehem within days of its cell phone ban posted signs at most of its city entrances notifying motorists of the new law. In Allentown, six months later, we're still waiting. *Bethlehem and Allentown are in my opinion violating the State motor vehicle laws by even enacting such a law.Regardless if Bethlehem posted signs or not. For the lawyers out there or even yourself Bernie.Would it not be a form of harrassment when/if your pulled over for using your cell phone since for the sake of aguement the laws is illegal
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