Philadelphia versus the suburbs. The burbs were once the clear winner when it came to the tax burden of property owners. But the suburbs are losing ground, according to The Pew charitable Trusts' Philadelphia Research Initiative.
A Pew study, "Residential Taxes: A Narrowing Gap Between Philadelphia and its Suburbs", found Philadelphia is more competitive with its Pennsylvania and New Jersey suburban neighbors when it comes to local taxes than it was a dozen years ago.
The study used a hypothetical, home-owning family of four with a household income set at the regional median, which is about $60,000 in the most recent Census data and a home valued at $180,000.
Researchers looked at the tax burden on the hypothetical family living in Philadelphia versus 237 suburban municipalities. The study found from 2000 to 2012, the total tax burden from income tax, property tax and sales tax went down in Philadelphia and went up markedly in the suburbs. While the tax burden is still higher in the city than most suburban municipalities, the gap is more narrow, according to the study.
Here are some of the studies key findings:
- In Philadelphia, the average residential tax burden declined between 2000 and 2012, from 10.7% of income to 9.8%. Factoring in state income taxes, the hypothetical family’s total state-and-local tax burden fell from 13.5% to 12.9%.
- In the Pennsylvania suburbs, the average residential tax burden rose from 9.8% of income in 2000 to 12.2% in 2012.
- In the New Jersey suburbs, the average residential tax burden rose from 9.9% in 2000 to 11.3% in 2011.
Driving the decline in Philadelphia, according to researchers, is the fact that the city lagged behind most of the suburbs in raising property assessments in line with market values over 12 years. Also, Philadelphia lowered its wage tax slightly, while many Pennsylvania suburbs raised their earned income taxes.
So who has the highest tax burden in the region? Researchers say it's individuals commuting from Pennsylvania suburbs to jobs in Philadelphia. From a tax-cost standpoint, those people would have saved money by living, as well as working, in the city. They would have saved even more money had they found comparable-paying jobs in most suburbs.