Op-Ed: Cap Philly's 10-Year-Tax Abatement

Qualifying developments are eligible for a ten-year tax abatement in Philadelphia. These op-ed authors say the abatement doesn't work as anything other than a government payout.

1 minute read

July 27, 2018, 7:00 AM PDT

By James Brasuell @CasualBrasuell


Ira Goldstein, president of Policy Solutions, and Emily Dowdall, chief of development and policy implementation at the Reinvestment Fund, write a guest opinion piece for the Philadelphia Inquirer:

Philadelphia’s 10-year tax abatement is fundamentally a tax expenditure:  not the benign concept of “money we never had” but more like writing a check from the city to the developers or buyers of new or substantially rehabilitated properties. Extreme cases such as abating $2 million townhouses prompt us to ask: Is this a wise expenditure for the city or school district?

The opinion piece was prompted by news of a luxury townhome development, each of the ten units expected to sell for $2 million, that would receive the tax abatement. "Assume an average price for these townhouses of $2 million per unit and that 20 percent of the $2 million is the value of the land for which tax will be owed; $1.6 million per unit will be exempt from the Philadelphia real-estate tax," explain Goldstein and Dowdall. "The city’s annual tax expenditure per unit will be $23,315 per unit (with the proposed 2019 tax rate of 1.4572)."

The writers present their argument against the abatements by refuting a series of arguments in favor of the abatements—i.e., the market requires stimulation, the abatement lowers the cost of construction, and it's an investment that eventually yields more revenue.

Tuesday, July 24, 2018 in The Philadelphia Inquirer

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