Rising property values are better than raising other taxes | Opinion

The job of the city Office of Property Assessment is to determine the value of land and improvements — the basis for levying real estate and related taxes that support schools and municipal services. It should be simple: rising land and real estate values are a fundamental sign of success. It means that residents and employers want to stay and grow here, that businesses owned by Black and brown people are beginning to expand, and that new people and firms are moving here. By contrast, real estate values fall when people and jobs depart, leaving behind unemployment and a diminished tax base to support our schools and public services.

Falling values mean that low- and moderate-income families lose equity in their biggest investment: their homes. This limits their ability to pass on generational wealth to their children — one of the most vicious downward cycles of poverty. Falling values also mean that Philadelphia has had to rely far more than any other large cities on wage and business taxes and this has driven away jobs and people.

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Philadelphia lost 255,000 jobs and 430,000 residents in the last three decades of the 20th century, leaving us with the highest poverty rate of America’s 10 largest cities. By contrast, prior to the pandemic, we were a city that added 93,000 jobs and 56,000 residents since 2010. Even then, however, we were growing more slowly than 24 other U.S. cities and were failing to add sufficient family-sustaining jobs.

For years, we have been hearing that our high wage and business taxes deter job growth. Now we are seeing the huge downside of depending so much on wage and business taxes to support local services. Instead of reaping the benefits of stored value in real estate, we are watching remote-work drain city coffers.

So why do we fear rising real estate values if they are a more reliable way to support services and schools? Why have we ignored recommendations from two tax commissions, urging us to depend less on taxing things that easily move — wages and business income — and to rely more on fixed assets like land and improvements — especially when cities that count more on real estate taxes have smaller deficits to fill?

We have created this problem because we fail to make proper distinctions between the value of real estate and how we tax it. The assessor’s job is to establish accurate values based on sales, rents, and the best computer technology. Philadelphia has not always done that well, so there are huge inequities. We need to fix that problem with professional staff and state-of-the-art technology.

But then, don’t shoot the messenger. The job of the mayor and City Council is to translate accurate values into equitable tax burdens — by setting rates as well as determining the types of properties to exempt and the groups who may warrant protection, such as fixed- and low-income property owners.

Paul R. Levy is president and CEO of the Center City District.