When it comes to politics, we live in very, very strange times. If you think this is the start of another piece about Donald Trump, well...ha, for once you're actually wrong! It's about the Philadelphia soda tax brouhaha. In fact, I'm pretty sure that Trump is, by now, just about the only major figure in American life who hasn't weighed in on Mayor Kenney's scheme to fund pre-kindergarten, community schools and parks and rec programs by imposing a three-cents-an-ounce tax on sugary drinks, mainly soda pop. (Prediction: Trump would stun the world by saying "I have no problem with the soda tax," Rush Limbaugh would have a fit, and 45 minutes later there would be a statement: "Mr. Trump has always opposed the Philadelphia grocery tax.")
But just look at who has weighed in so far. There was Democratic White House hopeful Sen Bernie Sanders, who said he supports pre-K but opposes the tax as a burden on poor folks -- and maybe, just may, because Kenney has endorsed Hillary Clinton. So then Hillary supported the tax...maybe, just maybe, because Bernie opposed it. THEN, a Nobel laureate, the Princeton economost and New York Times columnist Paul Krugman, weighed in and also supported it...maybe, just maybe because he also hates all things Bernie. Then came billionaires like the Big Gulp-hating Mike Bloomberg, the ex-New York mayor, to pay for TV ads in support of the soda tax. We still haven't heard from the Koch Brothers, George Soros, Pope Francis or Kanye West but something tells me that we will before all is said and done.
The Celebrity Soda Tax Apprentice reality show has obscured something else worth noting: The opponents of the soda tax are running a sleazy and fundamentally dishonest (and multi-million-dollar) campaign to snuff the new mayor's signature proposal. They've carpet-bombed your TV (and mine) with ads referring to the plan as "a grocery tax," which it isn't -- it's a tax on one particularly unhealthy item with no nutritional value, more similar to the other unhealthy items we now tax (like cigarettes and beer, which is now sold at my local "grocery" store.) Every time I hear or read the phrase "grocery tax," the levy -- in my mind -- goes up one penny, so now I'm psychologically pricing a two-liter bottle of Mountain Dew at $147.71...but I digress.
Nobel Prize winners and lying TV ads aside, is the soda tax a good idea? It's complicated. Let's stipulate that the best part of Kenney's plan is that it pays for programs that Philadelphia desperately needs. Numerous studies have shown that the head start that kids get from a strong pre-kindergarten program makes them better students in grade school and beyond. In fact, the truth is that just the social costs of keeping kids off unemployment or out of jail would probably finance the $60-million-a-year program, if only you could pay it forward that way.
Instead, doing something for the public good means making hard choices. Progressives like Kenney tend to prefer so-called "sin taxes," because they force some folks to give up a socially counter-productive habit -- soda is one leading cause of obesity -- and makes those who continue to "sin" pay up to benefit their neighbors in other ways. The only problem is that the soda tax -- like other sin taxes -- would be regressive. That means poor people would pay a greater percent of their income to the government to pay for pre-K and other programs -- the wealthy, not as much.
This is wrong, but it's nothing new, especially not in Pennsylvania. Regrettably, unfair taxation is hard-wired into the state constitution with its so-called "uniformity clause," which the courts have held means that the commonwealth can't impose a graduated income tax. That's played out so Pennsylvania -- and Philadelphia in particular -- is heavily reliant on the sales tax, which hit poor people the hardest because they pay the largest share of their income on necessary consumer goods. The non-partisan Taxation and Economic Policy says Pennsylvania is the 6th most regressive state for taxes in the U.S., which is a polite term for lower-income people getting screwed. Folks in the bottom fifth pay 12 percent of their income in state and local taxes, but the top 1 Percent (where have I heard this before?) pay just 4.2 percent.
The soda tax won't improve our ranking.
I was thinking of the unfairness the other day when I read that Philadelphia-based Comcast's new chief financial officer, or CFO -- 50-year-old Michael Cavanagh -- was compensated last year at annual rate of more than $40 million, the highest paid CFO of any public company in America. I'm sure he's a good dude who's very good at making sure the numbers on the left side of the page add up to the column on the right. But is it fair that his state income tax, his Philadelphia wage tax or -- maybe in a few months -- his can of RC Cola is taxed at the same rate as the janitor who cleans his office? Or that he works in a gleaming skyscraper that got $42.5 million in state grants and other aid and millions more in city tax abatements, all for the nation's most profitable cable giant.
I know it's apples and oranges, but it's hard not to notice that the tax write-offs and grants for just one of the eventually two palatial Comcast digs in Center City is on a par with what City Hall pegs as the annual cost -- $60 million -- of getting 5,000 more 3- and 4-year-old into quality pre-K programs. Or that Cavanagh's salary (unless I'm botching the math) could pay the city's cost of schooling about 3,400 of those kids. Is this really our moral priority system these days? Don't even bother to answer that.
Maybe it's not fair to pick on Comcast. Many of those giant construction cranes you see around Center City and the trendier zip codes (yes, they exist) are tied to property tax abatements or other grants and benefits; the biggest boom may be at Philadelphia's tax-exempt colleges and its health care centers, which briefly flirted a few years ago with payments-in-lieu-of-taxes (PILOTs) before the program was mysteriously wound down. To be clear, the tax abatement programs were born in an era when Philadelphia was like the Chernobyl exclusion zone when it came to new construction -- especially residential units -- but now the tonier neighborhoods are back. What isn't back, apparently, is the city's confidence. There seems to be this civic insecurity that any curbs on tax breaks for these mostly upscale projects would cause Center City to collapse like a giant Jenga. For some strange reason, those fears disappear when it comes to asking working folks to pay more for a shot and a beer at the corner pub.
It goes against every instinct in every bone on my body to be on the same side of an issue as Mike Bloomberg and on the opposite side of Bernie Sanders. But I don't see the harm in a small tax on sugary drinks -- 1 penny an ounce, maybe, or 1.5 cents tops. (Anyone who ever thought the final levy would actually be 3 cents must have flunked Political Science 101.) And Mayor Kenney, please read this if you haven't already, and expand the program to include diet soda. Maybe the smaller soda tax will still trim a few pounds off the civic waistline, and even save a life or two.
But please re-double your efforts to bring tax equity and fairness to Philadelphia in the next three-and-a-half years. Show some confidence that we are a "hot," desirable city and revisit and restructure the tax abatement programs so that the city doesn't become all penthouse condos for the rich and childless and crumbling, empty neighborhood schools for the left behind. Look -- as the Wolf administration is doing in Harrisburg -- at options for taxing dividends or other income that flows more heavily to the non-poor. Jump start the PILOT program so universities and hospitals pay their fair share. And if you want to dream really big, lobby Harrisburg for a constitutional amendment that could bring fair, progressive taxation some day. Make the wealthy pay their fair share for Philadelphia's renaissance -- and then Mike Bloomberg can spend his many spare millions on fighting our guns instead.