The iconic British economist John Maynard Keynes said, "The avoidance of taxes is the only intellectual pursuit that still carries any reward." As a city we should never reward tax delinquency. Too many hardworking Philadelphians diligently pay their property taxes to fund city services. Meanwhile, there are some who work hard to evade paying taxes and do so without fear of city action. And none of this has to do with tax abatement.
The issue of collecting unpaid taxes has been a vexing one for City Council. In 2013, Council held a series of "Tax Fairness" hearings to examine the issue ahead of the city's move to the Actual Value Initiative for property taxes. The hearings highlighted a terrible collection rate compared to other municipalities and hundreds of millions of uncollected taxes. Council also expressed a desire for tax delinquency reform by going after financially able deadbeats and finding thoughtful ways to handle financially distressed citizens. Later that year, Council and the mayor enacted sweeping tax delinquency reforms. In 2018, tax delinquency still vexes Council.
Councilman Allan Domb recently introduced legislation authorizing a lien securitization program. It aims to hold delinquents financially accountable, deter future delinquency, and capture revenue to fund vital city functions, including the now locally controlled School District, which receives 55 percent of all real estate taxes. This program is good for the city, it builds upon the work done in 2013 and builds in protections. Under this proposal, unlike the securitization plan used in the 1990s, the city will have more autonomy, including control of the funds that go into a trust and the ability to screen and withhold properties. Additionally, it keeps intact existing programs for homeowners needing a structured repayment plan or deferral options. Councilman Domb's program will proactively reach out to homeowners about available resources, drive more residents into payment programs, increase the city's compliance rates, and create a sustainable, consistent revenue stream.
Unfortunately, the highly successful property tax abatement program has been needlessly thrust into this conversation. Throughout the city, vacant trash-strewn lots that sapped community morale and reaped little or no tax revenue have been transformed into homes, businesses and long-term tax revenue. Since 2000, nearly 20,000 properties have participated in the program. Last year, the city collected over $48 million from properties with expired abatements. That number will continue to annually grow up to nearly $170 million in 2026 with the expiration of all existing abatements. But now this program is under threat so that it can somehow cover the deficit created by tax-evading deadbeats.
The Greater Philadelphia Association of Realtors supports Councilman Domb's honest and thoughtful effort to collect delinquent taxes. We support the tax abatement program and the long-term value it presents to all Philadelphians. We look forward to being a part of the conversation about development and taxation in our city.