Dear Wealthy School Districts: It’s Not Your Money, Anyway (A Note About Non-Property Taxes and the Earned Income Tax in Our Cities)

Even if you don’t live in Allentown or the Lehigh Valley, if you’re interested in infrastructure, urban renewal, and stopping suburban sprawl (let’s call it “mall creep”), this post is for you.

As you might know, the former Philadelphia Phantoms are coming to Allentown.  The Phantoms are the top-level developmental affiliate of the Philadelphia Flyers, and their new arena is being built downtown as the centerpiece of what will ultimately be at least a $600 million dollar redevelopment project in the Queen City.   Honestly, redevelopment doesn’t begin to describe what the special tax zone (the Neighborhood Improvement Zone, NIZ for short) will mean for Allentown.  The NIZ, created by a bill in the PA legislature, does things that make relocation to the NIZ very attractive.  You can learn more about that here.

Something else the bill that created the NIZ does is return the Earned Income Tax of people who work in Allentown but don’t live there back to city to help fund the arena project. Some people don’t like that.  Some, maybe most, local municipalities are used to using EITs to help fund the suburban school districts they support.  Some people are starting to say “why should School District So and So pay for an Arena in Allentown?”

Those people miss the point.

For the last 47 years or so, Earned Income Tax in the Commonwealth has gone back to a worker’s home municipality instead of staying in the place where it was generated.  Before 1965, this wasn’t the case.  Before 1965 (read, before our core cities started failing), Earned Income Taxes stayed where they were made.  Pennsylvania legislators, keen on seeing farmland turned to suburbs, put a stop to that and the townships blossomed with stripmalls, blacktop, and sprawl.  Urban cores and urban schools were left to wither on the vine.

Now, the same school districts and municipalities that have benefited from this tax grab for close to 50 years are crying foul because EITs are going back where they belong. Heaven forbid the core cities and the near-broke school districts in them get a fair shake in 2012.

For shame, township people on the wrong side of this issue.   The Allentown School District can’t afford year-long art, music or gym classes, even at the elementary level.

Look, I know it’s easy to get used to privilege, and then to expect it.  But as Jon Geeting and others have been saying, the cost of living and doing business in the suburbs has been subsidized from the start.  This isn’t about a hypothetically free market dictating that setting up shop in low-density townships made more sense than continuing to develop walkable cities.  This is about, and always has been about, the myth of cheap suburban sprawl.  Sprawl came at a cost to our economies, our infrastructure, our environment, and our mental and physical health. It came at a cost to our cities, to be sure, and to our schools.

No one is building an urban arena with money that should be going to buy football pads for rich school districts.  No one is suggesting that we slash the budget of the Parkland High School closed-circuit television station so Spanish-speaking kids in Allentown can live in a city with a future.  Who would ever suggest something like that?

Allow me to paraphrase one person who actually might.  “Render onto Allentown what is Allentown’s.”

4 thoughts on “Dear Wealthy School Districts: It’s Not Your Money, Anyway (A Note About Non-Property Taxes and the Earned Income Tax in Our Cities)

  1. Thank you for the proper insight on this issue. Too many people look through the topic and just assume that their municipality has a right to these tax dollars. They ignore the bigger issues of suburban sprawl, urban decay, and municipal consolidation.

  2. I concur, wholeheartedly. It was poor planning and policy that caused the death of the great American cities and only with sound planning and policy will they rises like a Phoenix from the decay of the 70s and 80s. Cities which foster entrepreneurial enterprises, generate jobs, and drive commerce should see the income taxes from that economic activity stay with the city. It is in the best interest of our health, our environment, our physical and mental well-being, and our strength as a society. There are countless externalities not considered when assessing the true cost of our suburban sprawl, a dangerously unsustainable development pattern that is heavily subsidized by our cities. The cities shouldn’t have to bare such burden, especially not when essential services are slashed to continue sending money elsewhere….

  3. Actually, City of Allentown, NIZ, East Penn – it’s not any of your money. It happens to be mine.
    I work in the Plaza building and live in the East Penn School District, so it’s MY money that’s being grabbed for this White Elephant. It’s MY money that is not going to my School District of choice. Its MY money that is going to support a private enterprise that will not benefit me and has only begun to drain the coffers of a city that has to post security guards in my parking deck to keep me from being a statistic on my way home.
    Class warfare is an ugly thing.

    1. Dave, your money isn’t being grabbed for anything. Since 1965, the EIT has gone to the boroughs and townships, and it’s been up to them to decide to use it for school districts or whatever else. That’s the money grab. The suburbs wouldn’t exist the way they do had that money not shifted. It’s interesting that you’ve said nothing about the subsidized externalities we’re talking about here. The suburbs did not develop in some kind of free-market vacuum.

      One thing we agree on: class warfare IS an ugly thing. The same class warfare that saw urban cores diversifying racially in the 60s and said “here’s a good idea: lets move the hell out and take our EIT with us.” That, my friend, is class warfare.

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