Did you know that there is a city wage tax refund available for working poor and low-income families? No, neither did I.
By Denise Clay-Murray
My guess is that people are tired of hearing about Philadelphia being the poorest big city in America by now.
It’s something that comes up every time the city’s finances, or the school district’s finances, or the possibility of raising the minimum wage here in the city comes up. Right now, there are people wondering how they’re going to make ends meet on $290 a week before taxes as I write this.
It’s also tax time. Right now, I’m finding all of my 1099 forms, the various receipts and other things I’ll need to be able to file my taxes. It’s always fun. Back when I was single, I was eligible for the Earned Income Tax Credit because (a) I was the head of my own personal household and (b) I was broke.
In fact, there are other tax credits available for people who are among the working poor here in America. If you go to one of the Campaign for Working Families sites here in the city to get your taxes done — and that’s a free service, by the way — they can tell you about some of them.
But, when I went to a press conference called by the Philadelphia Tax Advisory Board at the Arch Street United Methodist Church last week, I found out about another tax break that low-income working families should know about because it provides a refund of the City’s wage tax.
Mark Stier, executive director of the Pennsylvania Policy Center, presented research that showed that the Business Income And Receipts Tax and wage tax cuts suggested by the Tax Reform Commission won’t have the desired effect of creating jobs by growing the economy.
Using the examples of Boston and San Francisco, both of which have growing economies, Stier suggested that instead of cutting taxes, the city should take the $1.9 to $2.3 billion it was prepared to spend on the tax cuts and apply it to programs that would reduce poverty like workforce training, antiviolence programs and providing funding to small businesses.
But another thing that Stier suggested was to raise the city’s wage tax exemption and to find a way to make it easier for folks in the city to access.
In 2020, City Council passed a bill that created a wage tax refund to benefit the working poor. Those who qualified for the rebate would get 2.3% of the 3.75% wage tax that they paid back. The refund would mirror the federal Earned Income Tax Credit, said Jonathan Stein, a former member of the Tax Reform Commission.
While there are a lot of people in the city that could certainly use that refund, there are a lot of hurdles you have to clear to get it, Stein said. The first hurdle is knowing of the rebate’s existence.
The second is eligibility.
“You first have to apply for state tax forgiveness and be approved for the state tax forgiveness for low-income people,” Stein said. “But that has a ridiculously low eligibility threshold. If you earn more than $15,000, you’re ineligible for state tax forgiveness, and therefore ineligible for the local wage tax rebate.”
($15,000?! Really?! No one can live on that.)
Currently, only 1,600 of the thousands of people who should technically be eligible for the wage tax rebate are taking advantage of the program. But the group is hoping to meet with Council to try and fix that.
To see if you’re eligible for the local wage tax rebate, visit the Campaign for Working Families website at: https://www.cwfphilly.org/. You can also find a list of places where low-income workers can get their income taxes done for free.
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