|FOR IMMEDIATE RELEASE
April 14, 2022
Contact: Kirstin Snowsnow@pennbpc.org
RELEASE: Pittsburgh Budget & Policy Center Releases Brief on how Gainey Administration Can Meet City’s Revenue Needs
Calls for fairly raising recurring revenue from city’s rich and from city’s largest employer; sustainable solutions for long term
Pittsburgh, PA—Today at a virtual press conference ahead of tax day, the Pittsburgh Budget and Policy Center held a press briefing to unveil new research that provides a path forward for the Gainey administration and Pittsburgh City Council to fairly raise recurring revenue in the coming year including from Pittsburgh income taxes without needing any new legislation.
Stephen Herzenberg, Executive Director, Keystone Research Center began the conference by saying, “Enacting fairer taxation gives the new Gainey Administration a golden opportunity for a signature first-year initiative and can serve as a foundation for the more equitable Pittsburgh that the new mayor seeks.”
Nthando Thandiwe, Budget and Policy Analyst, Pittsburgh Budget and Policy Center, added, “Pittsburgh has the authority to enact fairer taxation, allowing the city to generate additional revenue to invest in affordable housing, job creation, and safe communities.”
The new brief finds that:
· Pittsburgh currently has an unfair, or “upside-down,” tax system that takes a larger share of income from lower-income and working families than it does the rich. This reflects the regressive nature of the city property and sales taxes. It also stems from city and school district income taxes that fall primarily on wages but not on most kinds of income received largely by the rich, such as dividends and capital gains.
Pittsburgh BPC put forward two different ways the city could create a more “right-side-up” tax system and raise as much as $100 million in recurring revenue each year.
· First, by taxing more of the income received by the rich—such as dividends and capital gains—and doing so at twice the tax rate on wages, the city could raise as much as $57 million each year, largely from the richest fifth of families in the city.
A legal memo in an appendix to the Pittsburgh BPC brief shows that Pittsburgh already has the authority to enact a fairer city and school district income tax—no new legislation is required from Harrisburg.
· Second, Pittsburgh could seek to get the city’s largest anchor “nonprofits”—starting with UPMC—to contribute to city revenues.
o UPMC currently avoids at least $50 million in Pittsburgh taxes each year by claiming it is a “purely public charity.” The city and Allegheny County both questioned, under Mayor Ravenstahl, whether UPMC meets the state legal tests required for this tax-exempt status.
o UPMC, in 2021, had excess revenue of $1.5 billion, up from $420 million in 2019.
o UPMC paid its president and CEO in 2020 $9.5 million, 115 times the pay of the average UPMC employee.
o In at least four Pennsylvania communities, UPMC already makes “payments in lieu of taxes “(PILOT) equal to 40%–55% of what it would owe in taxes without its “purely public charity” exemption.
If Pittsburgh acts now, it can secure more revenues from fair taxation by the time ARP funds expire. The knowledge that Pittsburgh has ways to raise additional revenues fairly should embolden the city to use its ARP revenues to address structural inequalities and racism, including by investing in more affordable housing and in job-creation programs that enable more jobless workers and people of color to access family-supporting careers.