Is the Philadelphia Wage Tax Unconstitutional? And If It Is, What Can and Should the City Do?

17 Pages Posted: 9 May 2016

See all articles by Michael S. Knoll

Michael S. Knoll

University of Pennsylvania Law School; University of Pennsylvania Wharton School -- Real Estate Department

Ruth Mason

University of Virginia School of Law

Date Written: April 20, 2016

Abstract

Philadelphia has a complex and antiquated tax system that has long been criticized for driving employers and jobs away from Philadelphia by making it expensive to conduct business in the City. The centerpiece of the Philadelphia tax system is the Philadelphia wage tax, which raised more than $1.6 billion in 2014. That tax has been challenged as unconstitutional in light of the Supreme Court’s 2015 decision in Wynne v. Comptroller of Maryland, which struck down a structurally similar Maryland tax. This Essay explains the constitutional challenge to the City wage tax, argues that the tax is unconstitutional, describes steps the City could take to save that tax, and raises the question of whether Philadelphia should save or eliminate its wage tax.

Keywords: Constitutional Law, Supreme Court of the United States, SCOTUS, Local Taxation, Tax Discrimination, Dormant Commerce Clause, Internal Consistency, Philadelphia Wage Tax, Economic Development

JEL Classification: H21, H24, H71, H73, K34, R51

Suggested Citation

Knoll, Michael S. and Mason, Ruth, Is the Philadelphia Wage Tax Unconstitutional? And If It Is, What Can and Should the City Do? (April 20, 2016). University of Pennsylvania Law Review Online, Vol. 164, P. 163, 2016; U of Penn, Inst for Law & Econ Research Paper No. 16-10. Available at SSRN: https://ssrn.com/abstract=2777504

Michael S. Knoll (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-6190 (Phone)
215-573-2025 (Fax)

University of Pennsylvania Wharton School -- Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States

Ruth Mason

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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