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Philadelphia

Sunday Mail Bag

October 11, 2009 · 5 comments

It’s a chilly Sunday morning here in Philadelphia. I thought a bit of housekeeping might be in order, so I’m opening up the ol’ taxgirl (e)mailbag. I have a bunch of non-technical tax questions which were submitted as “ask the taxgirl” questions but I thought it made more sense to answer them in one big post. So grab a cup of coffee and pull up a chair!

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Taxpayer asks:

Dear taxgirl, why did you decide to become a lawyer? I’m thinking about going to law school this fall and I’d love your thoughts.

taxgirl says:

I watched a lot of TV. Seriously. I didn’t really know any lawyers growing up so I based most of my impressions of lawyers on what I saw on TV or read in books. I was a big fan of Perry Mason and, of course, Nancy Drew’s dad, Carson (what girl didn’t have a crush on him?). But mostly, I loved the idea of doing something that made a difference. Remember that great scene in To Kill a Mockingbird?

I wanted to be able to stand tall like Gregory Peck (the tall never happened) and say things that mattered, take a stand for justice. Of course, that’s not exactly what happens in the legal profession – it took me awhile to figure that out. But at the end of the day, despite the lawyer jokes and bad press, I love what I do. I help people. And that matters to me.

That said, the legal market is really tough now. Law school can be expensive (I’m still paying off my loans) and jobs can be hard to come by. Make sure that you really want to go – and you’re not just going because your parents want you to (we had a lot of that in law school) or because you’re a smart kid and don’t know what else to do (we also had a lot of that in law school).

If you’re not completely sure, my advice is to talk to a bunch of lawyers: small firm lawyers, big firm lawyers, government lawyers. Intern in a law office. Sit in on a law school class or two. Then make your decision. Good luck!

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Taxpayer asks:

Have you ever filed your taxes late or owed taxes? I’m just wondering.

taxgirl says:

Yes and yes. Our tax system, as it exists, is self-governing. That means there’s no one standing over you screaming at you to file and pay every year – or every quarter in the case of small businesses and those who owe estimated taxes – and I’ve been both. Sometimes the mistake is on the employer side (as when I was first in Philly, my NJ boss didn’t withhold wage tax) and sometimes the mistake is on the employee side (as when you just get overwhelmed and forget a deadline). Mistakes happen. I always tell clients that there’s no shame in it: just fix them.

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Taxpayer asks:

I’m a 2L and am thinking about classes for next semester. Which tax classes do you recommend? Any to avoid?

taxgirl says:

I loved Federal Estate and Gift Tax and Tax Policy, hated Partnership Tax (though it is handy). I’d recommend starting off with baby tax (federal income tax) and seeing which aspects of tax law appeal to you. I also recommend taking some non-tax courses, too. I never intended to be a tax lawyer but I really enjoyed a class that I signed up for just because it fit my schedule and it wasn’t litigation-related. So don’t stack up on tax in the beginning, you never know. Try a bit of everything.

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Taxpayer asks:

You talk a lot about living in Philadelphia but you call yourself a Southern girl. What am I missing?

taxgirl says:

Easy. I grew up in North Carolina. I’ve lived in Hampstead (early years), Durham (high school) and Raleigh (college). I moved to Philadelphia to go to law school and loved it so much that I stayed.

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Taxpayer asks:

What’s the strangest deduction that you’ve ever seen on a tax return?

taxgirl says:

Hmm. I’ve seen some odd things. But one that jumps out at me is pet therapy – as in therapy for a pet. While I understand that pets are like children (we joke that our dog is our first born), you can’t claim pets or related expenses on your tax return.

And then there’s flat out lies like the guy who claimed his Disney cruise was a business expense (he ran a car dealership).

One thing you can say about tax law: it’s never boring.

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Taxpayer asks:

I see you practice with your husband. Do you talk tax at home? Just curious.

taxgirl says:

Yes, but he doesn’t listen. My husband isn’t a tax lawyer, he practices international and corporate law. But that doesn’t stop me.

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Taxpayer asks:

I saw this and thought of you: http://www.abajournal.com/magazine/the_25_greatest_legal_tv_shows What’s your favorite TV law show? Are there any tax lawyers on TV?

taxgirl says:

I did see it, thanks. Um, my favorite? I used to love LA Law – what a great cast! I also used to watch Perry Mason reruns with my grandfather and Matlock since it was filmed in my hometown. In law school, I watched Ally McBeal and The Practice even though they were completely unrealistic. I actually don’t watch any legal shows now that I practice, they drive me nuts.

I can’t think of any tax lawyers on TV off the top of my head. My guess is that the work doesn’t seem glamourous enough. “Watch me research this deduction!” It just doesn’t have the same on air appeal as, say, defense work. But hey, Hollywood, I am available. ;)

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That was fun and the mailbag is a little bit lighter now… Thanks for writing in!

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Phillies v. Van Gogh: Culture Goes to War in Philadelphia

October 5, 2009 · 0 comments

Philadelphia is a town known for its scrappy sports teams and its passionate fans. We’ve collectively cheered our world champion Phillies and wrung our hands over last minute Eagles’ losses. We’ve booed the drafting of Donovan McNabb, cheered Brad Lidge, mourned our beloved Harry Kalas and thrown snowballs at Santa. We’ve stood along Kelly Drive and screamed for half-marathoner Ryan Hall and cyclist George Hincapie and endeavored to catch a glimpse of Bill Cosby at the Penn Relays.

It’s rare that the worlds of sports and art collide in Philly in any kind of remarkable way. Until last month, the biggest challenge as between the two was figuring out where to put the infamous Rocky statue: it’s not quite art but reportedly, art museum attendance plummeted when the statue was moved to the sports complex. (It’s now back home at the museum.)

But that was before Harrisburg got involved. The state budget deal, which allowed Philadelphia to increase its sales tax by a penny in an effort to keep the city going, has one teensy little provision that’s getting quite a bit of press: an extension of the state sales tax to cultural performances and venues. Cultural performances and venues applies to the arts and music – but not to sports or movies. So yes to taxing the Cezanne exhibit at the Philadelphia Museum of Art, no to taxing “Zombieland” at the cinema. Hmm.

The deal would call for the creation of a special new fund for cultural institutions and the arts, including museums, orchestras, dance venues, theaters and zoos, previously budgeted as part of the general fund. Money from the general fund to the arts has already been cut due to budgetary restrictions and some venues, like historical museums and sites, have seen their budgets eliminated.

The idea is that *some percentage* of the the new tax (lawmakers have been silent as to the exact amount) would be used to establish the fund – it’s a bit unclear where the rest of the money would go. State Republicans, who had previously opposed new taxes, insisted on the tax expansion in reaction to revenue shortfalls. Supporters of the arts looked to Gov. Rendell (D) for help, but he suggested that tax increases were inevitable, with his spokesman claiming “we cannot do a budget without pain.”

In a cash strapped year, with revenues down, cuts are to be expected. Many in the City, myself included, admitted that they would prefer to see an expansion of the sales tax to save the arts over cutting other services, like police. But why not movies and sporting events?

One city resident that I spoke with suggested that it felt like “rural Pennsylvania’s chance to thumb its nose at the City” since a majority of the tax would be created and spent in Philadelphia. An interesting take, for sure, but not quite accurate. The tax would apply across the board to arts and cultural venues in the state. It would not just affect the Philadelphia Museum of Art and the Pennsylvania Ballet but also the Elmwood Zoo and the Michener Art Museum. It would not, however, affect the Eagles or the Steelers. You have to wonder why not.

Groups across the state have been working to scale back the tax expansion with varying amounts of luck. There have been, at times, rumors that the tax may now exclude nonprofits but include for profits; that zoos and museums may be excluded; that concerts at stadiums may be included but those at an actual hall may not… Rumors, all, and nothing substantiated. In fact, at this point, we’re not at all quite sure what will come out of any compromise bill.

Of course, it’s worth noting that our neighbor to the north, New York, decided not to tack on an additional tax for tickets after those who worked in the arts noted the domino effect that the tax might have. Reduced ticket sales means fewer customers for restaurants, hotels and retail shops. Fewer customers means lost revenue – lost revenue means layoffs. Layoffs mean less wage and income taxes. You get the picture.

It’s easy to think that tax cuts – and tax increases – happen in a vacuum but they don’t. Taxes are an integral part of our day to day lives. How we choose to prioritize those taxes, I think, says a lot about us.

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Philadelphia Closes Its Doors

September 11, 2009 · 7 comments

Philadelphia joined a host of other cities and towns – as well as states – across the nation hanging up “closed” signs on government funded institutions. Just months after Chicago ordered non-unionized employees to take unpaid furloughs and Hawaii warned of state employee furloughs, signs on Philadelphia public libraries and recreation centers warned of impending shut downs. The Free Library of Philadelphia, which once held the world’s largest circulation of books, warned:

As a result of the state budget crisis and legislation impasse, the entire Free Library of Philadelphia system is set to close October 2nd.

So, how did it come to this? Shutting down libraries, recreation centers, and other services? These shut downs are on top of other recent shutdowns (including my local firehouse).

Of course, there’s a budget crisis. Not enough revenue coming in. We get it, we’ve heard similar horror stories in other places. The recession has hit state and local coffers hard – not a day goes by practically that you don’t hear the Governors of New Jersey or California warning about budget shortfalls.

But in Philly, we have something worse than revenue shortfalls: the dreaded “legislation impasse.” And here’s how it works…

Philly needed extra revenue. After considering a host of options, Council and the Mayor agreed to a “temporary” (*cough*) increase in the sales tax of 1%. In Pennsylvania, the sales tax rate is currently 6% with a 1% increase in Philadelphia. So if you spend your dollars in Philly (and we certainly hope that you do), you pay 7% sales tax. With the additional increase, Pennsylvania sales tax would remain at 6% but Philadelphia sales tax would increase to 8%. Even with the additional increase, the sales tax would remain below that of other major cities, including Chicago, New York City and Los Angeles.

So, with that in mind, everyone nodded agreeably and the proposal was made to the Commonwealth that the sales tax be increased. Under the Pennsylvania Charter, increases in sales tax must be approved by the state legislature. Philadelphia submitted its proposal and held its breath.

The legislation was approved in the House. The increase would allow Philadelphia to raise its sales tax and temporarily defer pension payments. When it made it to the Senate, the legislation was amended to allow the state to step in and manage “Level 3 distressed municipal pensions.” Level 3 pensions are those funded at less than 50% – in Pennsylvania, currently Pittsburgh fits that bill, coming in at just 31% funded. The Senate also insisted on a pension freeze and reductions in benefits for incoming municipal workers.

And that’s where the sales tax increase got de-railed. The GOP won’t vote yes on the sales tax increase unless the other concessions are included. The Democrats, facing considerable pressure from organized labor, won’t agree to include the cost-cutting provisions. The result? A legislative impasse.

What’s a legislator to do? Here’s a thought: make them separate issues.

The GOP and the Dems both agree on a sales tax increase for Philly. City Council and the Mayor agree on a sales tax increase for Philly. Should be end of story.

But politicians like the idea of leverage. They like the notion that they can hold bills hostage while tacking on new, controversial and generally unrelated measures (that’s why, for example, the credit card reform bill that passed Congress this fall included language to allow concealed weapons in national parks). And so Senate Majority Leader Dominic Pileggi (R – Del) has said that there will be no compromise to split the bill.

Hey, I like Pittsburgh – but what does their distressed pension system have to do with my Philadelphia sales tax? Exactly. Nothing.

So, while legislators in Harrisburg argue about pension plans and benefits for union workers, signs are being tacked up on libraries announcing closures. Trash pick up may be reduced in the City. Letters informing workers that they’ve been let go are going out next week (a good friend has advised that her entire department will be receiving them). The Fire Commissioner will announce six engine and three ladder companies, plus five medic units, which will close. Two health centers are closing. Thanks, Harrisburg.

If you live in Philly, you should be angry. Angry that this has been allowed to happen. And if you live further afield – whether in West Chester or Pittsburgh – or even in Boise, Idaho, you should be concerned that so much of our tax policy has nothing to do with taxes at all: it’s about politics.

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Will Eagles Score With Tax Credit – and Vick?

August 27, 2009 · 2 comments

vick.jpg

In just a little under three hours, the Philadelphia Eagles will hit the field for the third of their four pre-season games. So far, they’ve given their fans nothing to cheer about. They have, however, given them plenty to talk about – not the least of which is the signing of former bad boy (and felon) Michael Vick.

Michael Vick, who pleaded guilty to “Conspiracy to Travel in Interstate Commerce in Aid of Unlawful Activities and to Sponsor a Dog in an Animal Fighting Venture”, is set to make his Eagles debut tonight against the Jacksonville Jaguars. The debut follows a conditional reinstatement for Vick by NFL Commissioner Roger Goodell.

Several teams expressed interest in Vick who had made quite a splash in the NFL during his early tenure. He still holds records for the most rushing yards by a quarterback in a single season (1,039 in 2006), highest average per carry in a single season (8.45 in 2006), 100-yard career rushing games by a quarterback (eight), best two-game rushing total (225 in 2004) and rushing yards in a single game (173 in 2002). But in a move that stunned almost everybody (including this Eagles fan), the Philadelphia Eagles signed Vick to a 2 year contract. Yeah, I thought he was going to the Steelers, too.

As it turns out, it’s a move that the Eagles could have received some tax benefits for… The Eagles could have recuperated some of the $1.6 million contract with Vick via a $10,000 tax credit offered to employers by the Mayor’s Office for Re-entry of Ex-Offenders (MORE). The credit was added to the existing program (which includes opportunities for education and job training) to encourage businesses to hire ex-offenders. So far, reportedly only six businesses have taken advantage of the credit. Would the Philadelphia Eagles be lucky #7 (ironic, since that’s Vick’s Falcons number)? Not this time. A team spokesperson told the Philadelphia Daily News that wasn’t going to happen.

But the move has put a new emphasis on the tax credit. According to the Mayor’s Office, there are approximately 298,400 adults living in Philadelphia who have a criminal background and who are technically ex-offenders. That’s more than a quarter of a million people. A quarter million potential employees. A quarter millions potential taxpayers. A quarter million potential actual contributing members of society.

Or we could just continue to pump money into the prison system by choosing to pretend that it’s not a problem (approximately 40% of offenders go back to jail, as high as 70% in California).

Philadelphia is opting for the former and choosing to believe in second chances – in more ways than one. Statistics suggest that ex-offenders with sustainable jobs remain ex-offenders, a finding that isn’t lost outside of Philadelphia. Kansas, Illinois and Iowa are just a few of the states that offer similar programs. The feds also offer an incentive in the form of a Work Opportunity Tax Credit. A business which hires a qualified ex-felon (defined as “an individual who has been convicted of a felony and has a hiring date which is not more than one year after the last date on which he was so convicted or released from prison”) may be entitled to a federal tax credit in the amount of $2400. Other target groups, including disabled vets, are also included in the program. George W. Bush re-authorized the bill in 2006 and expanded in 2007, once remarking, “America is the land of the second chance – and when the gates of the prison open, the path ahead should lead to a better life.”

While the Eagles take a pass on this tax break, maybe other local employees will give it a second look.

But for tonight, are you ready for some football?

Hat Tip: @jmnaylor via Twitter

(Image by Keith Allison from Baltimore, USA under Creative Commons Attribution ShareAlike 2.0 License)

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Philadelphia Struggles With Revenue Woes

1 May 2009

Philadelphia has joined a long list of US cities grappling with budget woes in the midst of falling revenues and increased expenditures. This week, things grew more dim as Mayor Nutter and City Council failed to work out a compromise to address the deficit.
There is no question that taxes will increase: it’s [...]

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Last Minute Filers: The San Francisco Treat

15 April 2009

Maybe it’s the sunshine that makes folks in San Francisco put off filing until the last minute… Whatever it is, San Fran topped the list of cities with the most residents stalling until the very.last.second to do their taxes.
Which cities rounded out the list? I’m proud to say that Philly didn’t make the [...]

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taxgirl on Good Day Philadelphia

26 March 2009

In case you missed my appearance on Good Day Philadelphia this morning, you can watch it here:

And yes, I move around a lot.
And yes, my hair is tucked behind my ear funny.
And yes, Sheinelle really is that pretty in real life.
And yes, I was super nervous (to quote my mom on the phone afterwards, [...]

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I’m in the Philadelphia Inquirer!

5 February 2009

In case you missed it, I was interviewed for today’s front page of the Philadelphia Inquirer. You can read the article, titled Tax Revelations of Rich, Powerful Irk Honest Filers, here.
I was asked to comment about how everyday taxpayers were reacting to the scandals swirling around Obama nominees Geithner, Daschle and Killefer, each of [...]

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Happy New Year!

1 January 2009

Be always at war with your vices, at peace with your neighbors, and let each new year find you a better man. – Philadelphia’s own Benjamin Franklin
Happy New Year!

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Fix the Tax Code Friday: Property tax abatement

19 December 2008

It’s Fix the Tax Code Friday!
Earlier this week, the Philadelphia Inquirer ran an article about an issue that has been on the minds of many local taxpayers as the city prepares for major cuts in services: real estate tax abatement. Many municipalities – from major metropolitan areas like Philly and NYC to smaller [...]

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