Measuring the Efficiency, Equity, and Success of Philadelphia’s Residential Property Tax Abatement
Philadelphia’s 10-year property tax abatement program is a tax expenditure meant to stimulate economic development through residential construction and renovation. In an era when many cities appear to be experiencing renewed growth after the urban decline of the late 20th century, it may be time to reevaluate these sorts of economic development policies. This article explores three possible ways to evaluate Philadelphia’s tax abatement as a case study for other cities with similar programs and asks whether it is the appropriate time to either restrict or end the program. The article assesses the abatement for its efficiency and equity, but most importantly, for whether and how well it achieved its goals. Based on this evaluation, Philadelphia’s policy does not hold up well against the efficiency and equity criteria and its goals are either too broad to measure, or impossible to evaluate without a similar city to compare against. As a part of the analysis, the author considers the key questions of how much of the city’s real estate comeback is directly due to the abatement and how to best reshape the policy to target Philadelphia’s goals in 2018. The article also presents examples of abatement policies from other cities as models of how to shape such programs to fit a local context. The author finds that Philadelphia and cities with similar policies should look to other cities’ targeted abatement programs and evaluate local priorities for growth when considering restrictions or terminations of their programs.