The Administrative Tax

There's a fee you pay to the city in dollars, and a fee you pay in time. The dollar fee is the wage tax, the property tax, the business privilege tax — visible, debated, line-itemed in the budget. The time fee is invisible. It runs on the hours you spend filling out forms, calling 311, waiting on hold, scheduling inspections, and complying with processes that produce nothing of value to you. Philadelphians pay the time fee every year. It is not on any form. It is, in a meaningful sense, the second-largest tax in the city.

The categories are ordinary. Rental licenses, building permits, code violations, business licenses, property tax appeals, deed recordings, vital records. Each of these is a real thing the city has to do — keep track of who's renting what, document ownership transfers, register births and deaths, make sure buildings are safe. None of them are illegitimate. The complaint is not with what the city is doing. The complaint is with what the city is asking of the people on the other end of the process.

The numbers, when you look, are not small. OpenDataPhilly, the city's own open data portal, lists 286,711 rental licenses, 918,761 building permits, 1,977,188 code violations, and 113,683 active business licenses in the system. These are not projections; they are what the database says. Each of those entries is somebody's time. Many of them are yours.

The way the system works is mostly the way a queue works. You submit an application. The application goes into a queue. The queue has a length. The queue moves at the speed the queue moves. If the queue is short, your application is processed quickly. If the queue is long, you wait. The waiting is the city's tax, even though nobody calls it that. The city does not charge you for waiting. The city does not acknowledge that you are waiting. But the time you spend waiting is real, and the things you could have been doing with that time are real, and the value of those things is real.

There are two kinds of time in the system. There's the time you spend, and there's the time the city spends. Both are real labor. The BLS says the average Philadelphian makes about $32.80 an hour in total compensation — wages plus benefits, the whole number. The city's own staff are paid on a different scale, but the same principle applies. Every form you fill out is somebody's hour. Every inspection that gets rescheduled is somebody's hour. Every plan reviewer who asks for a clarification is somebody's hour. The hours are not the same kind of hour, but they are all hours, and they are all spent on the work of asking permission.

The work of asking permission is the second tax. Add up the hours — for the rental license renewals, the building permits, the code violations responses, the business license filings, the property tax appeals, the deed recordings, the vital records — and the total is around half a million hours a year. At the BLS wage rate, that is roughly $17 million a year in free labor, extracted not through legislation but through forms. That figure is dwarfed by the city's actual budget. But the figure is paid in a currency that is harder to come by than dollars. It is paid in the time of the people who live here.

The implications are not abstract. The landlord who spends forty-five minutes on a rental license renewal is not just losing forty-five minutes; she is losing the forty-five minutes she would have spent on something else — fixing the building, returning a tenant's call, looking at a new property. The contractor who waits weeks for a permit is not just waiting; he is waiting while his customer's project is on hold, while the architectural fees accrue, while the rent on the storefront goes unpaid. The restaurant owner who spends months navigating the city's licensing process is not just navigating; she is months behind on the work of actually running a restaurant. The cost of the system is the cost of the things the system prevents.

This is what makes the second tax different from a normal tax. A normal tax you can plan for. You can save for it, account for it, build it into your pricing. The second tax is harder to plan for, because the second tax is not a number on a form. It is a delay. It is a portal that won't load. It is an inspection that gets rescheduled three times. It is a plan reviewer who asks for a clarification that wasn't in the original spec. The second tax is the friction of being a Philadelphian who is trying to do anything — fix a roof, open a business, keep an apartment legal, transfer a deed, record a birth. The friction is invisible in the budget. The friction is visible in the lives of the people who pay it.

The friction is not on purpose. The people at the city who process the applications are not trying to slow things down. They are working a queue of applications from people who are trying to do the same things the applicant in front of them is trying to do. The friction is the queue. The queue is the city's capacity, and the city's capacity is what the city's capacity is. The city is not slow on purpose. The city is slow the way a river is slow.

But the slow river, every year, extracts a fraction of the year from each of the people who depend on it. The fraction is not a single number. The fraction is the cumulative effect of every form filled out, every inspection rescheduled, every call returned, every plan reviewer who needs another detail. The fraction is what it costs to live in a city whose systems are running at the speed the systems can run.

The fraction has second-order effects that are harder to measure but easy to feel. When a landlord spends an extra week on a license renewal, the unit is empty for that week. When a contractor waits months for a permit, the project is delayed by months. When a restaurant spends a quarter on the licensing process, the restaurant opens a quarter late. The cost of the friction is the cost of the things that didn't happen on the schedule they would have happened on, if the friction weren't there. In aggregate, the friction is what it costs to be a Philadelphian who is trying to do the things the city wants you to do.

What the friction does, more than anything, is decide who gets to participate. A small landlord with one property can absorb a forty-five-minute renewal. A small landlord with twenty properties absorbs fifteen hours of renewals, every year, for the privilege of staying in compliance. A landlord with one hundred properties absorbs seventy-five hours, and the math starts to compete with the math of hiring a property manager, or selling, or simply not renewing — which is to say, the math starts to push people out of the rental market, and the rental market tightens, and rents go up. The same is true at every level. The contractor who has a bookkeeper to handle the licensing can absorb a three-month wait. The contractor who doesn't, can't. The restaurant owner who has a lawyer on retainer can navigate the city's processes. The restaurant owner who doesn't, opens later, or doesn't open at all.

None of this is on purpose. The people at the city are not trying to push small landlords out of the market. The people at the city are not trying to keep restaurants from opening. The friction is what the friction is. The friction is the queue, and the queue is the city's capacity, and the city's capacity is what the city's capacity is.

But the friction, in the aggregate, is not neutral. The friction is heavier on the people who have less of a buffer. The friction is heavier on the small landlord than on the institutional one. The friction is heavier on the single-location restaurant than on the chain. The friction is heavier on the immigrant business owner who is navigating the system in a second language than on the native English speaker. The friction is heavier on the renter who is trying to file a property tax appeal than on the homeowner who can hire a lawyer. The second tax, in other words, is regressive. The second tax is a flat per-unit-of-form cost that the city's flat-dollar fees are not.

This is the second tax we all suffer. We don't vote for it. It's too invisible to be a campaign topic. And so, every year, it devours a portion of our lives, racking up a secret bill no one accounts for.