The Regressive Revenue Machine

Philadelphia's city government has a problem. The School District faces a $300 million structural deficit, and the options on the table are not the ones you'd design if you actually cared about fairness in revenue collection.

The mayor wants a $1 per ride tax on Uber and Lyft trips. The revenue: $48 million annually starting in fiscal year 2028. The money would save 240 school-based positions — 130 teachers, 55 student climate staff, and others. That's real. The positions are real. The need is real.

But here's the thing: a $1 per ride tax is regressive. It hits the person taking an Uber to a doctor's appointment in West Philadelphia just as hard as it hits the Center City professional taking one to dinner. Gig workers who drive for a living see their costs go up. Commuters who don't have cars and rely on ride-share to get to work pay the tax. The people least able to absorb a new tax burden are the ones writing the check.

And the city has another option, one that never seems to make it into the press release. The timing of what does make it into a press release tells its own story — the Friday 4:47pm drop is a calculated move to dodge scrutiny. I wrote about the Friday news-dump playbook in a separate piece.

As of fiscal year 2025, the City of Philadelphia had $214 million in active principal real estate tax debt outstanding. That's up 9% from the prior year. 55,557 parcels are delinquent. The city's own Department of Revenue reports that the collection pipeline is working in places — they've collected 20% of actionable debt internally, 65% through an outsourced collection agency, and 14.5% through Sheriff Sales. That 65% outsourcing is a tell: the city's own Department of Revenue isn't the one doing most of the collecting.

And here's what makes the rideshare tax proposal so frustrating: the city isn't just missing on new revenue. They're missing on money that's already been billed. The same Department of Revenue whose appeals and payment-plan pipeline is fueling the delinquency growth is now asking gig workers and delivery customers to fill the gap.

Meanwhile, package delivery taxes are being proposed to fund "pothole squads." Amazon- and Google-backed industry groups are lobbying against the fees, citing the impact on disadvantaged residents and workers. They're not wrong. Every 25-cent delivery fee gets passed into the price of goods. It hits the working-class consumer who shops online because they don't have a car to get to the store. Philadelphia’s regressive tax menu is longer than just rideshare — the city also runs a $2-per-pack school-district cigarette surcharge that is structured as a revenue workaround for exactly the same reason.

I spent my career fixing broken balance sheets. And the pattern I see here is the same pattern I've seen in failing organizations: when you don't have the administrative capacity to collect what's already owed, you go looking for new revenue streams that are easier to capture. The rideshare tax is easy to capture. The package delivery fee is easy to capture. They're visible, they're measurable, and the people paying them don't have a budget lobbyist in City Hall.

The property tax delinquent who owes $10,000 on a rental property — they're harder. They might have a lawyer. They might be in bankruptcy. The city's Department of Revenue has to work a case for months to collect what a $1 Uber surcharge collects in a single transaction.

But here's the arithmetic reality: you cannot tax your way to structural balance when you're leaving nine figures on the table in uncollected existing obligations. You can't squeeze gig workers to make up for a collection system that lets assessment appeals and payment plans balloon. You can't pass a delivery fee and call it fiscal responsibility while $214 million sits uncollected in delinquent property taxes.

The solution isn't a new regressive tax. It's an aggressive tax collection modernization. Go after the $214 million. Simplify the delinquent tax process. Cut the sheriff sale timeline. Hire the revenue officers. Build the data infrastructure to catch delinquents earlier instead of watching the balance grow 9% last year.

And for the schools: the District's preliminary FY2027 budget cuts $169 million from the central office and roughly 130 vacant central-office positions. Superintendent Watlington has called the central office "already a very lean" operation — but if there's $169 million in cuts available there, the question of what we cut from the top of the org chart deserves more airtime than new taxes on gig workers.

City Hall pleads poverty and taxes your Amazon delivery or your Uber ride to work, while letting tens of millions of dollars slip through the cracks of a collection system that can't keep up with appeals and payment plans. We don't need new regressive taxes. We need a tax collection system that actually collects — and the will to fund it.