All of the mayoral candidates want to eliminate the gross receipts portion of the BPT, with different plans for elimination (Brady), reduction (Nutter and others), and increase (Fattah) of net profits. But the whole raison d'etre of a gross receipts tax is to reduce the likelihood of tax evasion, whether by companies that underreport their profits or larger companies who can shift their profits out of town or out of state.

The gross receipts tax strikes a lot of people as being inherently unfair, and others as disproportionately hurting startups and smaller businesses. But it has a strategic value, especially in a city that has real trouble with tax collection. Why isn't any candidate saying, "We need to reduce the BPT. But let's keep at least a reduced gross receipts tax, so that companies who do business in Philadelphia have to pay taxes in Philadelphia. I'll give a time and dollar exemption to new businesses and businesses with fewer than five employees. And instead of eliminating gross receipts, I'll begin reducing the net profits part of the BPT to make our taxes more competitive: 6 percent next year, 5 percent by 2011, 4.5 percent by 2015. But nobody is getting away without paying their fair share."

Note that this would be the exact opposite of Fattah's plan to restructure the BPT. But any of the candidates' plans to eliminate gross receipts poses a real risk that the revenue will simply disappear.

It would also bring Philadelphia closer to the tax structure of the suburbs, especially in Pennsylvania. Plymouth Township, for example, has a business privilege/mercantile tax on gross receipts of 1.5 mills, with a manufacturing exclusion, and a wage/net profits tax of 1%, with (much) higher property tax rates. The gross receipts tax doesn't seem to be hurting business out there -- in fact, that's where a lot of Philadelphians in the Northwest work and do their shopping.

(Cross-posted at Once More, With Feeling, or Why Progressives Should Have Trouble With the BPT.)

Supporting Michael Nutter for Mayor.