Helping Philly Based Businesses, Creating and Retaining Philly Jobs

At the Philly for Change meet up on Wednesday I promised to post the power point on YPP regarding the business privilege tax changes proposed by Maria Q. Sanchez and myself. There were 15 co-sponsors total.

Key features are:

Large multinationals pay more as they can't legally avoid the gross receipts tax like they can the net income tax

50,000 of the 84,000 tax payers will be taken off our tax roles as a result of our exempting the first 100,000 of revenue

Philadelphia based firms benefit

See attached for detail.

Bill

Thanks, Councilman!

You're a man of your word. Thanks for visiting us during a playoff no-hitter too. It was a fascinating talk.

When I do good, I feel good; when I do bad, I feel bad, and that is my religion.
--Abraham Lincoln

sam@dogoodprojects.com

Good To Have Industry By Industry Breakdowns

It would be good to have industry by industry breakdowns of how the tax burden is affected by this proposal. It seems to raise taxes on large low volume/high profit businesses targeting low and moderate income consumers, and lower taxes on small volume/high profit businesses targeting the more affluent. Taxes on the sale of used cars should go up, while taxes on the sales of new luxury cars should go down. Taxes on high-volume neighborhood law firms should go up, while taxes on corporate firms may well go down.

It certainly raises the taxes on high volume/low margin retail industries, such as supermarkets, fast-food outlets, and department stores. My legislative district has one of the larger shopping complexes in the city at Castor and Cottman Avenues,and major shopping complexes at Front and Olney Avenues and across from Friends Hospital on Roosvelt Boulevard across from Friends Hospital, and it is clear that taxes on these high volume/low margin businesses would generally go up.

The decline of the urban supermarket has been a major focus of public attention. Pennsylvania has developed a program that subsidizes the construction of supermarkets, because of health concerns raised by their declining numbers. This program has received national attention, because the decline of urban supermarkets is nationwide. Raising the taxes on endangered supermarkets seems likely to have unintended consequences that will work against the goal of bringing new supermarkets to the city.

The regressive effects of this bill are somewhat mitigated by the $100,0000 exemptions for small businesses. But these small businesses inherently pay very little taxes now, as they often lose money and have very short existences.

The addition of a discussion on state corporate income taxes to the discussion in the supporting documentation shows the influence of corporate lobbyists more than anything else. The fact is that the vast majority of Pennsylvania corporations are Subchapter S corporations, owned by a small number of people, and taxes at the 3.07% personal income tax rate, not at the much higher corporate income tax rate.

This is very complex stuff

and I'm not ready to say exactly where I stand on it. Your request for an industry by industry breakdown, however, is a sensible one. Another key effect of the proposed tax shift should also be revealed, namely how much of the overall business tax share would shift to out of City businesses. To the extent that the shift is large, the overall tax share paid by Philly-based businesses would be reduced, although there would still be some local businesses that do better than others. We need to know the impact on "foreign businesses" for another reason besides knowing how local businesses will be affected. Getting out of City businesses that sell into the City to pay their fair share of the BPT -- if that's what this proposal does -- would be extremely helpful in funding currently threatened City services.

Progressives have a challenging task in evaluating local taxes. We want them to be fair and to fall primarily on those who can pay. But we also need them to be substantial enough to keep our City functioning in a political climate that makes it increasingly unlikely that we will get the support from other governments that we need. So a tax structure that is not as fair as we would like might still be worthy of support if it keeps essential City services alive. Hopefully when we get the details of this proposal we will find that both equity and revenue robustness are present. If not, we will have difficult choices to make.

Btw, these comments are strictly my own and don't necessarily reflect the views of any organization that I belong to.

Multinationals

I think it does make sense not to treat everyone the same way and that large multinationals have some kind of special treatment to make up for all the advantages they do have (like being able to finance lobby groups, etc.) online casino

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