New effort to eliminate the BPT coming

You would think that, with the Nutter administration securing a substantial victory on tax policy, talk of the “job-killing business tax” would be on the decline.

But that awful tax is not yet dead—only the Gross Receipts portion of the tax is slated for elimination and the reduction in the Net Profits portion of the tax will come more slowly than desired by both Brett Mandel of Philadelphia Forward and the Philadelphia Inquirer. So the Inquirer and Mandel have been working together on a project to keep the terrible consequences of the BPT in the minds of the citizens of Philadelphia.

The first article to be influenced by this collaboration appeared today in a discussion of the factors that might help or hinder the creation of the fourth tallest building in the United States. (Inquirer June 29, p D1.The article is not yet on-line.) Reporter Linda Loyd points out that one reason the project might not be realized is the BPT. She quotes the potential developer Garrett Miller who says that “The business privilege tax is a very confusing tax; It’s onerous.”

Now one would think that this argument would be taken skeptically by a reporter in a city that has seen continuous large scale development over the last ten years in its central business district despite the tax. But, in line with the Inquirer’s policy of blaming the BPT for every ill in the city, Loyd never questions the point.

This is only the first of a series of articles that will point to the hidden costs of the BPT.

Another will point to conclusive evidence that the BPT is a major cause of the high drop-out rate in Philadelphia schools. Shelley Yanoff, of PCCY, is quoted in the article saying that “We have long known that student achievement begins to sink in the middle school years. Now we know the reason: it is only in the middle of seventh grade that students come to learn about the BPT. And, once they hear about it, they know that their economic future will be severely limited by that education-killing tax. They lose all incentive to study, their grades plummet, and they wind up on the path towards dropping out.”

And, when they leave school, where do they go? Many of our young people wind up selling drugs or engaging in other illegal activity. Why? Because of the BPT. In another article in the series, Commissioner of Police Charles Ramsey will explain how our tax structure “drives entrepreneurial young men and women into illicit activities.” “So many young people have a drive to succeed,” he explained, “but with the onerous legitimate-business-killing BPT in Philadelphia, it makes no sense for them to try to start a legal business. So selling drugs, prostitution, and other illegal activities that escape from the BPT become the main outlet for all this entrepreneurial energy.”

Another path too many entrepreneurial minded people take is into one that corrupts government. “Look at all the non-profits that surround our politicians, that pay their supporters outrageous salaries for little work and that exist only because of government grants and subsidies,” points out Irv Ackelsburg, who ran unsuccessfully for City Council against Donna Reed Miller last spring. “If not for the honest-government–killing-BPT people would be engaged in productive activities instead of creating make-work positions at non-profits that only pretend to help people,” Ackelsburg concludes in the article

Ending the BPT would also improve health care. While Marc Stier of SEIU has been writing a series of op-eds against the Republican plan to enlist volunteer doctors to provide health care for the uninsured, he admits in an upcoming article that, “if not for the health-care-killing BPT, the plan would actually work in Philadelphia. If medical practices did not have to pay this burdensome tax, they would be doubling or tripling the hours they volunteer to provide health care for the uninsured. Brady Russell of PUP adds, “I’ve been told off the record that Temple University Hospital is prepared to voluntarily give a free heart transplant every week to a needy Philadelphian if the BPT were eliminated.” Reminded that Temple is a non-profit that does not actually pay the BPT, Russell points out that in this case, as in many others, the effect of the health-care killing BPT may be indirect but is critical nonetheless. “All the suppliers of Temple, including those that make the equipment used in the surgical suites do pay the tax. With all the new business created by the elimination of the BPT, they would be in a position to make advanced medical procedures available to the uninsured for free.”

The Parks would also benefit if the tree-killing BPT were eliminated. “We talk all the time of how taxes effect the business climate,” says Philadelphia Parks Alliance president Pete Hoskins. “And we know that climate has a tremendous effect on plant growth. But it is only in recent years that we have begun to understand the linkage between high business taxes and the growth of trees and shrubs. Eliminating the BPT would create a climate in which our everything in our park--except weeds--would double their annual growth rates.”

It is, so far, too soon to tell how this new anti-tax effort will change the direction of the Nutter administration. But, already, Nutter advisor Terry Gillen is talking about scrapping much of the second year agenda of the Nutter administration and, instead, focusing all attention on another assault on the BPT. “We are only just beginning to understand the many ways in which the BPT is responsible for most of the ills of this city” she has confided to an acquaintance. “Pretty much everything we hope to accomplish—improve the schools, reduce violence, end government corruption, improve health care, and tend to our parks—can be better accomplished indirectly by eliminating the BPT than directly by government action.”

The dry tone is good

Understatement is the soul of sarcasm but still I wonder if this piece might work better if re-edited and submitted here.

-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Needs to be edited?

Not at all. The list of virtous things Mr. Blum could have cited as being directly endangered due to the BPT is much longer than what he offered. He should be commended both for his understated tone, and his brevity.

Serious tip

You would think that, with the Nutter administration securing a substantial victory on tax policy, talk of the “job-killing business tax” would be on the decline.

But that awful tax is not yet dead—only the Gross Receipts portion of the tax is slated for elimination and the reduction in the Net Profits portion of the tax will come more slowly than desired by both Brett Mandel of Philadelphia Forward and the Philadelphia Inquirer. So the Inquirer and Mandel have been working together on a project to keep the terrible consequences of the BPT in the minds of the citizens of Philadelphia.

The first article to be influenced by this collaboration appeared today in a discussion of the factors that might help or hinder the creation of the fourth tallest building in the United States. (Inquirer June 29, p D1.The article is not yet on-line.) Reporter Linda Loyd points out that one reason the project might not be realized is the BPT. She quotes the potential developer Garrett Miller who says that “The business privilege tax is a very confusing tax; It’s onerous.”

Now one would think that this argument would be taken skeptically by a reporter in a city that has seen continuous large scale development over the last ten years in its central business district despite the tax. But, in line with the Inquirer’s policy of blaming the BPT for every ill in the city, Loyd never questions the point.

This is only the first of a series of articles that will point to the hidden costs of the BPT.

The fact based part of this post is about speculation over whether Philly can really support its newest planned hi-rise office building / hotel. Regardless of one's opinion of the finer points of the gross receipt tax, generally real estate development in Center City has been stronger in the residential sector than the office sector. Comcast and CIRA both depended on significant tax incentives. Just curious if anyone in this thread can name when the last large new non-Penn affiliated office development in the city that did not involve some sort of major tax subsidy / incentive was.

-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Its worse than you think

Brett Myers blames the BPT for his loss of confidence in his fastball.

That's why Wilson Goode

was trying to figure out a way to reduce the BPT for starting pitchers during the tax debate this year. However, the uniformity clause prohibits any tax break going to starting pitchers but not relief pitchers. In fact, it is not clear we can give a tax break to baseball players without also helping....this is really beyond the pale...soccer.

And has anyone noticed

The more talk there is about reducing the BPT, the more Ryan Howard strikes out? Coincidence? I think not.

So

I realize this diversion into humor is probably part of the summer doldrums and I should probably just let sleeping dogs lie but what is One Philadelphia's take on Keystone Opportunity Zones? Are they tax subsidies to developers to primarily move lawfirms already located in older CC office buildings into bright shiny new tax sheltered ones? Do they really attract enough new wagetaxes and other revenue to the city to offset the movement of businesses from buildings where they do pay other forms of taxes to buildings where they don't?

I know that is how representatives of many of the owners of those older office buildings portray the issue and there is some controversy generally. I was just honestly curious on Stan's and Leon Blum's take, how it fits in with the whole BPT debate. It may have been previously talked to death and I just missed it so pardon if the question seems repetitive.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Can't speak for One Philly on this one, but

My own view is that cheaper land and central location are the main reasons for the Philly office tower boom. Even the Inky admitted in one of its columns Sunday -- next to the one Leon cited -- that Philly "remains a bargain compared with Washington, Boston and New York." Further it noted this in weighing how likely it was that a major new skyscraper would be built at 18th and Arch:

Soaring gasoline prices further urban development. Situated in the heart of a lucrative metro region, blessed with its transit system and regional highway network, the site is accessible to a three-state work-force. Major employers considering Blue Bell or Exton might find strategic advantages to being downtown. Stories about the death of the suburbs are already appearing in the national press.

I think Philly leadership needs to get over their inferiority complex and realize what a jewel this city is, one that no decent, smart, profitable company should shy away from for any reason, much less the puny BPT. Revenue from the BPT is part of what keeps it the great location that it is. And companies should and will pay that tax, if we don't approach them as helpless and hopeless beggars.

And that ain't satire.

So about the KOZ's

The next big towers actually being built - CIRA II (as opposed to 18th & Cherry which is still hypothetical) on the postal land behind 30th St Post Office is a KOZ. That means no BPT for any corporation or law firm that moves there for around a decade.
Actually more than that:

Tax Liability

Binding ordinances and resolutions were passed granting the waiver, abatement or exemption of certain state and local taxes. Depending on the situation, the tax burden may be reduced to zero through exemptions, deductions, abatements, and credits for the following:

* State Taxes: Corporate Net Income Taxes, Capital Stock & Foreign Franchise Tax, Personal Income Tax, Sales & Use Tax, Bank Shares and Trust Company Shares Tax, Alternative Bank and Trust Company Shares Tax, Mutual Thrift Institutions Tax, Insurance Premiums Tax
* Local Taxes: Earned Income/Net Profits Tax, Business Gross Receipts, Business Occupancy, Business Privilege & Mercantile Taxes, Local Real Property Tax, Sales & Use Tax

CIRA I was a KOZ. The Navy Yard is a KOZ. The Comcast building not a KOZ but they were given special tax dispensations as an incentiive to build - including on the BPT.

Only about 30% of CIRA was businesses not already located in Philly as I recall so an awful lot of the companies moving in moved across town specifically to avoid the BPT, so I was expecting a more substantive answer on the whole moving around town chasing the KOZ issue.

But yeah Philly is a great town, woohoo.

Have you ever considered running for office yourself, Stan? I ask because your answer here shows a masterful execution of the "skirt the meat of the topic while wrapping yourself in local pride/patriotism" technique. You might be a natural.

-Sean
MrLuigi, my cat, actually only types half as badly as I do.

To recap

Some of the other office building owners opposition to tax deals for Comcast:
http://www.bizjournals.com/philadelphia/stories/2004/05/03/daily52.html?...

Ultimately Comcast was a unique not-quite-a-full-KOZ deal but did get substantial tax incentives. I'm just wondering how one can claim a CC office "boom" when so many of the owners of office buildings not being given a deal on taxes including the BPT are still preaching doom and gloom. Either the taxes make a difference and the new projects need the deals to fill the space or the lawfirms in CIRA should pay their fair share, no?
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

We give away big gobs of money to big corporations. Suprise!

Which proves nothing more than that Philly politicians give big gobs of money away to big corporations. Like it's play money. What has that got to do with anything other than that corporate welfare is a favorite thing of politicians? I have never known a corporation that wouldn't take money that was handed to it on a silver platter. That proves nothing about whether they would behave in a socially responsible manner without the giveaway. But by all means, let's give 'em more. There's nothing else worth spending it on, is there?

Hardly

I just trying to understand the priorities.

Talking about inequities in property tax assesments is bad because even though the current system is a silver platter giveaway to owners in long gentrified areas and the map of those getting overtaxed looks suspiciously like the map of those living below the poverty line in this town. But you know Brett Mandell talks about it so it has to be anti-poor people.

I live in an area that has been bleeding middle class African Americans in shocking numbers for a long time and the #1 and #2 reason cited for leaving in order is schools first and jobs second. But talking about cracking down on people not paying taxes on abandonned properties contributing to blight is bad, even if it would mean more money for schools.

Now a couple of new office buildings that in reality mostly prove that business tax cuts are a good incentive to move across town are magically proof positive we are aren't losing jobs, though we are.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

You're making leaps my friend

1) I never said anything about whether or not Philly is losing jobs. Where did that come from?
2) Tax inequities are bad. I've said so over and over again. But giving someone poison and calling it medicine is a bad way to cure a disease. I would like to cure inequities, not make them worse. That's why I've stated that we need to first put in place protections for those folks living in gentrifying neighborhoods -- both tenants and homeowners -- before we throw them out with the bathwater. Clear enough? Probably not and I'll have to repeat myself a few more (dozen) times.
3) Why don't you talk about cracking down on BPT cheaters as a way to raise revenue for the City?
4) Of course bad schools and few jobs drive people out. The point of which is . . . decimate the BPT? Let me introduce you to Mr. Leon Blum.

Leaps

1. Citing new office buildings thatprimarily move businesses from tax-paying addresses to tax-free addresses so that the old office buildings can be turned into tax-abated condo conversions as self-evident proof of a downtown "office boom" comes pretty close to at least implying that Philly isn't losing jobs in my book. As long as we continue to lose jobs while the metro region produces them, I would say the strongest anti-poverty claim is that Philly is still doing something wrong when compared with its neighbors.

2. So lets put the policies in place already. I see a lot of what looks suspiciously like a continuing trend of "we can't fix things till we have protections in place" as a means of deflecting not addressing the inequities. How many threads have there been obliquely criticizing fixing assesments at all as compared to threads with concrete proposals on how to achieve fixing them more equitably? Beyond that I would argue the fact whether in real estate boom or bust the number of abdonned properties keeps increasing, the total population of the city keeps decreasing - clearly something about what we are doing right now is already "poisoning" the city disastrously. If the boat has been taking on water slowly and steadily for the last several decades when does clinging to the same course dogmatically become the wrong policy? I've seen the mechanisms of both "urban blight" and "gentrification" in action and I'm still not convinced the latter is winning overall in the city of Philadlephia. Certainly job loss and population loss data still leans decidedly in the direction of the former if you look at the city overall.

3. Name names. Don't cite buildings where the state and city intentionally "make" legal cheaters as proof positive that the current system is fine and dandy - especially when job loss numbers give concrete evidence it isn't.

4.I'm not even sure what you are saying here. Lack of jobs and schools that don't prepare our kids for jobs in the fields that are likely to grow in a post-industrial economic environment are the problem - so clinging to symbolic gestures that have a pretty repeated and proven track record of driving jobs away and defending property tax policies that further the underfunding of schools is helping stop poverty how again?

Look, I honestly don't see myself as falling squarely into either camp on this stuff but I have to say I honestly think the level of knee-jerk orthodoxy on this side often more seems closed to open discussion than the other side.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

What knee-jerk orthodoxy are you talking about, exactly?

The orthodoxy of insisting on equity instead of hoping for it? The insistence of having major corporations pay their way for the services that they get, and the qualities that they get, locating in what may be the most strategically located city in America? The insistence that to help people who need education and jobs we should direct City resources to help them get education and jobs instead of letting their help trickle down?

Guilty as charged.

Do you need a ladder to put a saddle on that high horse?

The problem with this type of rhetoric is that implies that everyone who disagrees with you in anyway about whether maintaining the BPT as-is is the most strategic approach to dealing with the scale of the problem Philadelphia faces as evil poor-haters. That's simply ridiculous.

I happen think that the calculated use of economic stratification by geography is very well practiced in this country and cities like Philly, Detroit, St. Louis, New Orleans have paid heavy price as a result. I would argue that since WWII an awful lot of national policy helped build a de facto policy of cities acting as a place society "dumps" the poor and the elderly, the blacks and the unassimilated immigrants that "good people" (read economically mobile and middle class - formerly exclusively white but since the 90s less racial as much as economic) move away from. I would argue that many of the economic policies that you proclaim as self-evidently about fairness by being aimed at a city rather than state or federal level in practical terms actually reinforce the practice of economic segregation by school board and suburban township council. I think that some of the policies you push have the end result of leaving poor folks more economically isolated from educational and job opportunities. In the name of self-serving high-handedness at times I fear you end up serving inequality and urban neglect far more damagingly than many Republicans.

Strategy matters and calling everyone who has a different take on where to best implement the policies that make a fairer, more economically distributively society sustainable a no-good "trickle downer" ultimately I suspect hurts the ability to build coalitions with lot of nominal progressives who want every bit as much as you do to see this city succeed, to build healthy neighborhoods with safe schools for everyone that lives in it.

But sometimes its more important for some folks to "feel" like they are doing the noble thing than to actually achieve it I guess. Talking in high-minded tones about preserving a particular sized slice of a steadily economically shrinking pie sometimes doesn't help poor people as much as a somewhat strategically smaller slice of econonomically expanding pie does, no matter how you spin it. Do I have all the answers about how to grow the pie enough and fairly? No. But neither do you - no matter how condescendingly you phrase your insistence that doing the same thing that has shrunk the pie for the last 45 years is the only thing possible for "moral" people to do.

-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Once again, I don't know who or what you're talking about

since you're trying to recreate me as a straw man just about as quickly as you're demolishing me. Actually I'm the rather modest one when it comes to certainty. I don't know that any particular policy is going to work or not work, and that's why when I choose one I prefer that it directly help those who need help. Sure, slashing the BPT MAY eventually trickle down to help folks, but it may not. Directly spending on programs for the poor MAY ultimately hurt the economy, but maybe not. So given the vacuum of certainty that's out there, and the wide divergence among "experts" of what to do, I would choose policies that would provide direct help to those who need it. That's an expression of great modesty on my part. Contrast that attitude to the chutzpah of advocating for policies that we know will shift tax burdens away from the rich because they will ultimately help the poor but . . . we really don't know anything other than they'll help the rich. And in the meanwhile, there will be less for you and your kids, Bud. Nevertheless, Bud should suck it up while we see if the grand rich-enriching experiment works.

Somehow you twist my attitude into one that allegedly treats your ideas condescendingly. If Dr. Freud were around, I believe he would call that projection, that is projection of your attitudes on to me. You are the one with certainty: we should take our chances on letting the wise people cut taxes for the rich. Presumably that's because we've seen no examples of when that doesn't work at the state, local or federal levels. Or that it's so ever obvious and beyond debate that whatever the result on the state and federal levels, tax cuts for local biggies are always cost free, and make cities just bloom and bloom and bloom.

Personally I've seen lots of examples in which the magic formula didn't work, including right here in Philly, but I'm still open to seeing one. I just don't think that when we're playing with real lives, Russian Roulette should be the most apt metaphor for why we ask people to support economic policies that may kill them.

So given the vacuum of

So given the vacuum of certainty that's out there, and the wide divergence among "experts" of what to do, I would choose policies that would provide direct help to those who need it.

This is a reasonable articulation of a reasonable political calculus.

I just don't think that when we're playing with real lives, Russian Roulette should be the most apt metaphor for why we ask people to support economic policies that may kill them.

This is pure rhetoric.

I would point out that there were several instances when this conversation has passed by instances of "helping the rich" that you didn't choose to scream bloody murder about and it could well be argued aspects of the BPT hurts a lot of decidedly non-rich strictly small-time business owners, some would say especially. The focus seems strangely selective.

I will say I'm not sure the back and forth of this conversation is enlightening the debate any more.

-Sean
MrLuigi, my cat, actually only types half as badly as I do.

WHAT THE HECK?

Brady Russell of PUP adds, “I’ve been told off the record that Temple University Hospital is prepared to voluntarily give a free heart transplant every week to a needy Philadelphian if the BPT were eliminated.” Reminded that Temple is a non-profit that does not actually pay the BPT, Russell points out that in this case, as in many others, the effect of the health-care killing BPT may be indirect but is critical nonetheless. “All the suppliers of Temple, including those that make the equipment used in the surgical suites do pay the tax. With all the new business created by the elimination of the BPT, they would be in a position to make advanced medical procedures available to the uninsured for free.”

WHERE THE HECK DID I SAY THIS???
Umm, seriously... I don't know anyone at Temple and I've only barely worked on the BPT.

WTF! It's too complicated to explain how I came to find this and only half read it. If this is satire and you're making up quotes, I'd really appreciate it if you marked it a little more clearly somewhere in here because I really don't need people in the healthcare world reading this with even less attention to detail than I did and thinking I actually said this stuff.

---
This Too Will Pass, for the guts in your cerebrum.

Hmmm

So I guess that graffiti I read about you offering "free mustache rides" (whatever that means) on the bathroom wall probably isn't true either.

Yes it is awkward to do satire without marking it as such where you make up quotes from people who frequently post serious comments on same website.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

I guess the made up quotes are a form of flattery

As someone for whom irony is a professional obligation (Socrates, the founder of my field invented irony) I've often thought that we needed a good irony / satire emoticon for the web.

But anything that talks about Temple university hosptital giving a free heart transplant away every week (as a loss leader, I presume?) is so obviously satirical that I'm not sure there is any way to mark it more clearly.

So I'll just say thanks, LB, for the props

Founder of my field?

Come on, Professor Stier: Thales? Parmenides? Heraclitus? Hello?

Socrates

called philosophy down from the sky and had it attend to human things.

I'm a political philosopher and irony is what keeps us political philosophers alive...especially when we ignore the advice of Socrates and dabble in politics.

Joshing between copractitioners

Socrates called philosophy down from the sky and had it attend to human things.

Funny, I thought that was what Protagoras and Gorgias did. ;-)

Sorry to tease, but I love me some Vorsokratiker.

We Socratic philosophers

call Protagoras and Gorgias, somewhat tendentiously, sophists, as you know.

That this is a somewhat tendentious characterization we know from Plato who marvelously has the Socrates-Protagoras duel end in a draw. The moment I realized that was the moment I got what political philosophy should be all about: questions not answers that is, learning how to think about politics (in the broadest sense) not adopting a set of conclusions about the best political community.

Of course, I'm being a little ironic in calling political philosophy this a "field." Way of life is more like it.

We historians of literature, ideas, and culture

call Protagoras and Gorgias sophists because that was what they were called; we just don't accept the tag "sophist" as a pejorative. Another word for sophist could be "humanist."

The sophists were the first people to teach philosophy and legal argument and other subjects to anyone (not just nobles) for money. They were also willing to put anything into doubt, make everything the subject of argument. Socrates's (or I should say Plato's) beef with the sophists is that 1) the sophists take money, Socrates doesn't and 2) Plato believes in transcendent content, aka the really good, beautiful, and the true, while the sophists really don't, not so much because they are fully anti-foundational, but because in practice these are distinctions without a difference -- what matters is the quality of art, the persuasiveness of argument, etc.

Varieties of Platonism

Interestinly enough, some of us who read Plato today see fewer differences between the sophists and Plato than the traditional interpretations had it. Instead of seeing Plato as positing that human beings have some capacity to trancend the world of appearances and attach ourselves to that which is truly real, we see Plato as putting forward hypotheses about the good for human beings that are not certain nor justifiable in any other way than through discourse, that is, persuasive argument. And from that point of view, the sophists make an important contribution to freeing human beings from an unthinking acceptance of conventional opinion. The real problem with the sophists, from this point of view, is that, ultimately, they are too close to convention and not radical enough.

Of course, this re-reading of Plato is another way of addressing contemporary debates about the capacity of reason to address moral and political issues and the sophists play the role or Richard Rorty...or is it the other way around. It is striking that these contemporary debates do have parallels in ancient Athens--we are not *just* reading our cown concerns back into the past--as is the parallel between that overstretched democratic empire, with its readiness to betray its own ideals of freedom--and our own.

Of course, if Athens had eliminated its BPT, it is likely it would have won the war with Sparta.

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