Young Philly Politics has taken on the task of breaking down the city's Business Privilege Tax. They are seeking to determine the winners and the not-as-much winners who will benefit from the cuts proposed by the Nutter administration.
So far, the city has been somewhat less than forthcoming on the information they're seeking to complete their analysis - namely how much does each business (categorized by size, revenue, profits, if not by name) actually pay and how much will each business actually save because of the cuts?
Dan U-A's conclusion from the analysis of the preliminary data sent to him by the city is:
If we want to target tax breaks to small businesses, fine. But, we should be clear about a couple things: Even at the biggest projection of tax breaks, the vast majority of Philly businesses will not be 'saved' by an extra 100 dollars a month. And, they will not all of a sudden be able to hire a number of additional workers. What will happen is that the biggest 446 businesses will get themselves a nice chunk of change.
Comments supporting and challenging that conclusion are plentiful. Check out it out and try your hand at your own interpretation of the (very preliminary) data and report back!
Comments (9)
What a waste of time. Of course the largest, most profitable businesses will benefit the most from cutting a flat tax. And, no, of course cutting the tax won't immediately help businesses so much as to make them all into wellsprings of wealth and employment. It's not like there's a whole lot left here to help. A large number of the city's small businesses are probably evading taxes anyway, and would've gone under or moved by now if they weren't
The point of the tax cuts is to eliminate the city's competitive disadvantage with just about every other municipality in the region, and trying to analyze what existing businesses would have their taxes reduced by the largest dollar amount totally misses it. We're trying to stimulate future employment growth by as yet unknown employers other than Comcast, Penn and city government because we currently don't have it.
BTW, isn't Penn exempt from paying the BPT? How dare they not pay taxes on that huge $6 billion endowment! We should lower taxes for everyone else so Penn doesn't keep getting that special treatment!
Ok, I'll stop now.
Posted by Goofy | March 12, 2008 10:08 PM
If 446 businesses get treated just as well as they would if they just relocated immediately across City Line Avenue, that is good for the city as a whole.
Does it really require any more than Econ 101, or a course in business to comprehend that jobs are created by businesses, so if businesses have any obstacle removed to their staying, it's good for the whole city?
Instead of treating business like cash cows for a bloated corrupt local government that performs according to no metrics, let's try to treat businesses like what they are -- job creation modules that government can't duplicate.
When the city has $454 million in overdue uncollected taxes, and when it is illegally applying assessments in a random fashion that is nonuniform, why try to harass the "job creation modules" and simply collect overdue taxes like every other city, county, and state?
Look at how much property owes that $454 million in overdue taxes -- 113,000 properties.
Why let those properties not pay anything, while trying to squeeze the last bit out of the few businesses who stayed?
The analysis makes the case for total abolition of the BPT. What does the average journalist have against being normal? Just like the surrounding parts of the booming metropolitan region? Why must Philly be the donut hole? Even the perception that the BRT is measurable -- business perceives that Philly is an unfriendly city, and goes to a place that is more normal.
Next, we have the gross receipts tax, and the wage tax.
With those city properties now paying property taxes, after collecting the half billion overdue, we can expect to make up for the loss of the $1.2 billion in wage tax revenue. Growing a tax base has to be Nutter's top task. That means if a property can and should pay taxes, a property must pay property taxes. 60% of that goes right to schools. This is how every city and county grows a base that funds high quality eduction.
Then Philly will really have to put up a fence to keep business out.
Business is not a "bad" word. As soon as the pols and press realize that they need to safeguard and preserve business, then they'll stop suffering such cut backs themselves.
Posted by Anonymous | March 13, 2008 2:28 AM
Let's get the press to visualize the phrase "job creation modules" everywhere they see or say the word "business."
It's just too bad they have to be trained by rote, Pavlov style, to see what "job creation modules" are to a city.
Posted by Anonymous | March 13, 2008 2:30 AM
What is better for the city -- taxing "job creation modules" or taxing property owners?
www.hallwatch.org/proptax/about/redelinq/stats/summary
Here's who owes what in Philly in overdue property taxes. If we just collected that $454 million in unpaid, long outstanding property tax, (there is no bad debt against property), we'd kill three birds with one stone.
1. The properties sold at auction or sheriff sale (most are vacant or empty) get new owners. The old lien debt for property taxes comes out of what the old owner gets from the sale.
2. The new owners understand that they pay property taxes. No years, even decades, of unpaid bills the city has to go after.
3. The new owners' property gets reassessed in real time, in real dollars. This pays for revenue that the city spends in real time, in real dollars.
The city gets away with not collecting property taxes, and it's killing schools. Now the city is trying not to also kill business, or give the impression that they love to kill business.
There is a best way to raise money. Driving out your advertisers isn't one of them. They pay your bills too, those 446 companies.
Didn't YOUR OWN company, PMH, just consider moving part of its operations out of the city? I rest my case.
Let Tierney know that you still don't get it, though. That's a career enhancing move.
Posted by ljlong | March 13, 2008 2:37 AM
"The net income tax cut, for example, would be about enough for 99.5% of Philadelphia businesses to hire one minimum wage worker for all of... two weeks."
"I know it is called job killing and all that by Philly Forward and the like, but... I don't see it."
says the blogger.
TWO WEEKS is two weeks. That's two weeks of work that the same yarn hat wearing vespa rider claims we need the city to create more of.
More high school age kids hired, more summer jobs starting someone out. The temp worker who's a mom and wants to stay at home, but needs a bit of cash for a short time.
WTW moms who want experience and will start with temp work. Come on, tax and spend Democrats.
You're losing the election FOR Hillary and Obama. Can't wait for talk radio to get a hold of this blog's conclusions.
That sucking noise is all the jobs that could have been because Fumocrats want the money for this most expensive yet most do-nothing of city governments. Incredible.
Yes, I live in Philly, so I get to be my own municipal worker -- collecting leave, trash, piling up dumped items for the trash collection that only comes at the end of the block. I get to try to poke open clogged drains with a tool reserved for that purpose. I get to try to organize private funds for regular mechanical street cleaning since the city, which has them but doesn't use them, won't tow cars to do it. Dragging my recycling to the corner because we don't have curbside recycling. What kind of freak show is this place that taxes so much, yet delivers almost nothing to the middle class in actual service?
If McCain wants to win, he just has to say "look how businesses and residents have to live in Philly -- a Democrat controlled city that endorsed [insert name here]. AND LOOK, how HIGH they TAX BUSINESS."
When McCain wins, you can cry in your beer. Since I'll still be employed, I'll buy.
Posted by Anonymous | March 13, 2008 2:50 AM
More from the pro-tax Dem blogger --
"...the bottom 99.5% of Philly businesses save... $574 a year from net income cuts (over a long period of time), and $734 a year from the elimination of the gross receipts tax."
Says this business owner, I'll take it gratefully, and I'll use it. Why do guys get that the Bangladeshi seamstress will buy a 2nd sewing machine with a micro-grant, but can't get that the Philly small business owner does the same exact kind of thing, if only the government would let us?
$574 plus $734 a year is a chunk of change. If you don't believe me, ask the millionaire business people buying their Dunkin' Donuts coffee with the $1.99 bagel cream cheese with coffee special at 5am.
Bill Clinton spits on you, because this is the thinking that gives all Democrats a bad name. What is so hard about seeing how $734 plus $574 dollars is to the small business?
$1,308 more a year to put toward getting stuff done? I want it. It could make all the difference.
Those of you who think it's insignificant, try this. Start a legal business. Do your dream -- a cafe, a shop, a boutique, a freelance home office, a pub. Incorporate it. Now, start paying taxes in Philly.
I'll buy the drinks after your 2nd year of operation, let me know what you think of not having that $1,308 when you were starting, and having to write a check to pay for... what again? What are you getting as a business, as a family, from the city? You pay for trash removal. You sweep the streets and wash up in front of your place. You pick up the trash in front and behind your place. You pour your own sidewalks. No mechanical street sweeper comes down the street -- you have to hire a local, if you can find one that is sober.
If you can start a legal business, keep it going for at least a few years, then want to say that you like to donate from your NET profits what you could use to keep the business moving forward, then, oh, we're not done, then write a check on the GROSS you made, even if you lost money, then you are already telling me that you don't have enough of what it takes to even try a business. Your margin can be, will be, that tight.
NO business can afford the BPTs, no start ups, no 2nd year, nor any business that is run to last, is going to simply choose to piss away money that could go into the business.
I can see you are no owner who wrote the above.
That's the problem in an economy where people don't own anything. They can't budget, and can't build. They just are -- oh, ok, the money appears like magic, so like magic, it can pay for my liberal paradise that is actually a grunge pit of filth and crime. But hey, it feels truthy. It appears, so it satisfies. Does it do?
So -- ask the owner of the business you work for if they could use that money and support getting rid of the BPTs. Yep. That's the only person among all you renters and hourly wage boys that know that THIRTEEN HUNDRED DOLLARS MORE A YEAR for your business is ALWAYS GOOD if not GREAT.
It's like a micro-loan for the whole city's small business -- a Nobel prize winning concept -- except that you don't pay it back. Micro-loans and micro-grants won the peace prize because they strengthen businesses and communities.
Take some economics. Run a business. Start a business. Get some experience doing something that requires budgeting. Buy a home. Own something that you have to take care of. Have a kid that you take good care of. Buy a shell and renovate it. Read Adam Smith. Live on a budget that dedicates a fixed portion of salary to savings.
Just do something that benefits from careful husbandry of resources, you'll finally get some idea of how much $1,300 a year is when you have significant financial responsibilities, and significant financial goals. Buying an iPod don't count. Buy supplies. Buy inventory. Fix equipment. Upgrade your system. It goes quick.
ALL UNNECESSARY COSTS = BAD. ALL possible sources of equity building = GOOD.
You can't get this till you guys finally own something, run something, pay salaries, come out of this odd magical thinking that liberal Philly politics is besotted with. The city is a business. If you can't figure out how to budget for a small business, the big business of city government will never mesh either. Your budget will never balance. Your goals will never be met. And people will leave. And jobs. And hope. And Obama won't bring it back for you. This strange cult of personality is no substitute for fiscal basics of city government. The state won't bail us out. The feds won't bail us out. We have to figure out how to grow our own tax base.
Just like a business has to grow.
Hopefully, then you'll see how FINALLY how badly the city needs its local businesses to stop paying more than the same business next door, just across the line.
This is not about conservatives and meanies who don't want to pay for things the city needs. That the underlying insinuation of the bloggers for Young Philly is oh you mean people who don't want to help the homeless and are all pro-Reagan cut all taxes, that is crazy. I want to pay taxes, such as it is, but not more than my competition.
You can't grasp the anti-competitiveness of the BPTs. Why put your home team at a disadvantage?
Posted by Anonymous | March 13, 2008 3:41 AM
Tax and spend, and the Democratic party will end. Where is our Guiliani, our Bloomberg? We just don't have enough people in this town with degrees, or with practical degrees in something besides liberal arts.
There's no way to frame the economic argument of why business taxes have a cost to such people. It's all, "save the tax and spend and make me feel good, whether the money is well spent or not."
These are the people who LOVE Fumo, who LOVE Mariano, who LOVE Street. They'll never take a hard course and master it. They'll never challenge themselves or take real risks. They love to get paid without working, and claim "that's how business works, so why can't I get mine?" It's a hair's width from an outright criminal mindset, and often slides right into it with ease.
Yet they want to live like they took courses that scared them but got As, or started a business from scratch, and made it into something. They want to earn without earning. So they don't respect those who actually do build up something from nothing.
They can't. They're children. They live and the nanny takes care of them. Please give us our bread and circuses so we can drink our wine and watch tv.
Posted by Anonymous | March 13, 2008 3:56 AM
Damn, and here I thought 6 other people had jumped into the discussion...
Posted by Goofy | March 13, 2008 9:03 AM
If the Center City District has shown us anything, it is that services don't matter and businesses don't want to pay for them.
Oh! Maybe it doesn't show that at all, and instead hints that businesses will pay, and understand the need for, good services, and maybe we should instead focus on that rather than taking 200 million dollars out of our budget?
Posted by Anonymous | March 13, 2008 2:26 PM