FATTAH: Business Tax
I support overhauling the onerous business privilege tax, but believe that we must balance this with the need to provide city services. I have called for immediately eliminating the gross receipts portion of the BPT and replacing the net income portion with a simple charge on net profits. This change will increase the competitiveness of city businesses, make Philadelphia more attractive as a place to do business and grow jobs.
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Simplifying the profits taxes for unincorporated businesses is a good idea. The current set of taxes are unnecessarily complicated.
Fattah needs to state that he has thoroughly reviewed the budget projections by PICA and commit to the cuts he describes, given those projections are correct. There should be no claim that he did not know how bad the budget situation is and not do the tax cuts if elected.
The gross receipts tax of the BPT does not apply to sales outside the city and functions like a local sales tax. Thus, it is not the main factor pushing businesses that sell elsewhere out of the city. The Business Privilege Tax should move to single-factor apportionment for the profits portion rather than reduce the tax rate. This helps businesses compete with companies outside the city. The Net Profits Tax for unincorporated businesses and the income portion of the BPT are the killers. The effective tax rate for an unincorporated business is double the wage tax.
Note only 3 out of the top 10 employers in the city are for-profit businesses. That says it all about the problems with business taxes.
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