City Council: Tax sales, not profits

After months of quiet lobbying and running the proposal past Comcast and the Chamber of Commerce and other big and small taxpayers, Philadelphia City Council members Bill Green and Martia Quinones-Sanchez say 15 of the 17 Council members have signed on to support their plan to cut the city's business income tax.

Instead they'll boost the gross-receipts tax, which they say is more likely to be collected from out-of-town companies, not just local firms.

The current "Business Privilege Tax" grabs 6.45% of net inome (profits) and 0.1415% of gross receipts (sales). But, especially if you're from out of town, it's easier to claim you have no "profits" in the city, than no "sales". So the new bill would:

1) Cut the income tax from the current 6.45% to zero, by 2015.

2) Boost the gross receipts tax from 0.1415% to 0.53% of sales, also over five years.

3) Free your first $100,000 in sales from the tax. That means 50,000 of the city's 84,000 businesses (vendors, bloggers) wouldn't pay at all.

4) Set Special Low Rates! for manufacturers (0.25%), wholesalers (0.35%), retailers (0.10%), and "fresh food retailers" (it's complicated).

"Our overarching goal is to generate economic growth in Philadelphia," Green said in a public statement. "We expect this change, which spreads the business tax burden across a broad base at a low rate, to have a significant, positive effect on the city's economy and lead to significant job growth."

Backers say the tax won't hurt or help the city's budget; it's supposed to be "revenue neutral," though few tax changes work out that way, and we worry more businesses than expected will be clamoring for Special Low Rates! (which also exist under the current BPT).

Mayor Nutter has long supported cuts in the gross receipts tax but resisted cutting the income tax; now, outnumbered, will he climb on board?