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Monday, December 6, 2010

Business Tax Boxing: We Take on the Controller

Last week on the It's Our Money podcast, we asked whether everything we know about business taxes is wrong. Council members Bill Green and Maria Quinones Sanchez had introduced a bill proposing to turn the city's business tax strategy on its head: For about a decade, Philadelphia has been on a path toward eliminating its tax on "gross receipts" (all the money a business earns, regardless of how much it spends) and taxing only profits. Green and Sanchez proposed taxing only gross receipts. Could it be possible, we wondered, that everyone in the city had been wrong for ten years?

This week, we sit down with Controller Alan Butkovitz, who opposes the new proposal, to see how well he can defend the current path. Listen here, and let us know in the comments how you'd score the round.
Posted by Doron Taussig @ 7:53 AM  Permalink | 5 comments
Comments   
  • 0 like this / 0 don't   •   Posted 9:44 AM, 12/06/2010
    it's a werthwhile idea but why does the increase in revenue ALL have to come from the GRT? the problem is the business taxes themselves
    — dreinterests
  • 0 like this / 0 don't   •   Posted 10:32 AM, 12/06/2010
    Taxing gross revenue is insane. Having a wage tax is insane. NYC went from "The Taking of Pelham 1-2-3" to the Today Show and 30 Rock, Times Square, and going to the city with your family because in no small part, they got rid of their wage tax. The resulting boom in jobs and business could never have been "invented" by government. That Philly old school Democrats spend so much time trying to fight Economics 101 is their special insanity. It's why they lost the state for new Dems. Can you say "red state?" Say it with me: Red State. We'll see if we can get some folks who passed economics to pass some state laws that implement policy change that grows the economy in Philly.
    — CleanupPhilly
  • 0 like this / 0 don't   •   Posted 11:40 AM, 12/06/2010
    The controller contradicts himself. He argues first that taxes have a major impact on business decisions such that low profit businesses will be driven out of business by a tiny increase ($4 per $1,000 in receipts) in the Gross Receipts Tax. Then he also says that low taxes on high income businesses will have no impact on their location and/or investment decisions (not clear which) calling that Reaganomics. Actually there's no evidence that tiny incremental tax increases in the gross receipts tax will have any impact on business health. However a major tax change that cuts the net income tax by 6.5% may. Furthermore, to the extent that the Controller is concerned about small businesses getting a small GRT increase, it is strange that he ignores the Sanchez-Green proposal to completely eliminate the entire BPT on over half of all taxpayers, all of them the smallest, most vulnerable Philadelphia businesses. Finally the Controller's dismissive evaluation of the Sanchez-Green proposal's ability to shift the tax burden to out of City businesses is particularly odd. Obviously the best way to protect Philadelphia businesses, if you think taxes make a difference, is to shift the burden of actually paying those taxes to businesses that aren't here. His suggestion that we go to Harrisburg for that power is a complete distraction since it's now obvious that we already have the power. There is absolutely no reason that we shouldn't exercise it.
    — Stan Shapiro
  • 0 like this / 0 don't   •   Posted 12:21 PM, 12/06/2010
    Cleanup, you ought to own up, whoever you are. Your sole interest is electing Republicans so that you can accelerate the ongoing power shift from big government, owned by the people, to big business, owned by the richest 1% of the people.
    — Stan Shapiro
  • 0 like this / 0 don't   •   Posted 3:03 PM, 12/07/2010
    I agree with Stan, Butkovitz conflates several issues. As a business owner in Philadelphia who does the vast majority business outside of the city, I find it ludicrous to have to pay 6.5% on most of my activity (a chunk is apportioned out, but since I have my business and employees here I still pay most of the 6.5%). I am very frequently asked, why I keep my business here. It's like paying a second mortgage to just keep my business in Philly. But we like the city and the environment here so we stay. I sincerely hope that Mr Green and Mrs Quinona-Sanchez are able to prevail here and spread the burden of taxes from locally owned businesses to the many multi-nationals who get the vast majority of spending from Philadelphia's citizens. Isn't it crazy that IKEA, HOME DEPOT, LOWE's, WALMART, Shop Rite, Best Buy, Target, Superfresh, Whole Foods etc pay almost no tax to Philadelphia on the profit they make in Philadelphia, while every independent store, restaurant, small scale manufacturer, distributor and any other type of Philadelphia based business pays tax to Philadelphia on all of the profit they make throughout the world?
    — bizzarrophilly


5 comments
About It's Our Money
Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.




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