In a striking show of unity, Philadelphia’s chambers of commerce — five in all — have banded together to push the city council to cut heavy payroll and business taxes.
Philadelphia has the highest payroll tax in the nation and doubles its businesses through a Business Income and Receipts Tax (BIRT) – the only major US city to do so. These two taxes are the main reasons cited by employers and employees who choose to locate just outside the Philadelphia city limits.
Instead of lobbying individually, the chambers formed the Coalition for Inclusive Growth with its own website. The coalition notes that past economic growth has not helped everyone, especially underserved populations, and that small businesses are in desperate need of tax relief.
“This is our first time meeting together,” said William Carter, Greater Philadelphia Chamber of Commerce liaison to City Hall. ” This is unheard of. What I do know is that business people – black, brown, everyone – need less paperwork and more help to succeed. They have to compete with the rest of the Philadelphia area and the nation.
A vote could take place as early as this week, according to Large council member Derek Green, who supports the bill.
“With inflation even higher, businesses are struggling to keep their lights on. Now we need policy to fix that,” Green said. attention of this administration.”
Council member David Oh also supports payroll and business tax cuts, although he is discouraged by past failed change efforts.
“The council is focused on collecting taxes instead of rewarding businesses, which, by the way, all feel harassed by the city,” he said. Liberal Council members “don’t understand that people need jobs, union jobs, jobs to support their families. Right now, we lack empathy.
Carter began in September engaging all of the various chambers to work together: the African American Chamber of Commerce; Hispanic Chamber of Greater Philadelphia; the Asian American Chamber and the Independence Business Alliance/LGBTQ+ Chamber of Commerce, and its employer, the Greater Philadelphia Chamber of Commerce.
“It happened naturally,” he said.
Carter recalled that his grandfather and great-grandfather, both from North Philly, had moved elsewhere to start contractor and heating businesses, respectively. A graduate of Temple Law School and a longtime city council member, Carter joined the Greater Philadelphia Chamber of Commerce last year. He focused on building the Coalition for Inclusive Growth as a united front.
Common arguments are that “if you want equitable growth in our city, first [the businesses] have to be here” within the city limits, he said.
Moving your business to City Line Avenue is much easier, Carter said, than paying business and payroll taxes. Instead, he and the Coalition for Inclusive Growth are advocating for city council to cut taxes over a 10-year period.
Philly has the highest payroll tax in the country and is unique in taxing business income. According to a 2016 Pew report, of the 30 largest cities in the country, 11 impose a tax on profits or income.
Philadelphia is unique in taxing both.
The city’s Business Income and Revenue Tax (BIRT) taxes both profits (6.25%) and sales (1.415% per $1,000), making it one of the heaviest charges. Businesses pay this tax even if they incur losses because the city taxes every dollar of sales, before expenses.
Philadelphia’s highest payroll tax is 3.8712% for Philadelphians and 3.5019% for nonresidents.
To support a fair recovery, the Chambers coalition has proposed a 10-year plan that cuts the city’s payroll tax to below 3% for everyone working within city limits; and a 10-year plan to halve the income share net of BIRT tax at a rate of 3.10%.
“Small businesses cannot endure Philadelphia’s tax system while dealing with the effects of the pandemic and the uncertainty of the economy,” said Jennifer Rodriguez, president of the Hispanic Chamber.
“Philadelphia has long imposed double taxation on businesses, and the payroll tax has earned us first place among major cities as the highest,” she said. “How do you fight poverty if companies don’t have an incentive to pay higher wages and lower taxes? »
City Council is holding a hearing Wednesday at 5 p.m. with a varied agenda, reviewing the budget as a whole, including potential property tax changes, taxes on workers and business owners, and support for seniors .
The Council hopes to reach a final budgetary agreement, when the Committee of the Whole meets next week to consider all proposals for taxation and spending. The Council must adopt a budget by June 30.
“With inflation soaring, the basics of everyday life – gas, groceries and going out – are becoming more expensive, we need to give workers an immediate raise and increase employers’ ability to recover. , grow and hire,” Green said.
“A significant part of the population is now working remotely. My concern is that non-resident payroll taxes will not come back,” he said. “And we need to help businesses get back into city offices. It has a ripple effect, increasing sales taxes, parking taxes.
At least nine of the 17 city council members are inclined to vote for the cuts, said Jabari Jones, president and CEO of the West Philadelphia Corridor Collaborative, which lobbies for small business owners.
“We have been advocating for tax reform for years. For years [City Council] launched it on the road to the next budget cycle,” Jones said. “Business is so fed up, and what I hear is that’s it. Do it or don’t. All my members are for it. They had such a bad year. And they’ve been frustrated for a long time.
Taken together, these taxes encourage businesses to move to surrounding suburbs, where local payroll taxes are lower or non-existent, and nothing beats BIRT, according to Paul Levy, chairman of the Center City District.
Political progressives disagree with the chamber, saying tax cuts will not lead to equitable growth.
“Last week’s budget debate pitted the needs of landlords and tenants against the needs of schools. it’s an example of pitting communities against each other,” said Ariella Klagsbrun, spokesperson for the TaxTheRichPHL.org coalition of left-wing organizations. The group recently released a report stating that continuing to fund community groups was more important than cutting taxes.
But nearly everyone — regardless of political affiliation — agreed the city should start spending leftover funds from the US federal bailout to make up for any budget shortfalls.
“This is money that should be used for the communities hardest hit by the pandemic. It’s like a missed moment. We have to spend this money now,” Klagsbrun said. “We should spend it as soon as possible.”