Taxable Talk

I don’t think highly of California’s business climate. Still, things could be worse: I could be in Philadelphia. The City of Brotherly Love has sunk to a new low.

After going after penny-ante bloggers the city’s Revenue Department has been tasked with administering a new Tobacco Tax. All businesses with a business tax account were sent a form that must be completed by September 30th, or they’ll have a new Tobacco Tax Form filing requirement…and there’s a $5,000 penalty for not filing the form.

I have a couple of clients in Philadelphia (neither sell anything). I’ll be letting them know that they must complete this useless form and return it. It is, as noted by Kelly at Taxgirl.com, a waste of time and money.

Another reason that, on the whole, I’d rather not be in Philadelphia.

Suppose you are a blogger that accepts advertising, and you reside in Philadelphia. You make $10 a year from the small blog advertisements you accept. It’s not much, but it’s something…until you get the bill from the City of Philadelphia for $300.

Philadelphia has a Business Privilege Tax that requires a license. A lifetime license costs $300; you can also buy a license for $50 a year. You will then also have to file the BPT returns each year and pay any tax owed. For the small-time blogger, it probably makes sense to avoid selling advertising as your $10 of profit just became at minimum a $40 loss.

Is Philadelphia within its rights to require a blogger who sells advertising to obtain a business license? Certainly. Overall, does it make sense? Well, that should be obvious.

Of course, Philadelphia is taking this one step further. The City of Brotherly Love requires a BPT license for, “any business…engaged in a for-profit activity in the City of Philadelphia.” So if you are a blogger in Philadelphia and set aside space for advertising on your blog but don’t sell ads, in the view of Philadelphia you need a BPT license. It’s not clear if Philadelphia is enforcing that part of their BPT yet, but they could.

There’s a solution, of course: move. If the City of Philadelphia has a bad tax structure, consider a nearby suburb. Unlike W.C. Fields, you may be far better off not being in Philadelphia.

Via the TaxProf Blog and others comes this horrendous advertisement from Pennsylvania:

I have nothing against Pennsylvania’s tax amnesty. I have everything against Big Brother-like methods for collecting taxes…even in a commercial.

The Keystone State is having a budget crisis. Governor Ed Rendell (D) has ordered a shutdown of all non-essential state services in Pennsylvania. The problem? There’s no approved state budget, and with the fiscal year having begun the state has no authority to spend money.

Pennsylvania, like many states, has a divided (politically) government. Governor Rendell is a Democrat, the state’s lower house is controlled by Democrats, but the state senate is controlled by Republicans.

Governor Rendell’s proposed budget features an energy charge that would cost residents an estimated $5.40 a year. That’s one of the reasons Republicans are holding up the budget. Other issues include a new hockey arena for the Pittsburgh Penguins and a new convention center in Philadelphia—issues that Governor Rendell wants considered before the budget but issues that the Republicans want considered after the budget. Republicans also want to cut $300 million from the state’s $27.3 billion budget according to Bloomberg.

Gamblers, though, got “lucky.” A state court judge has allowed the five racinos in Pennsylvania to remain open pending a hearing tomorrow.

Pity those of you who own businesses in Pennsylvania. For your elected officials have no pity, and just days before Christmas put lumps of coal in your stockings.

Pennsylvania Governor Ed Rendell (D) vetoed a package of business tax cuts last Friday. Rendell claimed that the tax cuts would have cost Pennsylvania over $1 billion in lost revenue. Proponents of the tax cuts noted that, “If our citizens have good jobs, they don’t need government programs. Proponents vow an attempt at overriding the veto during the 2006 legislative session.

Earlier, the mayor of Philadelphia, John Street, announced that he would veto a cut in the city’s business privilege tax. The measure, which had just passed the city council on a 9 to 6 vote, would have cut the net profits portion of the tax from 6.5% to 6.3125% and cut the gross receipts portion from 0.19% to 0.11875%. Both of these cuts would have been effective in 2010.

Pennsylvania in general and Philadelphia in particular is definitely not the spot I’d choose for my next business.

Coverage:

Pennsylvania: Pittsburgh Tribune-Review
Philadelphia: Philadelphia Business Journal