Bills would reduce Philadelphia’s high tax burden and help grow small and mid-sized businesses
PHILADELPHIA – City Councilmember Allan Domb (At Large) today introduced a package of bills focused on reforming the City of Philadelphia’s tax structure to create an attractive environment for businesses, workers and families to locate and grow in the city.
Each of the three bills introduced would change the city’s tax code by reducing the rates for the Wage Tax and Net Income Tax and eliminating the burden for businesses having to pay both the Net Income and Gross Receipts.
“Our city faces a challenging unique moment in time. We can use this moment to continue down the same path we’ve been on, or we can take bold actions to help change the trajectory of Philadelphia,” said Councilmember Domb. “Now is the time to examine what’s working and not working. We need to explore how we get the desired results we all want and need for Philadelphians.”
The reduction in Wage Tax rates for residents and non-residents would be over a 20-year period. It would reduce the resident rate from 3.8% to 2.9% and reduce the non-resident rate from 3.5% to 2.8%. The Net Income reduction would be over 10 years and cut the rate by more than half from 6.2% to 3.0%.
In addition, the legislation simplifies and reduces the tax burden on businesses by allowing them to pay the higher of either the Net Income or Gross Receipts portion of the Business Income and Receipts Tax, thereby eliminating the requirement to pay both. The Net Income is a tax on business income after expenses are deducted and the Gross Receipts is a tax on business receipts without deducting any expenses.
“Our present crisis will not allow us to continue to tolerate having one of the highest tax burdens among the largest U.S. cities, while having the lowest employment rate per 1,000 residents,” said Domb. “Philadelphia must become more competitive in the region and across major U.S. cities by attracting people and fostering job growth.”
According to Domb, the pandemic has magnified the difficulties that come with bringing back demand. Businesses are faced with staying and paying complicated and higher tax rates or moving outside the city and paying less.
“In a post-pandemic world, and as technology continues to advance, the ease of working anywhere will only become more prevalent,” said Domb. “We have to have a serious conversation about the precarious situation we find ourselves in this year and what it means for our future. When you can live and work anywhere, we need to compete for demand in Philadelphia.”
Several officials and community leaders provided their support for the measure to introduce the legislation:
“I want to thank my colleague, Councilmember Domb, for his leadership on this issue,” said Councilmember Katherine Gilmore Richardson. “This is an important starting point in the conversation about restructuring our tax system to reflect our current realities.”
“I’m excited to see these bills put on the table by Councilmember Domb,” said Councilmember Mark Squilla. We need to start the discussion about how we impact job growth through our tax policies. This is long overdue and paramount to how Philadelphia comes back in the aftermath of this pandemic.”
“Philadelphia faces a number of debilitating challenges. We need creative ideas to help us turn it around and this proposal will send a message to residents and businesses alike that Philadelphia is a good place to do business and we can jumpstart our economy in the aftermath of this pandemic,” said former Governor and Mayor Ed Rendell. “When I was Mayor, I started the city on a path of cutting the Wage Tax over a 20-year period to help grow our economy. Councilmember Domb has chosen to do the same, and it will be a great incentive to encourage people to live and work in Philadelphia.”
“We support progressive tax policies that will alleviate the burden that many Black and brown-owned businesses face in Philadelphia,” said Della Clark, President of The Enterprise Center. “By enacting tax reform, we can help stimulate an inclusive and equitable economic recovery.”
The package of bills will be referred to the Finance Committee for public hearings.
“The goal of these bills is to create an open dialogue and start thinking outside the box to reform our tax structure,” said Councilmember Domb. “I want to engage everyone in this conversation and it’s important that we take this rare opportunity in time to think about what we do to alter the City’s current trajectory.”
CM Domb TaxReformLegislation_FactSheet
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