How a Revised Business Tax will Support the Arts in Philadelphia

Abstract

This fall, Philadelphia City Council took a significant step to improve the business climate for small and locally-based businesses, including the thousands of artists, freelancers, designers and other creative types who lend such vibrancy to the city’s creative economy. Council implemented historic reforms to the business privilege tax (BPT) that will provide targeted relief for small businesses and locally-based businesses, including craftspeople, who sell goods outside of the city.

To this point, the conventional wisdom regarding business tax reform had been shaped by the interest of large businesses, often those based outside of the City. This “status quo” approach to tax reform provided relief to businesses with sophisticated tax planning strategies, while leaving local firms at a competitive disadvantage and small businesses saddled with a disproportionate share of the tax burden.

This approach ignored the simple fact that the majority of businesses in the City are small businesses. To put it another way, the City had been pursuing a tax policy that helped the few and provided scant relief to the many. Before getting into the nuts and bolts of the new reforms, a brief overview of Philadelphia’s business landscape may be helpful.