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Is the Nutter administration planning to eliminate the so-called "blogger tax"?
The Web site for the award-winning alternative weekly, the Philadelphia City Paper.
Is the Nutter administration planning to eliminate the so-called "blogger tax"?
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First thing: There is no blogger tax. Never was. This was an Internet meme that got carried away and blown the hell out of proportion (though, admittedly, some imprecise language on our part may have fanned the flames). But, as we first reported, the city does expect bloggers, freelance writers and âbusinessesâ of all stripes that report any income on their tax forms — even if the amount of money is infinitesimal — to shell out $300 for a lifetime business privilege license (or $50 for an annual license).
In any event, on Wednesday the city tried to make nice with area bloggers with a happy hour at National Mechanics. I didn't go; basically, I just plum forgot. But local freelance writer Laura Goldman did go, and she filed this report on her newly minted blog, Naked Philadelphian:
To quell the furor over bloggergate, the Department of Revenue and the Mayor's Office of Arts Culture and the Creative Economy walked into the lion's den and sponsored a Q&A about the city's business privilege tax on September 8, 2010 at the Old City bar/restaurant National Mechanics. Bloggers, freelancers, and small business owners were in the audience. The crowd was small. They probably scared off by the presence of the Department of Revenue. The fact that it was held at the start of the Jewish New Year did not help.
Moira Baylson, the city's deputy chief cultural officer, kicked off the evening with a brief introduction and then opened up the floor to questions. David Dorman, the revenue compliance program director, along with 10-15 officials from the departments of commerce, the managing director's office, the division of finance, and the mayor's office of the arts, culture and the creative economy, was available to answer questions.
Dorman announced, âThe city is reconsidering the tax.â When the crowd got excited about the prospect of not paying the tax, Dorman quickly clarified, âEveryone still has to pay the tax until it is actually repealed. The abolition of the tax is a long time way. It will take a vote of City Council to change the tax. â Lauren Vidas, assistant to the Finance Director, explained, âThe Pa. state constitution would have to be changed to institute a sliding scale fee because of the uniformity de minimus provisions.â
Goldman also breaks down what the BPL means for her and other small-time bloggers and freelancers:
For those that think the city is considering revision of the tax out of the goodness of their heart, I have a bridge in Brooklyn for you. The powers to be think that abolition of the fee will generate even more revenue for the city's business privilege tax. Citizens will be more inclined to start a new business sans the license fee.
Andrew Baer, a lawyer whose clients are smaller hi tech companies, asked, âHow much revenue has the fee generated for the city? The fee maybe generates $1 million in revenue. The city has received many times that in bad publicity.â Baer was not that far off.
Frank Breslin, deputy revenue commissioner, later confirmed that the fee was an insignificant part of the city's revenues (.1%) âThe business privilege license fee generated a little more than $3 million in revenue for fiscal year 2010 ending June 30. The total tax and fee receipts for the city for fiscal year 2010 were just under $3 billion.â The $3 million figure was a little higher than normal due to the city's tax amnesty program, reminded Andrea Mannino, special assistant to the revenue commissioner.
I, a freelancer, complained that the tax also hits âthe grunts of the editorial world.â I continued. âI do not own my own blog. I am not a freelancer by choice but because of the dire economics of the media industry right now. No one can afford to hire me full time. I am already levied a higher tax rate (6.46% vs. 4.9%) on my income because I pay the business privilege tax not the wage tax. I receive no healthcare benefits and also pay double social security tax. (Self employed freelancers pay both the employees and employer's portion of social security). Dorman conceded, âFreelancers were in a tough position but they still receive 1099 income so they have to pay the business privilege license fee.â
Gloria Bell of Red Stapler Consulting asked, âI take in $10 in ads on my blog that pay for my hosting. It is a wash income tax wise. Do I have to pay the business privilege tax?â Dorman said, âUnfortunately, according to the city, you are generating revenue so you have to pay the tax.â The crowd was surprised that the city is insisting that $10 in income would generate $300 bill.
City officials, Goldman writes, say Nutter is mulling some tax reforms over:
While no one wants to pay taxes, the crowd agreed that a $50 lifetime tax would be more reasonable. Vidas sounded promising, âOne of Nutter's main issues is tax reform so he is thinking about this tax.â Gary Steuer, the city's chief cultural officer, reminded, âThe abolition of the tax still has to be revenue neutral. It is hard times for the city.â Due to those hard times, the city did not pick up the tab for the cocktail hour, it was BYOB (Buy your own Booze).
I've e-mailed city officials to get their take on the meeting and to see if I can get confirmation on tax reform proposals. If/when they get back to me next week, I'll update.
[...] Philadelphia Citypaper (blog) [...]
[...] Philadelphia Citypaper (blog) [...]
[...] Philadelphia Citypaper (blog) [...]
I hate to break it to you, but the $300 fee pales in comparison to the 6.46% income tax, plus the gross portions tax. That is where we get killed - and where people almost everywhere else in the country pay none of it!
[...] You can find a full account of the “blogger tax” debacle and the September 8 Q&A session — as well as comments from me — on public radio’s “Marketplace” here and on Citypaper’s blog here. [...]
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