If I can25 230 11/30/10 - WHOLE - BILL 1006351 just add, we also employ, as we said,2 approximately 62,000 people in the3 construction industry, many of whom4 are -- they're skilled labor, but are not5 educated, and we pay them extremely fair6 wage rates. I think between us and the7 restaurant, hoteliers, bar owners, we are8 bearing a large piece of this brunt of9 this "losers" category. But the fact is,10 even though we're a high volume, low11 margin, our employees really make an12 amazing wage rate. So our average guys,13 we run between 30 and 50 guys in the14 field -- they're carpenters, tapers,15 laborers -- and their average salary is16 about $77,000 a year, which means that17 they can buy a new home, buy a new car,18 put their kids in school, college, and19 the majority of those employees actually20 live here and work here.21
That was22 going to be my follow-up question. We're23 rather selfish in this Chamber, as well24 we should be. So my follow-up question25 231 11/30/10 - WHOLE - BILL 1006351 was going to be, and what percentage of2 those are Philadelphians.3
I can't tell4 you the exact number of my employees, but5 we employ male, female, minority, gay,6 lesbian. I mean, it's a whole7 cross-section of Philadelphia that is8 employed either in the educated side of9 construction and basically the skilled10 labor section.11
Thank15 you.16 The Chair recognizes Councilman17 Goode.18
Thank you,19 Madam President.20 Is it Mr. Perlman from Building21 Industry Association?22
You25 232 11/30/10 - WHOLE - BILL 1006351 testified on behalf of the Building2 Industry Association?3
And your5 testimony was that you were against the6 bill, but now you're for it?7
So when the10 bill was introduced and you were against11 it, did you believe the bill was fair?12
But you24 don't care about that?25 233 11/30/10 - WHOLE - BILL 1006351
Thank you.11 Thank you, Madam President.12 COUNCIL PRESIDENT VERNA:13 You're welcome.14 The Chair recognizes Councilman15 Green.16
Thank you17 very much.18 We can discuss with Mr. Dubow19 and Mr. Mullin who the winners and losers20 are today, because, of course, there is a21 status quo that creates winners and22 losers and there's a shift that will23 create winners and losers, including24 shifting from inside the City to out.25 234 11/30/10 - WHOLE - BILL 1006351 I just wanted to finish with2 this. Ms. Bittenbender, we got3 distracted or I got distracted when I was4 asking you about bidding on projects in5 the City of Philadelphia. And you only6 are a contractor in the City of7 Philadelphia; is that right?8
Primarily.9 We've done projects throughout the10 region.11
So when you12 bid on a contract in the City of13 Philadelphia against a firm that is not14 bid -- that is not -- a general15 contractor that is not in the City of16 Philadelphia, do you have a higher tax17 burden as a consequence of being here18 going into that bid?19
Yes, we do,20 but -- and you've asked me this question21 before, and you and I have debated this22 question before. It depends -- on bid23 day -- and bid day determines whether you24 win or you lose. You decide as a general25 235 11/30/10 - WHOLE - BILL 1006351 contractor if you're going to pass on2 your total tax burden. On bid day you3 decide, I want to bid two percent fee or4 I've got to win this job to meet my5 payroll, so I'm going to bid one percent6 fee.7 So it's really -- those factors8 which you're about to ask me about are9 different depending on who you bid on,10 what the project is, how desperate you11 are that day, whether you want to lay off12 Johnny and Ricky and Joey.13
I agree with14 that, but sort of aside from winning the15 project, when you actually bid whatever16 you bid compared to a contractor from17 outside the City, you will be paying more18 in taxes than that contractor from19 outside the City; is that correct?20
Thank24 you all very much. We appreciate your25 236 11/30/10 - WHOLE - BILL 1006351 testimony.2 Our next panel?3 MR. McPHERSON: Our next panel4 consists of Michael Chapman, Anthony5 Tigano, William Gonzalez and Danilo6 Burgos.7 (Witnesses approached witness8 table.)9
Good10 afternoon. Kindly identify yourself for11 the record and proceed with your12 testimony.13
Hello. My name is14 Anthony Tigano. I'm Chief Financial15 Officer of Chapman Auto Group.16 COUNCIL PRESIDENT VERNA:17 Please proceed.18
First, I would19 like to thank the City Council for20 listening to our testimony today. 2 We have -- we sell three brands, car3 dealers, Ford, Chevy and Nissan. We4 generate approximately 100 million in5 annual revenues at these three locations6 in the City of Philadelphia. We employ7 more than 224 people, most of whom are8 Philadelphia residents. The average9 salary of our workers is approximately10 $45,000 a year. 14 We are proud to do business in15 Philadelphia and love the City, but the16 cost of doing business here has become17 too much to bear, especially in this18 economy. Our current business privilege19 tax is $118,000 per year across the three20 stores, of which $87,000 is net income21 and 30,000 is derived from gross22 receipts. Under this proposed BPT23 change, our company would save24 approximately $26,000 per year in25 238 11/30/10 - WHOLE - BILL 1006351 business taxes starting in the year 20102 through 2015. Over this five-year period3 at average growth rates, our savings4 would be approximately $132,000. Under5 this proposed BPT change, our company6 would save approximately $40,000 per year7 starting in 2015, and over another8 five-year period at average growth rates,9 this would be an additional $200,000. 22 The current tax structure23 creates a disincentive for profitable24 businesses to headquarter and stay in the25 239 11/30/10 - WHOLE - BILL 1006351 City. 5 Unfortunately, in our industry, franchise6 laws negate our ability to just pick up7 and move whenever we so choose. 5 percent on sales -- can21 calculate their gross receipts tax based22 on their net receipts; for example, after23 deducting cost of goods and labor. 6 The net income tax is also7 difficult for us to calculate. The8 apportioning formulas are confusing, and9 preparing our tax returns is time10 consuming -- a very time-consuming11 process. Calculating our total sales,12 however, is extremely straightforward in13 comparison and taxing those is much14 easier to understand. 21 Doing so, more importantly, will help22 level the playing field between Philly23 and the suburbs. 3
Thank4 you.5 Mr. Chapman, are you testifying6 on your own behalf or on behalf of the7 automobile industry?8
I'm sorry. My9 name is Anthony Tigano and I work for the10 Chapman Auto Group.11
Are15 you speaking for Chapman Auto or are you16 speaking for --17
You24 are what?25 242 11/30/10 - WHOLE - BILL 1006351
Good afternoon,10 Council President Verna and the members11 of City Council. My name is William12 Gonzalez. I am here today --13 COUNCIL PRESIDENT VERNA:14 Mr. Gonzalez, excuse me a minute.15 Councilman Green.16
Thank you,17 Madam President.18 The Automobile Dealers19 Association, in addition to sending20 Mr. Tigano, sent a separate letter, which21 is on the table, in favor of the22 proposal, which I'd like added to the23 record.24
Thank25 243 11/30/10 - WHOLE - BILL 1006351 you.2 Mr. Gonzalez, please proceed.3
Thank you. I am4 here today representing HACE, the5 community development corporation and our6 President, Guillermo Salas, Jr., who is7 also a Board member of the Hispanic8 Chamber of Commerce, who unfortunately9 could not be here today. But HACE has10 worked in Eastern North Philadelphia of11 Fairhill and St. Hugh's for decades12 pursuing a mission of neighborhood13 economic development, combatting blight14 and developing affordable housing15 opportunities. In addition, HACE has16 worked hard to strengthen our17 neighborhood commercial corridors and18 support entrepreneurship in our19 community.20 I strongly believe that Bill21 100635 proposed by Councilmembers Sanchez22 and Green will support HACE's economic23 development mission and improve the24 business climate of Philadelphia's small25 244 11/30/10 - WHOLE - BILL 1006351 businesses. This proposal will level the2 business tax playing field for3 Philadelphia manufacturers and businesses4 which compete nationally and5 internationally. It will also level the6 playing field between small retail7 businesses and the big-box stores who use8 their corporation structures to gain9 unfair tax advantages.10 The $100,000 exemption and11 fresh food tax credit will remove12 barriers to small businesses and13 encourage the sale of healthy foods in14 our communities. The BRT reform will15 help reduce the tax burden of the current16 inequitable tax structures, which present17 some serious equality issues on how we18 place tax burdens on some businesses more19 than others, who pay less, resulting in20 the reduction of jobs, losses of new21 business opportunities.22 The inefficiency of the current23 tax structure presents many challenges to24 the small businessowner. The tax reform25 245 11/30/10 - WHOLE - BILL 1006351 bill should reduce the burden of2 non-economic tax carried mostly by local3 Philadelphia-based businesses. The4 shifting away from the net income tax5 towards a gross receipt business tax6 structure will improve the fairness of a7 sound and equitable tax reform system,8 thereby making the tax reform package9 more fiscally responsible to generate10 additional tax revenue from jobs and tax11 base growth and expanding efforts to12 achieve efficiency in all City13 departments.14 After reviewing the data, it is15 clear to me that small businesses like16 the ones on North 5th Street, El Centro17 de Oro and neighborhood commercial18 corridors throughout the City will be the19 principal beneficiaries of such20 legislation. The City, through the21 restored corridor bond program, has22 invested thousands of dollars throughout23 the City's commercial corridors.24 I urge you to pass this bill25 246 11/30/10 - WHOLE - BILL 1006351 out of Committee to take a major step in2 reforming Philadelphia's business3 privilege tax and, in return, assisting4 thousands of small businesses that5 continue to support and invigorate our6 neighborhood economies.7
Thank8 you, Mr. Gonzalez.9 At this time, the Chair10 recognizes Councilman Goode.11
Thank you,12 Madam President.13 Mr. Tigano, I'll ask the same14 question I asked the previous witnesses.15 Should there be winners and losers in16 terms of business taxation?17
It's a very good18 question. I believe presently the way19 the system is set up, it's presently20 unfair. I think firms set outside the21 City --22
My question23 is, should there be winners and losers?24
I'm answering your25 247 11/30/10 - WHOLE - BILL 1006351 question. The present system is unfair.2
Okay. Well, let5 me finish my answer to your first6 question.7
Do you11 support the land value tax where we would12 shift assessment to 50 percent on land13 and 50 percent on property?14
Are you not17 familiar with the Automobile Association18 Dealers' position on land value tax?19
The22 Automobile Dealers Association has23 consistently come into City Council and24 we have considered a land value tax and25 248 11/30/10 - WHOLE - BILL 1006351 suggested that it was unfair because it2 shifts the tax in a way that's3 detrimental to them, while at the same4 time it would lower property taxes for5 the majority of Philadelphia homeowners.6 So is that a fair position?7
But I'm10 asking you a question about land value11 tax.12
I'm not prepared13 to answer that question. I'm not -- you14 know, I need -- I may need to take --15
You do16 realize that as we talk about tax reform17 in general, we never do it in isolation.18 We have to consider our tax structure in19 terms of business taxes, real estate20 taxes, sales tax, all of it.21
I understand your25 249 11/30/10 - WHOLE - BILL 1006351 position.2
And so if3 the land value tax hurts auto dealers but4 helps the majority of homeowners, could5 you support it?6
Can we take it7 under consideration and give us an8 opportunity to review it?9
I'm asking10 you. If it hurts your particular11 industry but it helps the majority of12 homeowners, could you support it?13
Simply put,16 if you win, you're for it. If you lose,17 you're against it.18 Thank you, Madam President.19 COUNCIL PRESIDENT VERNA:20 You're welcome.21 The Chair recognizes Councilman22 Kenney.23
Thank you,24 Madam President.25 250 11/30/10 - WHOLE - BILL 1006351 Just a question for Mr. Tigano.2 In your testimony I thought you said that3 your profit margin is about one or one4 and a half percent?5
It seems to7 go against the argument that other people8 have been making who are opposed to the9 tax shift, that if your profit margin is10 one and a half, two, two and a half11 percent, you're likely to be a loser in12 this scenario. If it's six, seven, eight13 percent, you possibly could be a winner.14 Could you explain to me why15 your industry is different?16
I think my17 interpretation of that has to do with the18 alternative method and having the19 opportunity to deduct cost of goods sold.20 We sell an automobile that has a higher21 cost of goods sold, and that is netted22 down to come up with a net sale number.23
So what do24 you base your gross receipts on? I mean,25 251 11/30/10 - WHOLE - BILL 1006351 you sell --2
But there is a6 deduction for cost of goods sold in7 there. So it lowers the sale number.8
No. I guess what11 I'm trying to say is, we inherently sell12 a vehicle that has a higher cost and it's13 my understanding that the cost of goods14 sold, you have the opportunity to reduce15 your sales by that number.16
The actual cost of19 the vehicle that the manufacturer charges20 us.21
Okay. So22 your sticker price is 30. Say you sell23 the car for 30. Your cost of buying the24 car is 25, or whatever.25 252 11/30/10 - WHOLE - BILL 1006351
Or 27, 28,3 whatever it is. So you deduct that, so4 your overall gross receipts is only5 $2,000 or $3,000?6
And that's8 your interpretation as -- your position9 as financial person for the company?10
Is that13 something that's been vetted with or14 discussed with the Revenue Department15 here? Would they agree with you, I16 guess?17
Was it the20 Finance Director or the Revenue21 Department?22
You know, our23 accounting firm, our CPA firm, has been24 preparing the return for the last 4025 253 11/30/10 - WHOLE - BILL 1006351 years. So, I mean, we do -- that is my2 interpretation.3
As with --4 I mean, this is hypothetical. As with5 the IRS or State Department of Revenue or6 City Department of Revenue, they could7 maybe potentially make an argument that8 that calculation is not correct, and in9 the event that that calculation remained10 incorrect in view of the City maybe11 through a court action of some kind, that12 would really put you in a different13 situation.14
No. I'm17 saying as far as your calculation of the18 tax, now with the gross receipt -- the19 gross receipts would be the $27,000?20
As opposed22 to -- okay. So I just want to make sure23 that of all the industries that testified24 today, when it came to a lower profit25 254 11/30/10 - WHOLE - BILL 1006351 margin, you're the only industry that2 said it would benefit them, but that's3 based on your deduction for the cost of4 the car?5
Thank9 you.10 The Chair recognizes Councilman11 Goode.12
Thank you,13 Madam President.14 Mr. Gonzalez, in your testimony15 you reference a lot of community economic16 development initiatives; namely, the17 commercial corridor bond program, which I18 am personally responsible for. You did19 not reference the targeted support from20 the Commerce Department, which I'm also21 responsible for. You did not reference22 the CDC tax credit program, which I'm23 also responsible for. But my question is24 really related to the CDC tax credit25 255 11/30/10 - WHOLE - BILL 1006351 program. Is HACE a participant in that2 program?3
Is HACE a5 participant in the CDC tax credit6 program?7
I can't attest8 to that. I'm not involved in the9 community development projects, but at10 this point, I believe so.11
And maybe12 Councilwoman Sanchez can remind me. Who13 is HACE's partner?14
I'm not15 sure if it was Blackwell or -- it's not16 PECO. It's a law firm.17
It's a law18 firm.19 Are you aware of how many20 corporations in the community development21 corporation tax credit program are law22 firms?23
Probably25 256 11/30/10 - WHOLE - BILL 1006351 half or more than half. So the question2 is twofold. First, should there be3 winners and losers when we do tax policy?4
Well, I5 represent HACE and I also represent a6 constituency in the Fairhill and St.7 Hugh's neighborhood with a population of8 about 20,000 people. In addition to9 that, more than 250 businesses.10 So I think that question would11 be best directed to a community that has12 struggled through decades of13 disinvestment, and many of the businesses14 have managed to overcome a lot of these15 obstacles, so --16
My question17 is, should there be winners and losers --18
Should there25 257 11/30/10 - WHOLE - BILL 1006351 be winners and losers as we're developing2 business tax policy?3
Okay. You9 came to the witness table. You provided10 testimony. The other part of that is,11 you're supposed to answer questions, and12 the question is, should there be winners13 and losers as we're developing business14 tax policy?15
That question16 should be presented to the constituency17 of our community.18
So you don't19 know. Okay. So the losers in this are20 going to be heard. They include small21 businesses. They include Philadelphia22 businesses. And the winners in this win23 big because there are losers. The24 winners in this are law firms. Because25 258 11/30/10 - WHOLE - BILL 1006351 it's a lopsided victory, there are not2 just winners. Because it's a lopsided3 victory, it's actually going to4 jeopardize the community development5 corporation tax credit program. Does6 that help community economic development?7
Based on the way8 you presented the question, I think9 economic development has its pros and10 cons, and I believe that it's necessary11 for us to continue these discussions,12 because a lot of this, it relates to13 changes, you know, within legislation.14 So I can't attest to most of this. I'm15 not really a businessowner. Okay? But16 basically HACE as a community development17 corporation has a vested interest in the18 commercial businesses. Unfortunately,19 Bill Salas couldn't be here today. But20 this much I do know: We do have a21 constituency in our communities that have22 suffered the consequence of this23 investment and many changes within24 governing structures throughout the last25 259 11/30/10 - WHOLE - BILL 1006351 30 years. And, you know, I understand2 that tax reform is necessary, but at this3 point, you know, we support the bill4 because of the way it supports the small5 business structure, tax structure. So6 that much I do say.7
So you don't8 believe that it raises taxes on small9 businesses?10
Well, I believe11 it will create a more equitable playing12 field in regards to the way the tax13 structure is presented. So it gives14 people more of an opportunity.15
But does it16 raise taxes on any neighborhood small17 businesses?18
Does it21 raise taxes on any neighborhood small22 businesses?23
I'll wait25 260 11/30/10 - WHOLE - BILL 1006351 for Econsult to come up. Thank you,2 Mr. Gonzalez.3
Thank6 you.7 The Chair recognizes Councilman8 Kenney.9
Thank12 you.13 The Chair recognizes14 Councilwoman Sanchez.15
Thank you,20 Madam Chair.21 I want to thank you both for22 your testimony.23 Mr. Tigano, the tax that you24 pay is not based on your gross receipts.25 261 11/30/10 - WHOLE - BILL 1006351 It is one of the alternative rates, and I2 think in your colloquy with Councilman3 Kenney, you brought out a really good4 point that you mention in your testimony,5 and, that is, it is the retail rate that6 would apply to you, which is a very low7 rate after your cost of goods and labor8 actually. You can then -- so what you9 pay your salesmen, what you pay for your10 car. You then take that and you apply a11 higher rate in millage to your12 essentially net receipts, but because we13 have eliminated the net income tax and we14 have not increased the alternative rate15 proportionately to the gross receipts16 rate for low margin businesses like17 yours, you are actually better off with18 this tax structure even though your19 margins or your net income is very small.20 Is that a fair summary of the colloquy?21
Thank you.23 COUNCIL PRESIDENT VERNA:24 Gentlemen, thank you very much.25 262 11/30/10 - WHOLE - BILL 1006351 We are now calling Bill Walsh,2 Stan Shapiro, Bruce Koch.3 (Witnesses approached witness4 table.)5
Good6 afternoon, gentlemen.7 Mr. Shapiro, please identify8 yourself for the record and proceed with9 your testimony.10
Thank you, Madam11 President. I'm Stan Shapiro. 14 I do have testimony which I'd be happy to15 distribute. 16 But I'm not going to read the17 testimony. I'm going to try to respond18 to some of the themes that I've heard19 here today from the perspective of20 Neighborhood Networks, which is a21 community organization with members all22 around the City that is really concerned23 at this point at something which has, I24 think, only been raised on the margins25 263 11/30/10 - WHOLE - BILL 1006351 here today, and, that is, the incredibly2 challenging circumstances that we're3 going to be in as a city given what4 happened on November 2nd. 12 So I would want to stipulate13 first that we would like -- all of us14 would like zero taxes. We would like15 zero real estate taxes, zero wage taxes,16 zero business taxes, and we would also17 like all of them to be lowered, if at all18 possible. 20 We'd also like it if the State21 would give the City more flexibility in22 the way in which it levied taxes. So if23 perhaps we could have a business net24 income tax or other taxes which were25 264 11/30/10 - WHOLE - BILL 1006351 graduated, I'm sure that this Council2 might entertain that kind of change so3 that tax rates could be specifically made4 as fair as possible. But in the wisdom5 of the General Assembly, we've not been6 given that authority, so Council has got7 to deal with what is before it, the8 possibilities that are before it. 16 If we just go down that road17 and we find that we're being eviscerated18 by Harrisburg, which is extremely likely,19 we're going to be living in a totally20 different city that we're not going to21 recognize and we're not going to22 particularly enjoy. 24 We think, looking at the25 265 11/30/10 - WHOLE - BILL 1006351 proposal before us, that it's not, again,2 the perfect proposal that would be3 written if we could in fact graduate4 taxes, but it's something which is an5 improvement over the present structure if6 we're looking at preserving the portion7 of our tax revenue that comes from the8 business privilege tax. And since we've9 just had a ten percent increase in the10 real estate tax, the wage tax is capped,11 there are no other really robust taxes12 that we can go to. 20 As we understand it, it would increase21 the revenue that's coming from -- that is22 coming from outside the City; that is,23 revenues which now flow outside of the24 City to businesses which don't have to25 266 11/30/10 - WHOLE - BILL 1006351 pay a net income tax. Those businesses2 would, by having their gross receipts3 tax, which they do pay, be paying a4 larger portion of the tax. It would5 exempt 45,000 businesses, approximately6 45,000 businesses from the tax, small7 businesses from the tax. It would lower8 the tax for other businesses, because the9 $100,000 exemption is available to all10 businesses. 14 From the statistics that I've15 seen, the average business, the average16 business -- and I'm talking about all17 businesses -- with receipts of less than18 a million dollars would benefit from this19 proposal. 17
Thank you24 very much, and I'll be short. But tongue25 268 11/30/10 - WHOLE - BILL 1006351 and cheek, I have to comment, that after2 all the years working with the late3 Councilman Cohen and your work on tech4 staff, it seems to me that in this bill5 under the calculations being done by the6 Revenue Department, a company like Sunoco7 would get a windfall in tax benefits, and8 I never thought you'd be in here9 promoting a piece of legislation that10 would help Sunoco. So I'm sure they must11 have fallen off their chairs when they12 heard your support for Sunoco's tax13 break.14 I told you, it's tongue and15 cheek.16
I don't really --20 I'm not crazy about some of the results21 of this legislation, and there are22 probably others that we could discuss,23 but we don't have a bill in front of us24 which would or a clear opportunity in25 269 11/30/10 - WHOLE - BILL 1006351 front of us which would make Sunoco pay2 more. This will pay -- this will, as I3 understand it, this will make a large4 range of businesses outside of the City,5 Coors Beer is one that's been mentioned,6 some that are in the City that are7 evading taxes, Toys 'R Us has been8 mentioned -- and I'm not here to validate9 that those assertions are 100 percent10 correct, and if it turns out that we find11 out that a substantial share of this tax12 is not in fact being shifted to13 out-of-City corporations, then we would14 have to again look at it. And the good15 thing is that we are doing this early.16 This is coming up early before budget17 choices have to be made. So there's18 between now and May when different19 decisions can be made.20 But I don't think there is the21 opportunity, that I'm aware of, for22 Council to actually put up a list of23 those that they would like to have be24 winners and those that they would like to25 270 11/30/10 - WHOLE - BILL 1006351 have be losers and pick among them and2 enact that bill. I don't think that3 that's an option that's in front of you.4
I was just9 commenting on the benefit to Sunoco and10 the fact that you're promoting it. So I11 just wanted to say hello.12
Thank14 you.15 The Chair recognizes Councilman16 Greenlee.17
Thank18 you, Madam President.19 Just one question, Mr. Shapiro.20 I know there's been a lot of debate about21 job loss and job gain and all like that.22 Have you or your organization looked at23 that? Obviously you're aware of24 Professor Inman's opinion that was in the25 271 11/30/10 - WHOLE - BILL 1006351 paper today. I'm not saying that's2 correct. I don't know. But I know one3 of the concerns is that by raising the4 gross receipts, some of these bigger5 companies will lay people off. A lot of6 those people are working-class7 Philadelphians. Has that factored into8 your thinking at all? Have you looked at9 that?10
We haven't11 specifically looked at losers and12 winners. I don't think that anybody can13 actually, including Professor Inman, can14 precisely predict that. I think,15 frankly, an examination of the tax which16 focuses just on the impact of changes in17 the gross receipts tax, without having18 any comment at all about the impact of19 what happens to the net income tax, is20 pretty worthless, because the net income21 tax raises three-quarters of the revenue22 from the business privilege tax right23 now.24 So I just don't give much25 272 11/30/10 - WHOLE - BILL 1006351 credence to that. Linking tax policy in2 general to growth of employment or lack3 of growth in employment, I think, is an4 incredibly inexact science. I mean, we5 can say that the tax changes in recent6 years increased growth, but we could also7 talk about the development of the arts8 district in Center City as something9 which attracts people and businesses.10 Studies have shown that business leaders11 tend to put their businesses where they12 themselves want to live. So if we have13 improved services, that might well be a14 much greater inducement for business15 growth.16 We've heard that in fact the17 retail sector doesn't do badly. I can't18 really tell you one way or the other for19 sure. We'll hear people who have20 examined those statistics more than I.21 But the bottom line is that it appears22 that companies that are now outside the23 City or inside the City able to evade the24 net income tax would no longer get the25 273 11/30/10 - WHOLE - BILL 1006351 benefit of either choosing to be outside2 the City or choosing to be inside the3 City and hiring good accountants who can4 help them evade the tax. So on5 large-scale terms, it would seem to me6 that this tax is more fair, more robust,7 more predictable and, therefore, can be8 better linked to the provision of City9 services.10 So without saying that this is11 the tax bill that I would write -- and12 it's not -- we have to recognize the13 choices that are before us, and this14 seems to be a better choice than the15 choice of what is now in The Philadelphia16 Code, in our opinion.17
Thank20 you.21 The Chair recognizes Councilman22 Goode.23
Thank you,24 Madam President.25 274 11/30/10 - WHOLE - BILL 1006351 Stan, you know it wouldn't be2 the same without you here.3
I know that.4 That's why I stayed this long. The same5 with you, Councilman.6
A few7 questions, a couple I've asked before.8 You have read the bill?9
From your14 understanding of the bill, does the bill15 raise taxes on any small businesses?16
That specific17 item of information is not in the bill,18 so I can't tell you from reading the19 bill.20
So you don't21 know whether it raises taxes on small22 businesses?23
And, of course,24 it depends on how you define "small25 275 11/30/10 - WHOLE - BILL 1006351 business." If you're saying --2
Annual gross3 receipts of less than a million dollars4 is the standard definition.5
I'm sure that it6 does. But that information is not7 available from just reading the bill.8 You'd have to look at what the particular9 business is earning.10
But even if11 the bill raises taxes on small12 businesses, you're still for it?13
Even if the18 bill raises taxes on Philadelphia19 businesses, you're for it?20
It's not a fair25 276 11/30/10 - WHOLE - BILL 1006351 question.2
Well, I'm sure9 that's true, but I thought I'd point out10 right now that it's not a fair question.11 You know, the bottom line is12 that there are many different bottom13 lines and some -- no matter what you do14 with taxes, there are going to be winners15 and losers. So it's kind of, frankly --16
Let me move21 to question three. And we're going to22 get the most relevant question fourth.23 The third question is, if the24 bill is not revenue neutral, if it25 277 11/30/10 - WHOLE - BILL 1006351 actually costs $23 million, as the2 Administration and the Controller3 suggest, are you still for it?4
No, but my5 understanding is that the authors of the6 bill, the sponsors of the bill, will cure7 that particular problem.8
The fourth12 question is a real kicker. We actually13 have the same goal in this, because we've14 discussed this online, blogging about it,15 and we discussed it by phone. I16 co-sponsored the bill because I like the17 $100,000 exemption on gross receipts.18 That's because I'm still pursuing my19 gross receipts strategy, and we would20 reach that goal for a majority of21 businesses with that $100,000 exemption.22 We don't have to enact this bill to get23 there, do we?24
And this2 bill has a schedule that eliminates the3 net income portion of the business4 privilege tax. We don't have to do that5 to achieve that, do we?6