I love that I can grab an authentic Ethiopean meal in one part of the city and a greasy cheesesteak in another. I love the way the modern cut of the relatively new Cira Centre contrasts with Billy Penn sitting on top of City Hall. I love that my kids think that wandering through the city and ending up inside of a world class museum is normal. And I love that I can catch an up and coming musical act at a little dive one day and see Miley Cyrus live at the Wachovia Center the next (hey, until you have children, don't judge me on that one).
And I love our sports teams: with all due respect to my friends in New York and Boston, our city lives and breathes sports as if our very lives depended on it.
It is, in so many regards, an amazing place to live and work.
But here's what I don't love: the outdated, inefficient revenue system that's choking our city.
Philadelphia's infamously business and taxpayer-unfriendly system made headlines again this August, nearly one year to the day after the Bloggergate fiasco left our city with a black eye. But this time, it's not blogging revenue that has taxpayers talking. It's poetry.
Philadelphia has solid roots in poetry, writing and music. From Will Smith to the Roots, Jennifer Weiner to Lisa Scottoline, Pearl Buck to Edgar Allen Poe, the city has often inspired the written word. As a result, many artists come to our city for concerts and readings, many of which are free and open to the public.
And that's what happened in 2007 when prize winning poet Stephen Dunn stopped by St. Joseph's University to deliver a reading of his poetry. Dunn, who was awarded Pulitzer Prize in poetry for Different Hours in 2001, has read his poetry at The Library of Congress, and at many universities and colleges throughout the country. He had no reason to think this poetry reading would be any different. Until, that is, he received a bill from the City for $10,073.
According to Dunn, he received a Code Enforcement Complaint from the City of Philadelphia "out of the blue" in early April 2011. The complaint cited unspecific violations of the City's Business Privilege taxes from the years 2003 to 2007. The complaint also indicated that Dunn had a court date set for May 20, 2011. The total due? $10,073.
Dunn was, of course, stunned and perplexed. When he called the Department of Revenue to inquire what was happening, he was told that the City was seeking taxes from the time period he had "worked" at St. Joseph's University in 2007. That work consisted of one poetry reading for one evening. Dunn was compensated $2,000 for the reading. That $2,000 would end up costing him more than $10,000.
Here's how: in Philadelphia, there's a wage tax payable for residents who live in the City and also for nonresidents who work in the City. That tax is only due for actual employee compensation. For all others who do business in the City - even if it's just for a day - the City imposes a Business Privilege Tax (BPT). That tax is ostensibly on the privilege of doing business in our fair city. In other words, "[e]very individual, partnership, association and corporation engaged in a business, profession or other activity for profit within the City of Philadelphia must file a Business Privilege Tax Return, whether or not they earned a profit during the preceding year." The tax is based on a formula composed of a gross receipts portion and net income.
After Dunn called Revenue and found out about the tax, he contacted his accountant to try and resolve the matter. His accountant did some calculations and found that the total tax due, based upon $2,000 of compensation, was $58. Dunn paid the $58 and thought the matter might be over.
Only it wasn't.
What Dunn also didn't know - and what the City does a miserable job of promoting - is that in order to do any sort of business in the City, you must also obtain a Business Privilege License. And there's a charge for that, too (of course). A "lifetime fee" for the license costs $300; a one time, annual fee is $50.
Dunn, of course, had not obtained a Business Privilege License for his poetry reading. So the City tacked on another fee for that. After Dunn paid his initial $58, he received a "Delinquent Tax Billing form" indicating that he owed an additional $178, including the charge for the license.
For many taxpayers, it gets worse.
The City doesn't just ask you to pay one year's worth of BPT when you file. You must double the amount due as a mandatory pre-payment. If you expect to make less, you can elect not to make the pre-payment, though good luck finding that stated clearly and even more luck to you if you're hoping not to get billed anyway. To get any overage back, you must file a return the following year.
Terminating your business? Even if you only had a business for one day? You need to file a "Change Form" to notify the City. If you don't, the City will consider you delinquent.
And on top of all of this, there are penalties and interest. And, for each offense, a whopping $5,000 fine.
It is a morass of bureaucratic inefficiency. And it's killing business in our City.
For Dunn's part, he told me:
I've given readings all over the country, and nothing like this has ever happened before, except once in Nebraska when they told me in advance that certain monies were going to be withheld. I knew nothing about a city tax in Philadelphia.
It's a clear problem. Frustrated taxpayers who can't find answers to an antiquated, nonsensical system.
And every time something like this happens, Revenue puts its hands in its pockets and claims that there's nothing that can be done. Council grandstands - like it did during Bloggergate - and promises that they will investigate ways to make the City more business friendly. And then they do nothing.
And it's not just a problem here and there. The maze that is Philadelphia's insane tax system is nearly impossible to navigate. I went on Revenue's web site and counted four separate types of tax that may apply to individuals and fourteen separate types of tax that may apply to businesses. Keep in mind that these taxes are in addition to state and federal taxes.
E-filing? Forget about it - unless you happen to use Internet Explorer 5.0. You get the feeling that the entire system is, in fact, being run from a Commodore 64 in the basement of City Hall.
Calling with questions? Be prepared to wait. And in many cases, as with Dunn, you may still not get the correct - or complete - answer.
Is it any wonder that a visiting artist - or a street vendor, mom and pop shop or new business - might not understand the enormity of trying to set up a business in Philadelphia? It's a lot to take in.
And yet, the City takes a hard line against these "scofflaws" - a word that the City likes to throw around a lot - even when the mistake, as in Dunn's case, is an innocent one. The City tacks on fees and issues complaint notices without stopping to think how this might otherwise be resolved. Dunn, for his part, says that the Code Enforcement Complaint was his first indication that there was a problem. There's something terribly wrong with that picture.
I asked Dunn if he would ever come back to Philly after all of this nonsense and he said that he "probably would" because he has friends here. He also considers this "this tax thing an aberration, not something I would be subject to again" noting that he could be wrong, in which case that "would change everything."
It's an interesting choice of words, fitting for a poet. As a taxpayer, I am actually hopeful that when it comes to our tax system, changing everything - into a sensible, workable system - is something we embrace. This great city deserves it.
