Aug 24th, 2010 @ Philadelphia, Pennsylvania

On Philly’s “blog tax”

By now you’ve probably heard the reports that the City of Philadelphia is charging bloggers $300 to operate a website.

The story has been republished in the Washington Post, Mashable and other outlets after first being reported by my old employer, the Philadelphia Citypaper (though local message board Philadelphia Speaks wrote about this before anyone else). Many of these sources are asserting that the city is targeting bloggers with a new tax.

This is untrue. The city created no new tax and any publication saying otherwise is doing some terrible reporting and any outrage about the anti-blogging attitude of the city is a knee-jerk reaction to some poor research.

Technically Philly, in fact, has paid $300 to the City of Philadelphia. However, this was not for any “blog tax,” it was for the business privilege license, a one-time $300 fee required of all businesses in the city. The purpose of the Citypaper story was to point out that the city was considering blogs claimed in tax returns as “businesses” that need to pay for the license.

It’s certainly a horrible waste of resources to pursue blogs with revenue in the hundreds when some companies and individuals owe the city millions in back taxes, forcing the city to do things likeĀ offer a tax amnesty to the dead beats.

To be clear: there is no “blog tax” in Philadelphia. None.

Admittedly, the city doesn’t help its public perception when city council threatens to sue Twitter and Facebook over the flash mobs or when the city’s Twitter account vomits Facebook links and often posts in all caps.

However, while these slip-ups over social media may be easy fodder for the Internet savvy to make fun of, there is a much larger issue revealing itself here: the city’s tax structure which can be crippling to entrepreneurial activity and innovation.

As I interview local entrepreneurs every day for Technically Philly, I see a common thread: any business located in the city boundaries of Philadelphia is here despite the city government and not because of it (see the 15 steps one businesswoman had to take). The ridiculous city business privilege tax (which is different than the license) and the wage tax which far outpaces other cities of comparable size are just a few examples of the hurdles many businesses face by choosing to do work in Philadelphia.

When applied to bloggers, the economic impact of the city’s awful tax policy is small while its impact on the web is inflated due the “victims” of the tax. However, when applied to small and mid-sized businesses the impact is, well, cities like King of Prussia and Cherry Hill that are located just outside of the city’s borders. These cities offer a more favorable environment for businesses looking to flee taxes such as the business privilege tax and other fees. The only reason Comcast is headquartered here is because the city created tax breaks just for them.

While the outrage over asking a hobbyist to pay $300 for a blog is understandable, it pales in comparison to the scores of companies that chose to set up shop outside city limits to avoid paying city taxes. While it won’t get headlines on Mashable, those lamenting about the blogger tax ought to direct their energy to urge the city to reconsider the taxes that keep companies, and jobs, outside city limits.

And those looking to do cheap, drive-by digs at Philadelphia should know that they look foolish and out of touch. Don’t believe me? Come visit.

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