June 12, 2025
By Marc Stier
The Inquirer’s editorial endorsement of cuts to city business and wage taxes repeats three widely held but false ideas.
First, Philadelphia’s taxes do not encourage businesses to locate outside the city. Philadelphia business taxes are not based on location but on activity. Businesses that earn income and receipts in the city pay the BIRT whether they are based inside or outside Philadelphia. And businesses located inside the city do not pay the BIRT on income and receipts they earn outside it.
The one exception is for businesses that sell intangible services such as law or investment firms. The City has already enacted a law to fix this problem. It needs approval by the General Assembly, and diverse interests in Harrisburg are ready to support it.
Second, it is not true that the city is generating jobs or businesses more slowly than comparable cities. Philadelphia is growing as fast as comparable cities in the Northeast and Midwest, faster than those regions, as a whole, and slightly faster than our collar counties.
Third, there are no sound studies that show that business and wage taxes are major deterrents to economic growth in Philadelphia. In fact, research shows the exact opposite.