Tax battle in City Council

    If it were a football game, I’d say Bill Green took an early 7-3 lead over Mayor Nutter in today’s City Council hearing over plans to dramatically overhaul city business taxes, but that’s partly because Green’s team got the ball first. Green and Councilwoman Maria Quinones Sanchez want to eliminate the tax on companies’ profits and replace it higher taxes on sales, a reversal of the city’s 15-year trend toward cutting the tax on business sales.

    Early witnesses said that city’s emphasis on taxing profits drives firms out of the city, because a city-based company that provides services all over the country has to pay Philly taxes on its activity everywhere. Taxing sales in the city makes more sense, they say, and would get revenue from big national retailers who currently avoid city taxes by claiming they make no profits in the city.

    Accountant John Kostenbauder gave a revealing explanation of tricks big companies use to hide their profits from city tax authorities.

    Nutter administration officials will argue against the Green-Sanchez proposal, but they’ve been placed well down on the witness list, which means they’ll likely testify after TV cameras leave. The administration’s analysis concludes the proposal will blow a $23 million hole in the city budget.

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    City Controller Alan Butkovitz was an early witness against the proposal, citing an estimate from Wharton economist Robert Inman that it would eliminate 75,000 jobs in the city. Councilman Curtis Jones suggested he was employing the “WAG theory – a wild-a** guess.”

    It’s not clear whether Green and Sanchez have to votes to get their bill out of committee and before the full Council.

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