A bill poised for passage in Philadelphia City Council Thursday would exempt private equity funds from the city’s business taxes.
The bill’s sponsor, Councilman Bill Green, and other city officials said there are no such funds in the city that now pay business taxes, but some are ready to move in if the exemption is approved.
Green said the business tax makes it virtually impossible for such a fund to operate in the city.
“It’s the normal business privilege tax, which when you apply it to the return of a fund, would take the first 6 percent of return and put it in the city’s pockets instead in the pockets of the people who invested in the fund,” Green said.
Green said exempting such firms, defined in the ordinance as “companies registered under the Investment Company Act of 1940,” could generate substantial rewards for the city and its taxpayers.
The city would benefit from the wage taxes and spending of employees who move here, he said, and also from startup companies that might follow.
“Job growth comes from entrepreneurial companies, small businesses, startups,” Green said. “And without the funds who invest in them here, we don’t have the companies.”
When asked why he singled out this one industry for a tax break, Green said he tried to pass comprehensive business tax legislation, but couldn’t get support from Mayor Michael Nutter’s administration.
The Nutter administration supports the private equity firm exemption. There was no testimony against the proposal in a City Council hearing last week.