As an entrepreneur in Philadelphia, I’ve built my life around the company I founded, Empower Construction, pouring everything into it. But every day, I feel the weight of the city’s tax policies pushing down on my shoulders as a small-business owner.
I watch as other companies struggle to keep their doors open — not because of a lack of customers, but because of our city’s tax structure. Philadelphia’s business taxes, which are the highest in the nation, tend to suppress entrepreneurship, minimizing opportunities for people like me. It doesn’t have to be this way.
I’m writing because Philadelphia now has a great opportunity to fix this and help with Mayor Cherelle L. Parker’s mission of Economic Opportunity for All. The Tax Reform Commission will soon announce recommendations on how to revise the city’s tax structure to fuel growth and jobs. As a small-business owner — and as a private citizen who wants to see small businesses thrive in this economy — I’m praying they do the right thing by fixing the Business Income and Receipts Tax (BIRT).
This tax is a double hit on small businesses, diminishing already low margins with which entrepreneurs could be investing back into their employees, companies, and communities to foster growth. We’re taxed on both our gross receipts and net income — money out of our pockets before we even see a profit. Imagine running a marathon and being forced to carry a heavy backpack. That’s what BIRT does to businesses like mine.
Imagine running a marathon and being forced to carry a heavy backpack. That’s what BIRT does to businesses like mine.
Unlike larger companies, small businesses can’t afford the high-priced accountants to minimize tax liabilities. So we get hit full force, paying taxes on revenue before covering our basic expenses. This is burdensome, especially when every dollar matters.
Philadelphia’s wage tax makes it even harder to succeed. At 3.75% for residents and 3.44% for nonresidents, it’s the biggest local wage tax in the country. It doesn’t just affect me, it affects my employees, the very people who make my business possible. We often have employees who refuse to take on any projects in the city due to this tax.
These aren’t just numbers on a spreadsheet, they’re real challenges we face every day.
It’s heartbreaking to lose good people because of something as basic as a tax. Compared with Atlanta or Cleveland, where the wage tax is significantly lower, Philadelphia is at a severe disadvantage. If we want to foster growth and make Philadelphia attractive to all businesses and employees, we need to address the issues that deter them away.
These tax policies have real consequences. At 22%, Philadelphia’s poverty rate is nearly double the national average. As an individual who was born and raised in poverty in Germantown, I understand how tax policies can influence a head of household’s ability to provide for their family, ultimately stifling hope. The Tax Reform Commission has a chance to change this.
While other cities like Atlanta, Houston, and Dallas are creating business-friendly environments with lower taxes, Philadelphia is losing ground. These cities understand that a thriving business community means more jobs and more vibrant neighborhoods. I’d be remiss if I didn’t acknowledge that although Philadelphia’s property taxes may be lower, the high business taxes negate any advantage.
By lowering or eliminating the BIRT and reducing wage taxes, we can create a fairer, more competitive environment that encourages growth and investment. I could invest in my business, hire more staff, and contribute more to my community. I can continue to steer the course of our company’s mission to “represent and empower marginalized communities by providing equitable energy access and opportunities for economic growth.” It would mean other small-business owners wouldn’t have to close their doors. We need to rethink our tax structure and the impact it has on small businesses.
Philadelphia can be a city where businesses want to stay, where new businesses want to set up shop, and where everyone has a chance to succeed.
For the sake of our city’s future, let’s remove the barriers that are too high to hurdle and create a Philadelphia where businesses, and people, can truly thrive.
William Bowie is the president and CEO of Empower Construction.
