According to a recent article in Philadelphia’s City Paper, Philly bloggers report receiving government duns for a $300 “business privilege” tax. The city’s government, operating on the unsafe assumption that these blogs have made raked in some form of income, wants a cut.
The city’s lawyer asserts that if a blog has the potential to make a profit — if, for example, it features any paid advertising space — its author must purchase a business privilege license “whether or not they earned a profit during the preceding year.” If your blog makes you a few dollars here or there, you’re still subject to the $300 lifetime (or $50 a year) tax, even if that tax exceeds the amount earned.
Taxing a blog under such vague circumstances of potential profit leaves the city the option to tax just about anything. A public speaking engagement, an account on Ebay, or even small tax-free money transactions such as babysitting fall under this kind of all-encompassing scheme.
What’s behind it all? City governments (especially Philadelphia’s) are in a bad spot due to their past poor budgetary decisions. Those $75 million taxpayer-subsidized baseball stadiums and such eventually add up to real money. So they’re scrambling for quick revenue fixes and the result is cockamamie tyrannical debt “solutions” like this one.
A few Philadelphia City Council members are promoting a “reform” proposal that would exempt bloggers who make less than $100,000 per year from pro rata taxes on their blogging income, but that proposal would still require the “business privilege” license for any blog intended to generate revenues.
These tax schemes in particular obviously conflict with freedom of the press and of speech. Most bloggers use their sites as personal online journals or soapboxes. They’re not in “business” in any meaningful sense of the word. Few make any money at all and even fewer make enough to cover the cost of their monthly Internet access bills, let alone anything a reasonable person would consider a “profit.”
On the practical side of the ledger, how does the city government determine that a blog “business” is even located in Philadelphia? Where’s the server it’s hosted on? How do they know you don’t drive out just past the city limit sign with your 3G laptop to update the blog each day? And why can’t they be content with the sales tax rakeoff they get when you spend that $20 in “surprise” blog money you made, instead of hectoring you for $300 that you’ve never seen and certainly aren’t going to give to them?
The city, of course, considers itself justified. All governments view “their” citizens as cash cows to be milked dry. If Philly’s politicians want to tax people who wear New York Yankees hats, they’ll come up with a pile of justifications for doing so, wrapped in legal paper and secured with red tape. Complaining about this one manifestation of government idiocy does little good. To fight it, one has to reject the idea that he or she is “just another taxpayer” and start treating those politicians like the muggers they are. Avoid them if you can, fight them if you must, throw some money at them and get away if you have no other choice.
Citations to this article:
- Stacy Litz, Philadelphia: The City of Big Brotherly Love, Medford, Massachusetts Daily Mercury, 28 Aug 2010
- Stacy Litz, Philadelphia: The City of Big Brotherly Love, Malden, Massachusetts Evening News, 28 Aug 2010
Small cities governments are where the people will be revolting first over egregious taxes. Mark my words.
I wish I could say that taxing on potential income is novel. I can say it’s a novel application. But as someone who has many friends in the family court system, alimony and child support based on what a judge says you should earn instead of what you do earn is not uncommon.
This is just taking that principle into a new area.
They're not being taxed on "potential" profit. All the bloggers involved declared income from their blogs (albeit a small amount).
You also need a proofreader.
Marc,
Actually, they ARE being taxed on “potential profit.”
Yes, the ones hit so far are people who declared small amounts of income on their tax returns, but they’re not being charged a pro rata tax on that income, they’re being charged a “business privilege tax” not tied to the amounts they declared on the premise that they will generate future revenue.
And actually we need several proofreaders. Are you volunteering?
it occured to me that this is the best scam ever.
I think if Philadelphia wanted me to pay a one-time $300 business privilege tax on my blog because i made a few bucks on it, I’d take them up on the offer. I would promptly begin writing off thousands and thousands of dollars worth of stuff as business expenses. Computer, internet, smartphone, lunch with friends (hey, it is a PERSONAL blog), the rent for my home/office, anything I buy and subsequently blog about…
I moved out of philly to avoid taxes. I might just move back.
This government measure is a burden on bloggers. Not all of blogs in Philly are raking in money! It stifles bloggers the right to blog.