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February 25, 2004

Chancellor: Lawyers Endorse Tax Reform Measures

Speaking on behalf of the 13,000 members of the Philadelphia Bar Association, Chancellor Gabriel L.I. Bevilacqua today told Philadelphia City Council's Committee of the Whole that the city must "restructure its tax system" and broadly embrace the recommendations of the Tax Reform Commission. Bevilacqua told Council members that "the wage tax must continue to be cut until it is substantially reduced" and added that the city must eliminate a provision of the Philadelphia Business Privilege tax which effectively penalizes businesses conducted in partnership versus those conducted in corporate form.

The Chancellor said that "studies have time and again shown that the wage tax is one of the principal reasons why businesses leave Philadelphia, do not expand here, or never locate here." He noted that "these studies are confirmed by our own experience as well as those of our lients." Bevilacqua also pointed out that "the city effectively taxes partner income at a combined rate of at least 6.7% but taxes compensation paid to employee owners of businesses operated as corporations or sole proprietorships at rates ranging from 3.9% for nonresidents to 4.5% for residents." The Chancellor said that "this disparity has been a major factor in the relocation of professional firms from the city into the suburbs."
The Chancellor suggested that lowering taxes would stimulate economic growth, bring more quality jobs into the city, and actually enhance city revenues. 
"Misplaced or unbalanced taxation can pre-emptively strike at the heart of our local economy," Bevilacqua warned, but reasoned and equitable tax policies can help create economic vitality. "It makes no sense to pit one group or one segment against another," he added. The Chancellor urged Council to choose an equitable tax policy that will "create a growing, vital, economically vibrant city and region."
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