REFORM OF PHILADELPHIA'S BUSINESS PRIVILEGE AND NET PROFITS TAXES
 
WHEREAS, most law firms practicing in the City of Philadelphia are organized as unincorporated associations;

WHEREAS, the City of Philadelphia imposes a net profit tax (NPT) on all unincorporated associations;

WHEREAS, the City of Philadelphia imposes a business privilege tax (BPT) on all businesses, including unincorporated associations, which are engaged in business within the City of Philadelphia;

WHEREAS, the BPT is based upon both gross receipts and net income;

WHEREAS, when computing income subject to NPT and BPT, an unincorporated association is not permitted to deduct compensation paid its principals;

WHEREAS, when computing income subject to BPT, an incorporated business is permitted to deduct compensation paid to its principals;

WHEREAS, an incorporated business is not subject to NPT;

WHEREAS, a credit in the amount of sixty percent of the net income portion of the BPT may be credited against the taxpayer's NPT liability (BPT Credit);

WHEREAS, Philadelphia City Council, on February 27, 1992, adopted City Council Resolution 41 calling for the creation of a select committee charged with the responsibility of reviewing the City of Philadelphia's business tax structure and making recommendations for the reform thereof (Select Committee);

WHEREAS, the Select Committee was charged with the responsibility of making recommendations which, cumulatively, were revenue neutral;

WHEREAS, the Select Committee has made forty-four specific recommendations, including a recommendation that City Council enact an ordinance increasing the BPT Credit from sixty percent to one hundred percent;

WHEREAS, the Select Committee's other recommendations are intended to make the City of Philadelphia's business taxes simpler, easier to administer, fairer and more equitable;

NOW, THEREFORE, BE IT RESOLVED that the Philadelphia Bar Association Board of Governors:

  1. Commends the work of the Select Committee in making recommendations which are revenue neutral and are designed to improve the economy of the City of Philadelphia and the business climate in which it must operate;

  2. Specifically endorses the Select Committee's recommendation to increase the BPT Credit from sixty percent to one-hundred percent;

  3. Requests that City Council enact an ordinance increasing the BPT Credit from sixty percent to one-hundred percent;

  4. Requests that the Mayor of the City of Philadelphia sign into law any ordinance enacted by City Council which increases the BPT Credit from sixty percent to one-hundred percent;

  5. Requests that the Mayor of the City of Philadelphia sign into law all ordinances enacted by City Council designed to make Philadelphia business taxes simpler, fairer and more equitable; and,

  6. Requests that the Mayor of the City of Philadelphia immediately submit to the Pennsylvania General Assembly proposed legislation designed to implement those Select Committee recommendations which require state legislation in order to make Philadelphia's business tax structure simpler, fairer and more equitable.

PHILADELPHIA BAR ASSOCIATION
BOARD OF GOVERNORS
ADOPTED: March 30, 1993