Commentary & Analysis

A Printing Office: the Philadelphia “Blog Tax” That Never Was, but Is

By Patrick Henry
Published: August 26, 2010

“On the whole, I would rather be in Philadelphia.” It’s what W.C. Fields was rumored (falsely) to have chosen as the inscription on his gravestone. For present-day bloggers in the City of Brotherly Love who remember it, the line carries as much irony as any of the late comedian’s celebrated wisecracks.

That’s because the city of Philadelphia wants them to pay what has been incorrectly labeled a “blog tax”—a development reported by Philadelphia Citypaper last week. The tax would apply, said this story and many subsequent reports, to any blog published by a Philadelphian that makes money from advertising, even if the income is minuscule. Tales of people being hounded for earning as little as $11 for their blogging pains soon abounded.

Written by an intern, the Philadelphia Citypaper story got a viral kick when it was picked up by major news media including The Washington Post, the New York Daily News, and local Fox television. Many in the blogosphere, predictably, were outraged, as a Google search for “Philadelphia blog tax” instantly reveals.

But, here’s the hitch: although the tax in question is real, it isn’t a new levy, and it isn’t specific to blogging. It’s Philadelphia’s existing Business Privilege Tax (BPT), a fee that applies both to businesses and to individuals who earn freelance or consulting income. Those subject to it must pay $50 annually or purchase a lifetime license for $300.

The controversy arose when the Philadelphia Department of Revenue began notifying bloggers of their obligation to pay the BPT. It found them, reports The Philadelphia Inquirer, by using Internal Revenue Service information that identifies everyone in Philadelphia who has reported income from blogging and other taxable pursuits to the IRS.

Bottom line: there is no “blog tax” per se in the city that Benjamin Franklin made famous, although its tax authority now foists the BPT on bloggers as it does on anyone else meeting the description of “individual, partnership, association and corporation engaged in a business, profession or other activity for profit within the City of Philadelphia.”

Although responsibility for the “blog tax” misnomer could be said to lie with Philadelphia Citypaper, accusing the paper of “churnalism,” as this second-guessing commentary does, isn’t fair. Semantic confusion aside, the article deserves some credit for reminding all who read it of the difficulties that cities routinely heap on their small businesses.

Philadelphia media consultant Sean Blanda takes Philadelphia Citypaper to task for careless reporting. But, he also blasts the BPT as one facet of a tax structure that "can be crippling to entrepreneurial activity and innovation.”

“Any business located in the city boundaries of Philadelphia is here despite the city government and not because of it,” he writes. “The ridiculous city business privilege tax and the wage tax...are just a few examples of the hurdles many businesses face by choosing to do work in Philadelphia.”

The situation also turns a spotlight on the value of blogging as a promotional activity for small businesses. Gene Marks, an accountant and a small-business author, thinks that in most cases, it’s an exercise in futility.

“The City of Philadelphia is providing a service,” he writes in a critique of blogging for Bloomberg BusinessWeek. “They're making us face the fact that most small business owners shouldn't waste their time on a blog. Instead of writing about the state of society...they should be reviewing their overhead, meeting with potential customers, and helping their employees do a better job. Not blogging.”

Most small-business blogs are “terrible,” according to Marks, and few succeed as marketing tools. But that doesn’t matter to the city of Philadelphia, which wants its cut from the brilliant and the blithering alike. Will it be only a matter of time before other cash-strapped municipalities put similar tax hooks into their bloggers in the unlikely event that they manage to make a buck? Will they decide, as Fields used to say, that “It’s morally wrong to allow a sucker to keep his money”?