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March 25, 2002

Bar Association Backs 'Substantial' Cut in City Wage Tax

The 13,000-member Philadelphia Bar Association has thrown its support behind a "substantial reduction" in the city's wage tax as a way to "encourage business to locate in, expand or remain in the city." In a resolution overwhelmingly approved by the Association's Board of Governor's on Thursday, March 21, the wage tax was tagged a "substantial impediment" to business retention and development.

Speaking for the Association, Chancellor Allan H. Gordon said: "We are happy to join the Greater Philadelphia Chamber of Commerce and others who support proposals in City Council that would reduce the wage tax. We are deeply concerned about the economic vitality of our city and region. Nearly every study that has been done says that the wage tax in this city must be reduced if we are to be economically viable and competitive."

Gordon said he would testify in favor of the wage tax reduction in front of City Council and that he would urge all Philadelphia lawyers, their employees, family members and friends to call or write Council members in support of the tax cut.

The Chancellor pointed out that the top 22 Philadelphia law firms employ about 8,500 people, withhold more than $14 million in wage taxes annually and lease nearly 14 percent of all of the office space in center city.

"That's just the big law firms," Gordon reported. "Most of the law firms in the city are small and medium-sized. So, you have to multiply those figures and also consider that many of our lawyers are operating small businesses. These taxes are onerous. It's been shown that the wage tax drives businesses and working people out of the city. One study we have shows that a Philadelphia family of four earning $40,000 can save $816 per year by moving out of the city. That's significant."

The Chancellor said he has come to accept the idea that tax reduction is necessary if the city is to survive. "The Philadelphia Bar Association has been a part of this city for 200 years. We love Philadelphia and we want to see the city thrive and prosper. That's why we're ready to work with the Mayor and City Council to begin to put positive, growth-enhancing tax policies into place. The first step is the reduction of the wage tax," he explained.

Gordon said the Board's resolution also puts the Association on record as favoring changes in the business privilege and net profits taxes to put personal service firms such as law firms organized as partnerships of limited liabilities on an equal footing with businesses organized as corporations. "Those are further steps that can be taken. But right now we're focusing on the wage tax," he concluded.

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