Philadelphia is still paying for a mistake made 72 years ago when the city implemented its first business tax under Mayor Joseph Clark despite strong opposition, writes Allan Domb for Philadelphia Magazine.

In the first iteration in 1952, the levy required businesses to pay a tax of 30 cents on every $100 of their gross revenue. Since the levy was not only taxing the profits, that meant that even the businesses that had lost money were still required to pay the tax.

That changed to a certain extent in 1985, when the current BIRT tax structure was adopted. It lowered the levy on gross revenue, but also added a tax on profits which now stands at 5.81 percent.

This business tax creates a problem to this day, as due to the city’s high tax rates, private-sector businesses often do not want to come to Philadelphia.

According to 2020 statistics, Philadelphia recorded a private-sector job growth rate of 1.6 percent annually. This puts the city below the national average.

This has led to a lack of good-paying private-sector jobs, which is one of the main reasons for the city’s low standard of living and high poverty rate.

Domb said while the business tax rate has dropped marginally, it’s time to get more aggressive.

Read more about the long-standing Philly business tax mistake in Philadelphia Magazine.

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