Bloggers Bonked by Big City Tax UPDATED
on August 22nd, 2010Cities strapped for revenue are turning to bloggers for tax dough. Philadelphia bloggers, regardless of net income, are required to fork over $300 for a business license.
After dutifully reporting even the smallest profits on their tax filings this year, a number — though no one knows exactly what that number is — of Philadelphia bloggers were dispatched letters informing them that they owe $300 for a privilege license, plus taxes on any profits they made.
Even if, as with Sean Barry, that profit is $11 over two years.
This kind of punitive small business tax can sneak up on freelancers no matter where they live. I moved from a small town years ago when they set up a 3% tax for the self employed: a few miles away in another town, my fee was $50 a year.
Freelancers, keep a watch on zoning, and business license fees wherever you live. Expect municipalities to push for more loony laws, and to hit offenders with outrageous punitive fees. I’m betting many webcomickers aren’t keeping a watch on this sort of thing.
When I lived in a city condo, my neighbors spied on me to see if I used the condo dumpster to take out business-related trash. One neighbor confronted me:
“What are you doing at that computer all day?”
“What are you doing looking in my window?”
Neighbors have been known to report self employed persons for running businesses from their homes. Cross your t’s, dot your i’s.
This blogger tax has scary free speech implications. I wonder if it could be challenged on that basis. As I recall, where I used to live, writers were exempt from business license tax due to free speech concerns.
Because I am an idiot, I forgot the links.
Philadelphia City Paper
Philebrity
EDIT: There is conflicting info in some of these posts. A couple of the taxed blogs seem to have NO ads.
And double EDIT: The city might want to think twice before declaring all these hobbyists new businesses. Because the hosting fees, internet connections etc suddenly become TAX DEDUCTIONS.
And triple EDIT: Yes, I know I use the terms tax and license interchangeably, mostly because I know a license is just another form of tax.
I think this could very easily be overturned based on First Amendment grounds. Very definitely has a chilling effect. I think there ought to be a tax on politicians.
I agree w/Joe, can we vote on that?
I’m not sure how they would enforce it. First off, not all bloggers have advertising, and so are not making any income directly from the blog itself (if they are the owner of the blog). And then some blog templates may have advertising as part of the deal for free hosting — that is, it’s not the blogger that’s making the revenue but rather the hoster.
Frankly, it makes me glad in this case that I love in LA City/County. Freelancing is so extremely prevalent in the area that they had to come up with reasonable guidelines for small business. But of course, I’ll double check – now would be a good time, since I’m planning to add “ScribblerWorks” and “ScribblerWorks Publishing” as ficticious names to my DBA.
Ack! typo! … “makes me glad in this case that I LIVE in LA….”
I don’t see how this can hold up under challenge. It’s an impediment to free speech. Many blogs have advertising on them. If you are on livejournal or something like that, the company posts the ads.
The license hits whether the blogger makes a profit or not. Chilling effects, indeed.
Here’s the definition of a privilege license:
“A privilege license is a license requirement of every person, firm, company or corporation engaged in any business, vocation, occupation or profession.”
OK, that’s nice, but I don’t see the wisdom in a draconian application to hobbyists.
$300 for a small business license is a wad.
I agree that the $300 is insane — especially if it is an annual fee, and not just the initial licensing. Way to kill the tiny businesses.
Wait a minute: “A privileged license is a license requirement of every person, firm, company or corporation engaged in any business, vocation, occupation or profession“???
But…. that is EVERY SINGLE PERSON employed in ANY job! From babysitter and burger-flipper to the real estate entrepreneur to the local mini-grocery to the eBay collectibles dealer. That’s … twisted. And impossible. And … infringes on my “life, liberty and pursuit of happiness” … plus taxing me unduly for just trying to be a good citizen and paying my bills.
Some interesting comments over on the original article.
This one left me flabberghasted:
(Oh, and sorry about the coding screw-up on the previous post!)
I see this differently than most. The city though morally wrong is simply excising what it can from its SUBJECTS! If one is ignorant enough to sign a 1040, w2, claim to be a U.S. citizen on say a voter registration form that man or woman is made a subject by their own signature and now has NO recourse against their masters. Thew issue here is of STATUS. This is a farm animal bleating about her treatment by her OWNER! No other OWNER OR animal has any right to object to this. Watch how she is treated by her owners. She will be treated EXACTLY as a farmer would treat a belligerent sheep! If one wants to remain ignorant AND free one wants what never was or can ever be! Learn to step OUT of “taxpayer” status or accept your yolk!
I had never equated being a citizen and taxpayer with being a farm animal OWNED by my local government. I think someone’s analogy is way off the rocker!
Another commentatory recommended getting a P.O. Box outside the area affected and registering that as one’s place of business. However, if I’m remembering correctly from when I filed for my license, you CAN’T use a P.O. Box as “place of business”. Oh, sure, you can specify it as a mail collection point, but you have to provide an actual street address as the “place of business” whether you get your mail there or not. Too many people commenting that don’t know what they’re talking about.
Also in reading it, judging on a latter passage in that article (or in the comments?) it seems the $300 is a lifetime fee with an alternate of a $50 annual fee, which is a different thing (although both are still far more than I had to pay here in LA). The cap on taxation is also important — apparently under $100,000 is not taxable. In LA, it’s actually higher because of the film industry, it’s at $300,000. This is because screenwriters might easily actually get a GROSS paycheck of $100,000, but once all the agent/manager/taxes are paid, their take-home might be more like $35-40 thousand. For the year. In a very expensive city. The object is to keep them around a potential taxpayers, so don’t make it impossible for them to stay because you’re taxing them out of existence. So LA made adjustments for reality. Philly needs to learn that lesson.
@ scribbler: the license doesn’t refer to everyone with a job, it refers to everyone with a business, including the self employed.
The blogger license applies to all bloggers with commercial blogs, regardless of income limit. Even if you make under the local taxable limit, you still have to get the license.
Even $50 a year is a ridiculous fee for a blog that made $11 in two years.
I had to get a business license regardless of my income, because the business license and taxable business income are two different matters.
I can’t remember what I paid for my license last time, but it was something like $30. Then I had to pay a tax on my equipment.
And yeah, the farm animal comparison…jeez, there are some people I wish would have to pay me money to put up with their crap on the internet.
I double checked, scribbler. The REVISED proposal is no business tax on first $100,000 of income, but you STILL have to get the license.
And I think a lot more municipalities are going to try this sort of thing. The city makes no distinction between the hobbyist and the professional. Citizens need to stay on top of these goofy laws.
EDIT: There is conflicting info in some of these posts. A couple of the taxed blogs seem to have NO ads.
And double EDIT: The city might want to think twice before declaring all these hobbyists new businesses. Because the hosting fees, internet connections etc suddenly become TAX DEDUCTIONS.
Good god almighty, how grabby can Philly get?
Somehow I get the feeling that whoever drew up this proposal doesn’t really have any practical experience with websites, blogs, hosting matters (ie, “free to you if you let US run google ads!”), and suchlike stuff.
What a mess.