Many bloggers dream of making some decent money for their online efforts. Only a handful ever actually turn a profit on their blogging. Most don’t even make enough to buy candy, but Philadelphia still wants a cut of these non-existent profits.
Marilyn Bess has made about $50 over the past few years as a contributor for eHow.com and working on her own blog. According to the city of Philadelphia, this means her hobby is a potential source of income and they want a cut. This wouldn’t be such a big deal, but they are demanding $300, the price of a business privilege license.
“The real kick in the pants is that I don’t even have a full-time job, so for the city to tell me to pony up $300 for a business privilege license, pay wage tax, business privilege tax, net profits tax on a handful of money is outrageous.”
Bess is not alone. Many bloggers in the Philly area were served up with similar demands after filing their taxes. Why? Because they reported income from blogging activities. No matter how small, each was told they owe $300 plus taxes on their income. According to Sean Barry, who made $11 over two years on his music blog, he doesn’t believe blogs should be taked unless they’re “making an immense profit.”
Of course, the cash-strapped city doesn’t agree. Tax attorney Michael Mandale of Center City law firm Mandale Kaufmann says that the city requires a privilege license for any business engaged in any “activity for profit.” This applies “whether they earned a profit during the preceding year.”
What is most disturbing about this is that the city is charging people up based on the potential to earn revenue. If you even think of starting up a blog and putting some ads on it, the city feels that you own them $300 plus taxes on whatever you make. It doesn’t matter if you make nothing. It doesn’t even seem to matter if you actually monetize or not since just about every blog has space for ads, thus potential to earn cash.
City Council members Bill Green and Maria Quiñones-Sánchez are looking to reform the city’s business privilege tax to make Philly more attractive to small business. Under their proposal, bloggers would still have to fork over $300 for a privilege license, but wouldn’t have to pay any taxes on their first $100,000 in profit. Not much of a step-up as most bloggers will never even earn enough to cover the $300.
This is definitely not a good look for people in Philly and bloggers are not the only ones affected. Anyone deciding to step out on an entrepreneurial branch must pay up according to the law. Bloggers, freelance writers, starving artists, babysitters, even moms trying to earn a buck selling crocheted hats on Etsy.
Do you think Philly is being fair?