Editorial: Mayor Parker’s Proposal to Eliminate Business Exemption Puts Philadelphia’s Economy at Risk
Rep. Jason Dawkins April 1, 2025 | 9:44 AM
Philadelphia Mayor Cherelle Parker’s proposal to eliminate the $100,000 exemption on the city’s Business Income and Receipts Tax (BIRT) has ignited debate, and for good reason. While the intent is to generate an estimated $23 million in additional revenue to fund critical city services, the potential fallout could be devastating for Philadelphia’s small businesses and long-term economic vitality.
Enacted in 2014, the BIRT exemption was designed to alleviate the tax burden on small businesses, many of which operate on thin margins and reinvest profits to sustain growth. A Pew Charitable Trusts study from 2017 to 2023 underscored the importance of this exemption, highlighting that over 70% of businesses benefiting earned less than $500,000 annually. Many of these enterprises are minority-owned and located in underserved neighborhoods. Removing this exemption could dismantle the fragile progress these businesses have made, potentially driving them to closure and discouraging new ventures from taking root.
The consequences of eliminating the exemption extend beyond economic harm, they could exacerbate racial and economic inequities. The Pew study showed that minority-owned businesses disproportionately benefited from the exemption, helping close the racial wealth gap. Stripping away this support risks reversing years of hard-fought progress toward equity and inclusion.
Adding complexity to the issue, a recent lawsuit involving a Massachusetts-based medical device company questioned the exemption’s legality under Pennsylvania’s uniformity clause, which mandates that taxes be applied uniformly. In response, I have partnered with Pennsylvania House Philadelphia Delegation Chair Morgan Cephas to introduce legislation to codify the exemption and protect its legal standing, a critical step to safeguarding Philadelphia’s small business community from uncertainty.
While raising revenue is essential, doing so at the cost of dismantling Philadelphia’s small business ecosystem is a dangerous trade off. The city’s leaders must explore alternative revenue strategies that do not jeopardize the growth and stability of the businesses that form the backbone of the local economy.
Philadelphia’s future hinges on policies that balance fiscal responsibility with economic inclusion. Mayor Parker’s well-intentioned proposal must not sacrifice the city’s long-term growth for short term financial gains.
State Rep. Jason Dawkins, D-Phila., is Majority Chair of the House Labor & Industry Committee.