No 'blog tax' in Philadelphia

Sister Julie Vieira sits at her computer working on her own web blog called "A Nun's Life" in Chicago, Ill.

TEXT OF STORY

Kai Ryssdal: There are -- and this is just a rough count -- approximately zillions of blogs out there. Only a tiny percentage of bloggers make anything close to a living at it. But if your blog does make money, and even if it doesn't, and if you happen to live in Philadelphia, the city wants a cut. To absolutely nobody's surprise, news of what quickly came to be called a "blog tax" circulated wildly in the blogosphere.

As with many things online, Joel Rose found out there's less to the story than meets the eye.


Joel Rose: For a few days in August, Philadelphia was the laughingstock of the Internet, as bloggers and even the mainstream media picked up the "blog tax" story and ran with it.

Reporter 1: Philadelphia bloggers are all atwitter over a city business tax on their Internet thoughts.

Reporter 2: Call it a blogging tax. Some website bloggers are being sent letters from the City of Philadelphia demanding $300.

Reporter 3: Basically, what they're doing is licensing freedom of speech.

The problem with the "blog tax" story is that Philadelphia doesn't actually have one.

Brett Mandel: There is no blog tax. The problem the bloggers are encountering is that Philadelphia is not a welcoming place to be an entrepreneur, period.

Brett Mandel is a long-time tax reformer in Philadelphia. He says bloggers are discovering what small businesses in the city have complained about for decades. Basically, if you work for yourself in Philadelphia, you have to get what's known as a "Business Privilege License," which costs $50 a year, or $300 for a lifetime.

Mandel: Philadelphia has a punishing tax structure. So whether you're trying to make a widget factory or whether you're trying to be the next Google, Philadelphia is going to tax you whether you make a profit or not, which is hard on start-ups.

Philadelphia isn't the only city that has this kind of fee, but it does seem to be more aggressive than most about enforcing it. The $300 license can be especially hard on the majority of bloggers, who say what they do is more like a hobby than a job.

Sean Barry: My blog is a labor of love. It's not a business.

Sean Barry writes a music blog called "Circle of Fits." He says he's made exactly $11 from the banner ads on his blog -- not even enough to cover his web hosting.

Barry: I spend money to do what I do. I don't make any. Basically, I put those banner ads up to maybe supplant the cost of a beer every now and then.

Barry says he never got a letter from Philadelphia's tax office. In fact, all the noise about the so-called 'blog tax' seems to be based on just one blogger who did hear from City Hall. Of course, that didn't stop the blogosphere from spreading the story far and wide, which in turn forced the city to do damage control.

Man 1: So, to clarify, if someone makes any kind of revenue from a blog...

Last week, the city hosted a "Bloggergate happy hour" at a local bar to answer questions. Philly officials tried to seem sympathetic. But on the basic question -- whether bloggers have to sign up for a Business Privilege License, even if their blog is just a hobby -- spokeswoman Andrea Mannino wouldn't budge.

Andrea Mannino: In our city, you know, unfortunately, the second you generate a dollar, we go after it. That's just the way our tax code is currently written.

That argument doesn't impress Andrew Baer. He's a lawyer who also writes a legal blog.

Andrew Baer: Regardless of what's on the books, any tax compliance agency, any department of revenue has discretion in deciding who to go after and who not to. I would love to know whose decision it was to go after people earning $11 a year from Google AdSense, and give the city this very public, very national black eye.

Tax reformers say it's a black eye Philadelphia richly deserves -- just not for the reason you might think after reading the blogs.

In Philadelphia, I'm Joel Rose for Marketplace.

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