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From wage taxes to red tape, here’s why Philadelphia is one of the hardest cities in which to do business


Andrew Halladay, owner of Imperial Yeast, inside his production facility. Halladay is in the process of opening up his second location in Philadelphia and hopes to have it up and running next year around February or March.

November 23, 2020

Why would a company moving into a century-old building that has never flooded need to cut a drain flap into its metal front door?

It’s the extra cost of doing business in Philadelphia.

Philadelphia ranks among the worst U.S. cities in which to do business, with high taxes and burdensome regulations. Most major cities face similar complaints. But according to academics, business owners and public policy experts, Philadelphia is particularly unwelcoming to new and transplanted businesses, helping to ossify Philly as the nation’s poorest big city.

“If you’ve got barriers to entry for new businesses or make it difficult to expand existing businesses, you’re by definition also restricting the employment prospects,” said Stephen Slivinski, an economist at Arizona State University and a senior research fellow at the school’s free enterprise-focused Center for the Study of Economic Liberty. Slivinski heads a project launched last year ranking major North American cities by how hard or easy it is to run a business. Philadelphia was among the lowest-ranked U.S. cities.

The barriers in Philadelphia begin before a business opens. The city slowly processes paperwork needed to open an establishment, taking 10 days when other U.S. cities need just two to five days, Slivinski said.

The extra steps might matter less for firms that can hire lawyers, said Ross Emmett, the research center’s director. But for small shops, it’s often the business owners themselves who must stand in line or wait in limbo for the next step.

“A week of waiting when you are not receiving any income and are incurring startup costs can set many businesses back,” Emmett said.

Article source: The Philadelphia Inquirer

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