Beating the Tax Bite

Businessmen are always grumbling about rising taxes, but they rarely make good on threats to take their firms out of town to avoid the bite. Last week, to escape a new 50-per-share city tax on stock transactions, the Philadelphia-Baltimore-Washington Stock Exchange abruptly began moving to the suburbs from its imposing quarters in downtown Philadelphia.

Even though a court order temporarily restrained the city from collecting the levy, the nation's oldest exchange (founded in 1790) started trading in makeshift leased quarters in the affluent Main Line town of Bala-Cynwyd, a 25-minute auto ride from the city center. Lacking the traditional opening bell, George Snyder, an exchange governor, intoned a resounding "bong." Then 25 trading specialists sat around a composition-board table laid over trestles to buy and sell shares. Despite a shortage of telephones and stock tickers, which forced them to run the tapes down the length of the table so that everyone could get a quick look, they managed to handle half of the P-B-W's normal volume the first day.

Exchange President Elkins Wetherill calls the eight-mile flight "a matter of survival." Though it accounts for only 1.3% of all U.S. stock transactions, the P-B-W is the third largest of the nation's nine regional securities markets, after the Midwest and Pacific Coast exchanges. More than three-quarters of its annual 45-million-share volume comes from brokers outside Philadelphia. Most of that business involves stocks listed on the big New York exchanges. Says Wetherill: "No broker would do business with us when he could save his customer the 50 a share on the other regional exchanges."

If the city repeals the tax quickly enough, Wetherill promises that the exchange will move back downtown. So far, the city shows little inclination to do so, even though the 50 levy will raise only $3,500,000 a year. "If the brokers want to leave, let them leave," says City Council President Paul D'Ortona. If the tax stands, that is just what some 50 Philadelphia securities firms are expected to do.

This file is automatically generated by a robot program, so reader's discretion is required.