When City Plays Taxman, Businesses Lose Out

Our city leaders keep informing us that the Los Angeles budget is in shambles. They tell us that the deficit is large and growing. They say cuts need to be made. They inform us that revenues need to be increased. In the midst of all these statements, what does our city do? Los Angeles moves forward by doing its best to discourage businesses from doing business in the city. Our fair city enacts unfair business taxes that push businesses away. It appears to me that the Los Angeles motto should be, “The only good business is one that used to be in Los Angeles”. Why does Los Angeles keep finding new ways to tax the same people that are still in the city? Our City Council only needs to read its own statistics which show that the cities adjacent to L.A. receive twice the sales tax dollars per constituent than those in the City of L.A. Could it be that something is scaring high volume businesses from opening or staying in L.A. Would it not be better if the City of L. A. were to become business friendly and became proactive by bringing new jobs and businesses to our wonderful city? I have been saying for years most problems usually have simple solutions. Losing local business and their tax generation to nearby and adjacent cities and states is no exception. Los Angeles’ unfair business taxes are the problem and our enemy here. We all agree the City needs revenues to pay its bills, but pushing businesses out of our community by assessing unfair taxes is not the solution. Why can’t our leaders see that less business and fewer employees in our city equates to less tax revenues? One simple solution would be to revisit the business tax schedule in 2010. How about offering businesses a 1% business tax credit for each full time employee that lives in the city and ½% for every full time employee who lives outside the city. If a company has 51 employees living inside the city their tax bill would be 50% lower than a company with only one employee. Proof of living in the city would be a copy of the employee’s utility bill when submitting the businesses annual business license fee. We might even encourage employers with over 100 employees to move to L.A. How about a business tax credit of 1% for every million dollars of taxable revenue a business generates in the city of L.A? That would encourage a lot of high volume retailers or car dealers to move to L.A. rather than a negative tax for doing a lot of business here. This would be a wonderful encouragement for a car dealer to move from Calabasas or Santa Monica to Los Angeles. Yes, I understand that we would initially be losing a lot of business license fees but it would be good having people working in L.A. and living in L.A. instead of commuting 30 or more miles a day. Over the long haul, this short fall would be made up by businesses opening or returning to our city. Additionally, retailers will be generating hundreds of thousands of dollars in sales tax for the city instead of just a few thousand from business license fees. Councilmember’s are you listening? Or are you just contemplating what new taxes and fees you will create in 2010. Rickey M. Gelb is managing general partner of the Gelb Group – A Family of Companies