Council acts to cut tax or face business exits and fallout

There are several related stories on the topic of a city tax hike due to reclassification by the city for internet-based businesses. That was changed back to the prior conditon when the businesses talked about just leaving L.A.

"Taxes Increase; Businesses Leave: An LA Case Study." By Joel Fox, Editor of Fox & Hounds and President of the Small Business Action Committee. Mon, March 8th, 2010
http://www.foxandhoundsdaily.com/blog/joel-fox/6578-taxes-increase-businesses-leave-an-la-case-study

"L.A. City Council eases business tax to keep Internet firms from bolting." March 5, 2010 2:44 pm , http://latimesblogs.latimes.com/lanow/2010/03/la-council-eases-business-tax-to-keep-internet-firms-from-bolting.html

The council unanimously approved the measure despite concerns by some members that the tax break would be applied retroactively to Jan. 1 and cost the city $3.4 million in revenue. They argued that L.A. could not afford to lose that money at a time when the city faces a $212-million budget shortfall.

The city council discussion included the overall impact of people leaving the city as workers and the related impact on other business that would be created by the exit from the city.

That impact would include as such examples where employees eat meals and shop within city limits, and that loss would be felt as they depart, creating more negative conditions for these and other businesses, as well. The overall impact would cost the city more than the $3.4 million projected reduction of tax money that the tax hike would bring in.

You might recall the writer's strike that slowed or stopped production of television programs and movies a few years ago. That created a falling dominoes effect as there were businesses not involved in the strike also feeling the pinch from the lack of regular customers for all sorts of services and products, both as reflecting the needs of studios and the individuals not working anymore. The entire economy is affected in that way.

Cardenas had doubts about this but then he's hungry for any dollars he can find first. When it comes to giving up the opportunity for grabbing some tax money, as here, compared to the much bigger loss impact as this industry begins a permanent exit from the city, it is beyond their comprehension.

The collective influence of their money-gouging genes is overwhelming their ability to see these future problems:

"Council members Jose Huizar, Paul Koretz and Richard Alarcon also expressed concerns about the lost revenue — with Koretz saying it made “absolutely no sense” — but ultimately voted for the measure. Garcetti urged a unanimous vote, saying it already had enough support on the 15-member council to pass."

That's the thinking that they have used for years to make L.A. unatrractive for setting up businesses. Add to that the police and fire cutbacks in services, and you can really see why there are major obstacles in deciding to coming to L.A. instead of heading over to Glendale or Burbank or any number of nearby cities that have some better conditions for them.

The change was approved today by the Mayor as the LA.Times reports on L.A. Now, "Villaraigosa signs measure to reduce Internet business taxes."
March 22, 2010 11:16 am, http://latimesblogs.latimes.com/lanow/2010/03/villaraigosa-signs-measure-to-reduce-internet-business-taxes.html