Los Angeles Enhances its Anti-Business Reputation

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

On Tuesday the Los Angeles City Council voted 14 to 1 to pass a resolution supporting increased property taxes on business on a regular basis. Little surprise as the city continues to build an anti-business reputation. For years the city has held on to a gross receipts tax system for business that neighboring communities use as a talisman to lure business out of the city. The last three Los Angeles mayors have vowed to change the business tax system but nothing happens. Now the council wants to punish business more with a split property tax roll.

The city’s own sanctioned 2020 Commission identified Los Angeles as a “city in decline.” The Commission’s report, “A Time for Truth,” noted, “A city’s ability to maintain a competitive edge in today’s evolving global economy depends largely on how well it attracts – and retains – business, investment, and a talented workforce.”

Los Angeles has been pathetic in creating job growth.

According to the 2020 Commission report, “Los Angeles has a “job crisis.” It’s the only one of the major metropolitan areas in the country to show a net decline in jobs over the past two decades.”

L.A.’s unemployment rate is one of the highest in the nation; the job deficit is not a consequence of the Great Recession because L.A. lagged behind in employment over three business cycles since 1990.

Raising taxes on business property is only going to make the employment situation worse.

A study from professors at Pepperdine University a couple of years ago said a split roll scheme – raising property taxes only on commercial property — would cost the state nearly 400,000 jobs. Since Los Angeles’ job market is the largest in the state, many of those job losses would occur there.

Do the city council members think that business can simply pay increased taxes without raising the cost of goods and services or cutting jobs? Won’t the city budget take a hit in a down economic cycle if regular property value assessments show a drop in commercial property value and thus a drop in taxes due?

These questions seem to matter little. The council sees more tax dollars to spend. Meanwhile, businesses, as exemplified by the many business representatives that attempted to testify against the resolution but were denied when the council refused to hear any testimony, wonder why they remain in a city that continues to punish them.

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