Extending biz tax holiday

It'll now be three years instead of two. The City Council voted 10-0 to extend the tax holiday after a big push by L.A. Mayor Antonio Villaraigosa. From the HuffPost:

I am proud to report that City Council has just unanimously passed the Business Tax Holiday and other tax-friendly reforms! This action will without a doubt create jobs in Los Angeles, and lay the foundation for future economic growth.

I wouldn't bet the farm on that. A tax holiday is more of a fiscal gimmick for governments unable or unwilling to provide any other incentive for businesses. It's not the worst move in the world, but its impact is limited for any number of reasons, not the least of which is that at a certain point, whether two years or three, the holiday will be over and the taxes will be due. It's also unlikely to generate much extra revenue for the city - any additional sales taxes to be collected would be offset, at least to an extent, by the business taxes that are lost.

Attached to the tax proposal was a USC study commissioned by the mayor's office that bolstered Villaraigosa's case for a tax holiday. Sort of - the study found that the program would create 55,000 jobs, a questionable conclusion considering the limited effect that other incentive programs have had on the local economy. Thing is, there's no easy solution to what have been years of misguided policies that thwarted business growth. Now we're paying the price.

Here's the USC study.