Pushing for elimination of L.A. business tax

The gross-receipts business tax has been one of those low-hanging gripes among economic boosters looking to bring more companies to the city. It's a mess of a tax, all right: confusing, contradictory and frequently unfair. Bill Allen, chief executive of the L.A. County Economic Development Corporation, is making a pitch for the tax's elimination in a letter to the mayor and City Council:

Phasing-out this gross-receipts business tax is one of the more rational, prudent and high-profile ways to positively transform the city's hostile job creation status and disposition. By eliminating this widely reviled gross receipts business tax--either through a phased approach or at once in its entirety--the city would be able to take advantage of "announcement effects," which will help in attracting, growing, and retaining companies (and their jobs) within the city that may otherwise not consider the City of Los Angeles to be a viable place to start a business, expand their existing business and hire additional workers, or even stay and continue operating.

Blah, blah, blah. Basically, this is a tax on revenues that a business generates, and the EDC is saying that phasing it out over the next few years would surely pump up the economy. To what extent is a matter of debate, but the more pertinent question is how the city is supposed to make up for the lost tax revenues, especially near-term when L.A. is stuck with budget deficits of hundreds of millions of dollars. (Proponents say the shortfalls would be made up by increased economic activity, which is wishful thinking to the extreme.) A recommendation to eliminate the tax is being considered in a City Council committee. For my money, the focus should be on overhauling the regulatory maze, which is really what drives business owners craaaaazy. City Maven has a report from the Business Tax Advisory Committee.