Just what we need: Fewer tax revenue opportunities for the city. The three-year tax holiday is supposed to provide an incentive for businesses to set up shop in L.A., and the mayor's office is trotting out examples of a few companies recently making the move. What the city hasn't done is quantify the number of jobs from those transplants. Among the names mentioned is the Chinese electric car company BYD, which is good for a few dozen positions (wowser!), and the architectural firm Gensler, which will add about 100 people to the L.A. office. This is hardly an employment tidal wave. But the biggest question about tax holidays is how the lost tax revenue will be made up. All that's being offered is a hastily prepared 2010 study by a professor at USC's Marshall School - and commissioned by the mayor's office - that suggests a business tax holiday would result in no lost revenue. Here's what Villaraigosa said last year:
USC Professor Swenson expects that the Business Tax Holiday will create an estimated 55,000 new jobs and that each new company will generate a net revenue increase of more than $8,000 to the City.
Hmmm, 55,000 jobs? If BYD is any example, there's a long way to go. Here's the thing: Tax holidays are not the same as actual tax reform - and L.A.'s tax code remains among the most mucked up of any city in the country. And now, the mayor wants to make this three-year giveaway permanent.