Ordinance cuts company taxes for Web-based firms in L.A.
Los Aayor Antonio Villaraigosa on Monday signed a measure to cut company taxes for Web-based firms, many of which last year saw their tax rate jump from the lowest in the city to the highest.
The change, unanimously approved by the City Council on March 5, will affect about 1,400 businesses in Los Angeles.
Some of those had threatened to leave the city if the tax rate was not decreased. Villaraigosa signed the ordinance at the Westside Web firm Shopzilla, 1 of the that had considered relocating.
“Not only is this ordinance great company policy, it is a proactive step toward increasing revenues and committing the City to lengthy-term fiscal health,” Villaraigosa said in a written statement. “We are sending a message loud and clear that Los Angeles will fight to maintain great-paying and high-growth jobs in our city.”
Council President Eric Garcetti, who wrote the ordinance, said the change was critical simply because Web-based businesses by their very nature are nimble and can “pack up and move anywhere in the world very quickly.”
Throughout the council debate over the measure, some members expressed concern about making the rate change retroactive to Jan. 1, saying it would cost the city $three.4 million in revenue at a time when the city faces a $212-million shortfall. But Garcetti argued that the city stood to lose even more tax revenue if the left town.
“This change to our tax code will help us retain these businesses and the jobs they produce,” he said Monday.
The city’s Office of Finance last year started to reclassify Web-based firms into a higher company-tax bracket. Until then, Web had been considered to be “multimedia” businesses and subject to a tax rate of $1.01 per $1,000 of gross receipts. Under the new classification, they had been placed in the “company and professions” category, which has a tax rate of $5.07 per $1,000 of gross receipts.
Under the measure signed Monday, Web will be subject to the exact same tax rate as multimedia firms, the lowest rate.
Tags: gross receipts, good company, tax rate, start, fiscal health, los angeles mayor antonio villaraigosa
Having said that: if I were in the proposed 39% tax bracket, I’d be looking with an extremely skeptical eye at government expenditures.
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