Today's topic: Giving companies financial incentives to locate in a particular area is alternately praised as a way to boost the local economy and decried as corporate welfare. What's your view? Previously, Walter Moore and Greig Smith debated ways to reverse L.A.'s rising unemployment rate.
Give incentives to all businesses, not just a few Point: Walter Moore
I never actually saw the movie " Cinderella." But I've gathered from one of my nieces that the evil stepmother sings, "Cinderelly ... fix the breakfast, wash the dishes, do the mopping!" Cinderella works her animated you-know-what off, while Cinderella's stepsisters live a life of leisure.
Now, if you're one of the stepsisters, it's a great deal. But don't expect Cinderella to stick around for long. She's going to take off with the first guy who shows up with a glass slipper, despite the risk of personal injury inherent in that particular form of footwear.
Employers can flee this city -- and they have been -- because they don't have to wait for someone to show up with a glass slipper to relocate in another city or state. They will put up with quite a bit to enjoy our climate and get access to our market of 4 million consumers. But you and your colleagues have made this city so hostile to employers that they are leaving despite the natural incentives to stay.
Here's the critical difference between you and me on this issue: You want to give a handful of businesses, selected by you, financial incentives to stay here or move here. I want to give all employers financial incentives to stay here or move here.
You acknowledge, correctly, that rational business people decide where to open a business based on how much profit they can make there. What you don't seem to get is that what is sauce for the goose is sauce for the gander: All employers will have an added incentive to stay here if you will reduce taxes on all employers.
For years, you and your colleagues at City Hall have burdened honest, hard-working business people with a higher tax burden than their counterparts in surrounding cities. You have then redistributed their money to politically connected cronies, including millionaires and billionaires and at least one spouse of a Community Redevelopment Agency employee. That's welfare for the rich -- it's wrong, it's inefficient,and it violates equal protection of the law.
If you want to attract and retain employers, City Hall must stop acting like Cinderella's evil stepmother and start treating all people fairly and equally.
Walter Moore, a business trial lawyer, is a candidate for Los Angeles mayor.
Compete with the 87 other L.A. County cities or perish Counterpoint: Greig Smith
Obviously, we both agree that there is a real need to do more to help businesses in the city thrive and to repair L.A.'s reputation as being business-unfriendly.
Walter, you are absolutely correct that businesses have been moving to other locations. We began to address that in 2004, when the city adopted the Business Tax Reform. This year we implemented the fourth and final phase, which has now reduced business taxes by 15% across the board for every company in L.A. The $92 million of relief completely eliminated business taxes for small businesses with annual sales lower than $100,000, some new businesses and independent creative and artistic workers. This move offered direct tax relief to all employers operating in Los Angeles with absolutely no consideration for any political connections. I helped craft that measure as a member of the City Council's Ad Hoc Business Tax Reform Committee, and that is one reason I was appointed to head the council's Jobs, Business Growth and Tax Committee.
You call into question my credibility because I serve on the City Council. In fact, I was a successful small business owner in the San Fernando Valley. I can tell you that while business tax is an important consideration, it is not the determining factor of where a business chooses to locate, contrary to what you say.
What is the determining factor is the overall business climate and the ability of a company to be competitive in a particular marketplace. If the cities of Glendale or El Segundo, which border Los Angeles, are offering deals to businesses such as reduced taxes, fees and utility rates, then why would the businesses locate in Los Angeles? They would still be in the same region with access to the same market, the same climate, the same transportation infrastructure and the same labor pool.
What you don't seem to realize, Walter, is that Los Angeles is competing with 87 other cities in L.A. County, all of which are fighting to take business away from us. Los Angeles has for too long had a reputation of being business unfriendly. Our inability to compete with other cities has contributed to that reputation, a fact that has been confirmed by the L.A. County Economic Development Corp.
We can continue to allow more businesses to slip away to other cities or even out of state by not competing. Or we can choose to follow your naive and simplistic proposal, which overlooks the fact that Los Angeles has already passed a 15% tax cut for businesses, the most significant cut any city has enacted in recent years. We have already begun to rehabilitate L.A.'s reputation and are moving in the right direction with Measure E.
Walter, you can continue to live in your Cinderella make-believe world, but here in the real world, in which the rest of us live, it is compete or perish.
City Councilman Greig Smith represents Los Angeles' 12th District.