HEARTS OF THE CITY / Exploring attitudes and issues behind the news : Taxes and Tycoons : The cheap ironies of the deal slap you in the face. Here is a cash-strapped city shoving millions of dollars at one of the richest new companies in history.

For the sake of argument, let’s say DreamWorks SKG had not agreed--as it did this week--to build its movie studio in the marshes of Playa Vista. Let’s say the groveling efforts by the city of Los Angeles to lure Messrs. Spielberg, Katzenberg and Geffen into the Playa had failed, and the tycoons had decided to establish their studio somewhere else.

Where would they have gone? To Redmond, Wash., next door to Microsoft? To Boise and its blue skies? Cancun?

No. DreamWorks would have trotted over to Universal City or Burbank, the two other locations on the tycoons’ short list. Los Angeles, as a region, owns the movie business, now more than ever, and the founders of DreamWorks didn’t even threaten to go elsewhere.

So this week Mayor Riordan and Councilwoman Ruth Galanter come with the announcement that they have tossed $70 million in tax breaks at DreamWorks to ensure their arrival in the Playa rather than the San Fernando Valley. The tycoons graciously accepted and the matter now rests with the City Council, where nary a discouraging word has been heard.

The cheap ironies of the deal slap you in the face. Here is a cash-strapped city shoving millions of dollars at one of the richest new companies in history. The personal net worth of SKG comes close to $2 billion. They have $3 billion in financing for their studio, and their partners include Bill Gates and Paul Allen, the founders of Microsoft.

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Still, who can blame the tycoons for taking money pressed on them with such enthusiasm? I mean, picture yourself walking into the mayor’s office to announce you are going to build a new house in either Burbank or Los Angeles. And here comes the mayor, tax waivers stuffed in his pockets, begging you to build in L.A. and promising no property taxes for the next 20 years. What would you do?

The real question should be directed to the rest of us: What are we getting for our 70 million?

Clearly, the number of jobs created by DreamWorks remains the same whether it puts the studio in the Playa or in Universal City. So does its economic contribution to the region. So does the so-called magnet effect that attracts feeder companies and satellite operations.

What we do get is both simple and perverse: We get DreamWorks planted inside the boundaries of the city of Los Angeles rather than the city of Burbank or Universal Studios, which is located on county territory.

Is that difference worth $70 million? Surely it is, if you’re the mayor of L.A. You can brag about winning DreamWorks and the $500 million in taxes it will produce over the next 15 years. The Playa location can--and will be--used as a trophy in the next election campaign.

Ditto if you’re Councilwoman Ruth Galanter, who presides over the district where DreamWorks will now get built.

And ditto-in-spades if you’re Maguire Thomas Partners, the real estate company that owns the land and has been trying to find an acceptable development concept for most of a decade. If the $70-million investment by the taxpayers puts DreamWorks in the Playa, Maguire Thomas will emerge as one of the biggest winners.

But for the rest of us, the equation goes murky. Say you live in L.A. You’ve just sacrificed your chunk of the $70 million to put DreamWorks inside the city. The studio presumably will eventually pay back that sum and more. But if DreamWorks had gone to Universal, with no tax breaks, the revenues would have flowed into the county treasury. And you live in the county too.

Is the difference worth $70 million?

Or put it this way: DreamWorks’ deal means it will pay less in taxes. Does that mean someone else will pay more to make it up? Probably. And that someone is you, along with existing businesses that don’t get the tax breaks.

You could argue--and city officials do--that the taxes paid by DreamWorks, in whatever sums, amount to found money. It wasn’t there before. Now it is. So let us be thankful.

But that argument sets up a curious morality about taxes. Old tax money is seen as an obligation. New tax money is seen as a gift. It says that you and I, as old hands, must pay through the nose according to the code. So does, say, the Broadway or the local nursery.

DreamWorks, on the other hand, pays whatever it can negotiate, an amount that always will be less. And for doing so, DreamWorks will be thanked profusely. The rest of us will simply wait for the next tax bill to arrive in the mail.

A classic example of this double-think popped up recently with the expansions of two existing studios in Burbank. Disney is building a $600-million addition to its studio and Warner Bros. just announced an $800-million expansion. Both of these projects will generate the same kinds of jobs and the same spinoff benefits as DreamWorks. But neither Disney nor Warner’s got a dime in tax breaks.

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They were old pennies, and DreamWorks represents the bright, new penny. The “found money.” This time, L.A. snagged the prize. But what happens next time, when the next new penny arrives? Will Burbank and Los Angeles County, having licked their wounds over the loss of DreamWorks, win the next round with even bigger tax breaks?

And will we end up in the ludicrous position of bidding against one another and throwing away tax dollars to lure companies that would build here anyway, in one location or the other? It sounds so outlandish as to make you laugh.

But we just did it once. Stay tuned for the next rounds.