Don’t Throw a Curve to DreamWorks : Tax breaks: Supply side theory says all companies should get what Spielberg’s gets.

Through the magic of Steven Spielberg, a well-known species that was thought to be extinct has been brought back to life. Some thought it was a monster, mean and untrustworthy; others were willing to give it a chance. Now, Spielberg and DreamWorks have resurrected it: supply side economics.

In the Spielberg movie “Jurassic Park,” the park’s founder had a cartoon character named Mr. DNA to lead the audience through the complex steps to recreate living dinosaurs. Even though all of us in the Los Angeles area now are DNA experts, perhaps the Laffer Curve--named after Arthur Laffer, one of the foremost proponents of supply side economics--would be a better tutor to explain how the DreamWorks project was put together.

The curve would tell us the formula is simple, really. The new DreamWorks studio, headed by Spielberg, Jeffrey Katzenberg and David Geffen and proposed for Playa Vista near Marina del Rey, gets a package of tax and fee breaks from the city of Los Angeles that total about $85 million. Among them are reduced business license and utility user taxes and a steep cut in the sewer hookup charge. These incentives are supposed to pay off for the city in the long run by creating new jobs that will bring in even more tax revenue.

Cut taxes to stimulate the economy, create incentives, promote investment, create demand, bring in more tax revenue--that’s supply side economics, according to the curve.

Of course, Laffer and supply side supporters looked for larger across-the-board cuts. Targeting tax cuts, in this case for a specific industry like multimedia technology and entertainment firms, appears to many like a form of inverted affirmative action in which the advantaged receive the advantages. Councilman Nate Holden voted against the DreamWorks package calling it “corporate welfare”--giveaways to a well-off business so it can improve its situation.

Holden has a point. But instead of voting down this deal, it should be spread around and not reserved to the high-tech and entertainment industries. Let all businesses and individuals enjoy the benefits of incentives and tax cuts, and the city will prosper even more.

Creating jobs boosts government revenue. Look at the state. The California Department of Finance reports that 320,000 jobs were created in the first 10 months of 1995. Not coincidentally, the state finds itself with a $676-million surplus after only one-quarter of the fiscal year. Job growth increases revenues for government and reduces costs of so-called entitlements.

Following DreamWorks’ lead, leaders should encourage local economic growth by reducing the city utility tax. Los Angeles temporarily raised the utility tax in the 1980s, pushing it to 10% on residential water and power users and 12% for businesses, making it among the highest in the state. Like that shark in Spielberg’s “Jaws,” the tax would come back again and again for another bite as the council continued it “for just one more year” until it made the temporary tax increase permanent.

There’s good reason to reduce the utility tax. For one thing, the Department of Water and Power transfers a budget surplus to the city each year for general fund purposes. The DWP knows it must pay this amount to the city, so it budgets for what is nothing more than a hidden tax.

DreamWorks’ cut in utility taxes is being subsidized by all other DWP users. Yes, DreamWorks has agreed to buy its power exclusively from the DWP in exchange for the lower rates, but that same offer probably would be gobbled up by residential and other business water and power users.

If cutting taxes will create jobs for DreamWorks and bring in more revenue, supply side theory says a similar tax cut will have the same positive effects on the whole community.

Let’s not take away the DreamWorks deal. The economic package is good for Los Angeles in many ways. Let’s just spread it around.