L.A. Surtax on Businesses

Your March 27 editorial in favor of extending the 3.75% business surtax (Prop. 7) implies that the city tax is quite low, at $1 to $6 per $1,000 gross receipts. In fact, there is a minimum tax for each category that severely penalizes the small business owner. Oh yes, and there is a separate tax on each category of business in which one engages, and each has its own minimums.

The person who makes $5,000 from his or her home office, doing computer hardware consulting, has to pay the same amount, about $110, as does the person who makes $18,000 doing the same job. If our hypothetical consultant wants to resell hardware as part of his consulting job, he must pay a retail business tax, which has a minimum of about $115. This minimum applies whether he sells a machine for $2,000 (for which his profits might be $250) or 30 machines for $30,000. His receipts from this year are $7,000. He has paid $225 in city business tax. This amounts to about $32 per $1,000 in receipts, far more than your editorial suggested was the maximum!

The city tax is regressive, and hits the small business owner hardest. Any surcharge only hurts that much more. Voters need to see the whole picture to make an informed choice at the ballot box.

MAUREEN KENNEY

Northridge