For 50,000 new Amazon jobs, will Los Angeles act ‘stable and business-friendly’?: Susan Shelley

By Susan Shelley – Los Angeles Daily News


Amazon is going to build a new headquarters, and Los Angeles wants it. City Councilman Bob Blumenfield wrote in a letter to Amazon CEO Jeff Bezos that the former Rocketdyne site in Canoga Park would be an ideal location. The property is “vacant, available and ready for sale,” he said.

That’s welcome news. Apparently the previously announced plan to build 4,000 apartments at the corner of Victory Boulevard and Canoga Avenue has gone off the board.

But you can bet that Canoga Park will freeze over in August before Amazon builds its new headquarters in Los Angeles, or anywhere in California. The company says it is looking for a “stable and business-friendly environment.”

You can write your own joke about stability, either seismic or psychological, but our lack of business-friendliness is not a joke.

There are any number of reasons that governments make life unbearable for businesses. Some officials believe in their hearts that businesses “take” from a community, so it’s only fair to tax them half to death, even all the way to Texas.

Other officials just want the money.

Los Angeles has a “gross receipts tax” on businesses, meaning the city collects a percentage of every dollar of revenue that comes in the door, before any of the bills are paid. In 2015, the top rate was lowered a bit from $5.07 per $1,000 in revenue to $4.50 for 2017, and it will drop to $4.25 in 2018, but it’s still a hefty penalty for doing business in the city of Los Angeles. Neighboring cities in L.A. County don’t tax gross receipts at all.

Then there’s L.A.’s problem of wildly complicated and burdensome city regulations, a business-unfriendliness so severe that last fall, the City Council created a “concierge” service to help businesses navigate City Hall’s tangled requirements.

“Too often, investors and businesses want to create new jobs, but they get mired in regulations,” Councilman Paul Krekorian said at the time.

The city’s “business-friendly” plan created a small-business commission on public policy, and a website with information about permits, licenses and incentives. The plan also set up economic development “incentive zones,” a streamlined process for minority and local businesses to get contracts with the city, and a plan to hire 5,000 city workers from underserved communities.

But business-unfriendliness is not solved with policy commissions, selective incentives or a website to list all the burdensome red-tape requirements in one convenient place.

The depth of the problem should become obvious to our city officials when they try to compete against other cities to be the home of Amazon’s new headquarters.

The Internet giant is offering to pump $5 billion in capital spending into somebody’s local economy, and to create 50,000 local jobs with salaries that average more than $100,000 annually.

That prospect has kicked off a frenzy of competition from coast to coast in the United States and Canada. Amazon will soon be reviewing offers from more than four dozen cities, including one combined bid from Detroit and Windsor, its Canadian neighbor. That bid will stress the tax advantages of having a headquarters in two countries at once.

It’s something to keep in mind as the debate over federal tax reform gets underway. The U.S. corporate tax rate is higher than the rate in other countries. We’re uncompetitive with the rest of the world.

And the state of California is uncompetitive with the rest of the nation. This is self-inflicted damage, mostly due to our tax laws and our costly policies that supposedly fight climate change. We pay $1 a gallon more for gasoline and 30 percent more for electricity than the national average. Trucking is more costly in California because of the higher price of diesel. Our state income tax, sales tax and gasoline tax are among the highest in the nation. And while our property taxes are controlled by Proposition 13, there is a perpetual threat in Sacramento to “split the roll” and reassess commercial properties annually. That’s not what a company like Amazon wants to hear when it’s planning to build an 8 million square-foot facility.

Sometime next year, Amazon will announce that the city of Someplace Else will be the home of its new headquarters. Maybe by then our elected officials will have a better understanding of the value that job-creating businesses add to our society. With any luck, it will be the beginning of a new era of reforming the self-destructive and idiotic policies that keep good jobs away from our communities.


Republished with author’s permission- PUBLISHED: September 26, 2017 at 3:41 pm – Click to read this column on the Daily News website

Susan Shelley is a columnist and member of the Editorial Board for the Southern California News Group. Reach her at [email protected], or follow her on Twitter: @Susan_Shelley.

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