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Wednesday, September 26, 2007

Hey Villaraigosa...Are You Willing To Go On Record And Dispute Zuma Dogg's Concern That You Are Going To Create A New "City Income Tax"

Look to the past, to see the future. Especially when the past and present includes Villaraza "consultant" Richard Alatorre.

Zuma Dogg was pondering on some very excellent chronic...if the City is $300 million short on this year's budget...where is the money for the “to be announced” salary increases for the City unions? (And all the other problems a $300 million budget "DOH" will cause.)

So ZD had to dig up an old document from 1993 someone sent me, which cites a proposal for a payroll tax on all people who work in the City of Los Angeles. It doesn't specify taxing just City employees, but EVERYONE who work within the city limits. This would probably include Federal, State, City, and County employees. It would also include all employees working for companies in the private sector (such as banking, service industries, fast food, construction, education, small employers, et al).

In '93, City Council approved the tax, but it was dropped due to intense negative constituent reaction.

Villaraza and the present Shitty Council are not the first to re-name taxes as “fees”. This “name change” was actually thought of in '93, while Council was considering a city income tax. The ‘93 Council was thinking of renaming the city income tax as an "occupational license fee." (LOL!) According to the document I am referring to, the same idea for a city income tax had been considered before by the City Councils of 1983 and 1991.

But now, we have a bunch of no-scruples, corrupt, organized-crime-like politicians running the City. (See Villaraigosa, Alatorre, Delgadilldo, City Council, et al) – and they don’t give a F*CK.

CURRENT LA CITY STRATEGY: Take as much money out of the city coffers as possible until it’s all about to cave in like an “Enron House of Cards” – then just think of every and any tax, fee, hike, bond – for any and everything to help make up the difference. Who cares about tomorrow…you’ll be on to the next elected position, and it will be too late.


We all know about the DWP rate increase coming down the pike. (Which is necessary because they are grossly inefficient – and has a HUGE illegal payment/money transfer to make to the City of Los Angeles.)

BUT THAT IS NOT ENOUGH: $300 million short, is $300 million short…so let’s look to the past, for the future…

A payroll tax on all people who work in the City of Los Angeles was among the suggestions discussed in ‘93 at a meeting of the City Council's Ad Hoc Committee on the Budget Crisis they were experiencing at the time.

"How many more libraries do we have to close? How many more parks, before we go after what none of us wants to talk about -- police, fire and refuse?" said (then) Councilmember Richard Alatorre, who later proposed the committee consider a "gross receipts" payroll tax to balance the budget. [How about just making one, big huge tax called a "shakedown tax"...I mean "fee".]

But a city "income tax" would be illegal, so let’s call it an "occupational license fee". (Which experts say has essentially the same effect.) It would tax…I mean “not tax”, but fee (to death) the income of the individual employee.

The idea has been discussed in Los Angeles before – but was dropped because of intense negative constituent reaction.

Previously, the City came to it’s senses and realized this (not-a-tax) “fee” would drive business out of Los Angeles, California, and it would be tough to attract/recruit employees from competing cities. (What does Villaraigosa and his crew care about that? That’ll be the next guy’s problem. Meanwhile, he’ll have already deposited and cashed all the checks and received all the gifts. Maybe he can take all his shady riches and move to Mexico! Judging by the way he runs THIS City…he must LOVE Mexico! (See “Illegal Vending” spreading all over the damn City!)

(Then) Committee Chairman Zev Yaroslavsky urged committee members to look hard at major city staff cuts, saying "the longer we wait, the more Draconian the measures will be."

"Cuts have been made. We have less employees. That is real," countered then Councilmember (and current Villaraza “consultant” and Mayoral thinker, since the mayor can’t) Richard Alatorre.

"It's real, but it's not enough," Yaroslavsky shot back.

The committee even consider whether to close down all or part of the Community Redevelopment Agency, returning its tax increment to the general tax rolls, to be divided among the city, the county and local schools. [ZUMA DOGG SAYS THAT’S THE BEST IDEA HE HAS EVER HEARD! Of course they didn’t do it.]

COMING NEXT: Suggestions on how to close the budget deficit. (Besides physically dragging the Mayor out of city hall and dumping him on the other side of the border.)





Anonymous . said:


September 26, 2007 11:22 PM  

Anonymous AntonioVdeLA said:

Who cares what the ignorant fool from the beach says?

Why should I respond to a third grader?

September 27, 2007 1:20 AM  

Blogger Zuma Dogg said:

you just did, dummy.

September 27, 2007 4:50 AM  

Anonymous Mayor Villaraigosa said:

Yes, I willing to go on record and say Zuma Dogg is a smelly obnoxious fool who believes he is actually relevant to Los Angeles politics. And if that isn't ridiculous enough Zuma Dogg thinks he is funny.

Antonio Villaraigosa

September 27, 2007 5:29 AM  

Anonymous Anonymous said:

Given how many people commute into L.A. from outside the city limits, clogging our streets and using services, maybe getting a little sugar from them isn't such a bad idea. In New York, it makes all the difference in the world when it comes to helping that city pay for 40,000 cops.

One problem: state law prohibits municipal income taxes. The City Council DID investigate it once upon a time and that's what they learned.

September 27, 2007 6:09 AM  

Anonymous Anonymous said:

Dogg, you talking about changing the gross recipts tax to apply to workers? Do the Google.

September 27, 2007 6:11 AM  

Anonymous Anonymous said:

Great post Zuma. I know where the city could get money, TAX ALL THE ILLEGALS. That's right, tax those uneducated low lifes who have ruined our city. Why isn't clowncil being proactive and telling the illegals in Spanish to stop illegal vending and better yet fine them for not having a permit. It seems clowncil only goes after money that is waiting being selective. Totally agree Zuma on special event waivers. Over $20 million wasted on corporations who get permits waived by idiots on council

September 27, 2007 6:20 AM  

Anonymous Eric Garcetti said:

Yeah, and tax all the illegal sellers like you and Matt as well.

Then we can have enough money to run you off the beach.

September 27, 2007 6:54 AM  

Blogger Antonio Watch said:

The "Shakedown Tax." I love that. I will use it and credit you.

September 27, 2007 7:05 AM  

Anonymous Anonymous said:

Zuma, why are you being so vague in your posting? When will this be introduced? Who is working on it? And how did you learn of this moving through the system?

If you want us to stand up and oppose it then we need more informations!

September 27, 2007 8:12 AM  

Anonymous Anonymous said:

To 8:12


September 27, 2007 8:37 AM  

Anonymous Anonymous said:

To 8:12, link didn't post so.....

An L.A. Tax That’s Really Gross
By Rick Wartzman, New America Foundation
Los Angeles Times | April 6, 2007
To get a little, you’ve got to give a little. And there’s no better place to start than by supplanting the gross-receipts tax.Learn More About:
Rick Wartzman
Related Programs:
The Bernard L. Schwartz Fellows Program, New America in California
Corporate Taxes, Fiscal Policy E-mail, Print or Share this Article:

About These Icons If Los Angeles business leaders were looking for somebody to carry the torch on one of their most important causes, it’s a safe bet that Wally Knox wouldn’t rank very high on the list.

The former Democratic assemblyman acknowledges that he had a reputation in the state capital as a "wild-eyed, union-loyal liberal." He is perhaps best remembered for his authorship of the 1999 law that secured overtime pay for Californians who work more than eight hours a day -- legislation that many from the corporate world condemned as government meddling into the decisions of private employers.

So when Knox starts spouting a line that sounds pro-business -- specifically, advocating to replace the city’s gross-receipts tax, a big bugaboo for local companies -- it makes your ears prick up.

On Monday, at an economic forecasting conference at UCLA, Knox used his turn at the dais to trumpet trading in the gross-receipts tax for a "more rational" levy that would be based on a firm’s profit.

In other words, let’s tax the city’s businesses on the bottom line, not the top.

Knox -- who made similar statements last month at a meeting of the Southern California Assn. of Governments -- isn’t out speechifying for the heck of it.

After Mayor Antonio Villaraigosa delivered the closing remarks at the UCLA confab, I buttonholed his honor to ask what he thought of Knox’s idea. As we were talking, Knox walked over and began to explain more precisely what he had in mind. The mayor’s eyes lighted up.

"I love it," said Villaraigosa, an old friend of Knox’s from their days together in Sacramento. "Damn right I want to look at it."

Gary Toebben, president of the Los Angeles Area Chamber of Commerce, says he also "took note of Wally’s comments and think we ought to work with him."

Knox, who recently founded a research organization in L.A. called the Institute for the Middle Class, is not pushing this issue to make executives happy (though he’s not necessarily opposed to that). His hope is that if businesses here are more successful, they’ll share their prosperity with their workers in the form of higher pay and better benefits.

Although that remains to be seen, it is in fact hard to imagine a tax that is dumber than the one on gross receipts.

The effect is that if you and I both run shoe stores that ring up $1 million of sales this year -- but you earn $200,000 in profit and I endure a net loss -- we’ll owe the exact same thing to the city: $1,370. (Rates range from a low of $1.09 per $1,000 in gross receipts for wholesalers to $5.50 for professions such as law firms, with retailers at $1.37.)

One result, Knox fears, is that this makes companies less willing to invest in the kinds of technology and fresh approaches that will be crucial as L.A. continues its transformation from a manufacturing center to a more service-oriented economy. "You’re penalized for trying to restructure," he says.

Messing with the tax code is not without risk.

Villaraigosa, who is intent on reducing the city’s budget deficit, can ill afford to have the number crunchers goof up and set a profit tax that’s too low. They need to guarantee that, at the least, any new tax would generate the same amount of money as the old one: $434.5 million last year, accounting for about 10% of the city’s annual budget.

Many are also bound to gripe that shifting to a profit-based tax would be too complicated to calculate and hard to administer. But there’s no reason that the city’s data collection apparatus couldn’t be plugged in to the state or federal income tax system, in which the needed information already exists. Some initial expense might be required to piggyback in this fashion, but that shouldn’t be a deal breaker.

Most daunting will be the politics. In 2004, after many years of business community complaints and a long period of study, then-Mayor James K. Hahn and the City Council finally approved a series of reforms to the gross-receipts tax. They kicked in last year, and now businesses with annual revenue of less than $100,000 don’t have to pay. Meantime, the 250,000-plus firms in the city that aren’t exempt will, over time, see their taxes trimmed by as much as 15%. (About half of that cut has already been phased in.)

But a 2004 report commissioned by the city called for going even further. It characterized the gross receipts formula as "not economically efficient" and "not equitable," and instead suggested implementing a tax that would reflect both profit and a company’s square footage (a nod to the concept that businesses with a larger physical footprint use more city services).

"We were given an assignment that we knew would fail politically," says Gary Painter, a professor at USC’s School of Policy, Planning and Development, who was part of the 12-member panel that prepared the report.

The real problem, he says, is that every time you overhaul the city’s tax structure -- even if it doesn’t swipe a dime from L.A.’s coffers and is fairer and smarter in the way it encourages economic activity -- some businesses are going to wind up paying more than they were before. And even if they’re in the minority, they tend to make the most noise at City Hall.

Beyond that, some worry about that deadly affliction from which many a public servant has been known to suffer: inertia.

"Some council members might think they’ve already done their thing" by passing the earlier reforms, says consultant Larry Kosmont, whose annual cost-of-doing-business survey continues to rate L.A. as inordinately expensive. In truth, he adds, "they’re far from done" in terms of fixing things.

Of course, if anyone can break through the torpor, it’s Villaraigosa -- particularly on a subject like this. When then-Mayor Richard Riordan attacked the gross-receipts tax, the council could shrug it off as a sop to his business allies. But it would really be something for a mayor who is still trying to establish his pro-business bona fides to take this on.

And if he succeeds, the whole political equation could begin to change. As I’ve written before, I would love to see a "living wage" ($10.64 an hour) taken past the doors of a dozen airport hotels and extended across the city. But it would be easier to do that -- or even seriously debate doing that -- if L.A. was viewed as friendlier to business overall.

To get a little, you’ve got to give a little. And there’s no better place to start than by supplanting the gross-receipts tax. Even the doubters can be brought along -- that is, once the mayor Knox some sense into them.

Copyright 2007, Los Angeles Times

September 27, 2007 8:41 AM  

Blogger Zuma Dogg said:


You don't think Zuma Dogg is funny?

AWatch: Thanks! I was just trying to come up with the most accurate description. (NOT trying to be funny!)

8:12am, I gave you what I have for now. There has been chatter about this on the blog. So I tried to see what I could come up with...so IF they are proposing to do this...this is the method/approach I would be looking out for.

September 27, 2007 9:30 AM  

Anonymous Anonymous said:

Great post 8:41. Now Wally Knox is a DWP commissioner just in time for rate increases.

September 27, 2007 10:20 AM  

Anonymous Anonymous said:

The problem pointed out in changing the city business tax is good old Prop. 218. If any busuness gets a tax increase, even if a majority get a decrease, it has to be passed by the voters. Good luck on that.

September 27, 2007 10:24 AM  

Anonymous Anonymous said:

10:20 Don't blame Walley--he's a commissioner who is just finding out where the 15th floor bathroom is. It's the City Council that will increase the rates.

September 27, 2007 12:19 PM  

Anonymous Anonymous said:

Only if DWP commission approves the rates and sends it to them.

September 27, 2007 3:04 PM  

Anonymous Anonymous said:

My co-workers and I have already talked to our employer abouot a possible city income tax. We told them that if one is implemented, they have to move our headquarters out of LA and they were agreeable.

We're a large company and we use vendors, caterers, conference facilties, hotels, and restaurants every day - all in LA. We entertain our clients in LA. Not to mention substantial charitable giving to organizations that work with disadvantaged neighborhoods in LA. THINK ABOUT IT MAYOR.

September 27, 2007 4:02 PM  

Anonymous Anonymous said:

3:04 They have no choice. Salary increase Oct 1. Council needs transfer. Union wants more dues paying members to pay for new headquarters. It's win-win except for the sucka people who pay the bills. ZD is off the hook for this one. Low carbon footprint. Good going ZD!

September 27, 2007 6:00 PM  

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