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'Open for business': Los Angeles pioneers local tax reform
In a challenging economic environment
This article discusses the past and present reform efforts related to the City of Los Angeles’ Business Tax, using its history as a framework to examine future reform efforts that seek to create a more business-friendly environment.
An updated analysis of Los Angeles business tax reform
In recent months, multiple cries to “Axe the tax!” have been heard in the Los Angeles business community.1 The City of Los Angeles, the second largest city in the United States,2 imposes the Los Angeles Business Tax (“LABT”), a gross-receipts-based tax on persons and business entities doing business within the City. A movement to completely eliminate the tax, and not just reduce or modify it, has received a surprisingly large amount of support—not only from the taxpayers, but also from politicians and members of the local government, whose budgets rely on the revenue generated by this tax.
This article seeks to present both the history and the current developments concerning the LABT, including the past and present tax reform efforts of the City Council, the Mayor’s office, the Business Tax Advisory Committee (“BTAC”) I, and BTAC II, as a framework for considering future tax reform efforts.
In their discussion of Los Angeles tax reform, authors Susan Ferlianto and Patrick Kennedy of Deloitte Tax LLP examine:
- Criticisms against the LABT
- The history of Los Angeles taxes
- Early tax reform efforts in 1993-1999
- BTAC I and its contributions to tax reform in 1999-2004
- The reinstatement of BTAC II and its proposals for LABT reform
by Susan Ferlianto and Patrick Kennedy of Deloitte Tax LLP, who updated their March 2012 article for reprint in the November 16, 2012 issue of Bloomberg BNA "Tax Management Weekly State Tax Report"
1 This article does not constitute tax, legal, or other advice from Deloitte Tax LLP, which assumes no responsibility with respect to assessing or advising the reader as to tax, legal, or other consequences arising from the reader’s particular situation.
Copyright © 2012 Deloitte Development LLC. All rights reserved.
2 "Largest" city determined by population, per 2010 national census data. POPULATION DISTRIBUTIONAND CHANGE: 2000 TO 2010, March 2011, http://census.gov/prod/cen2010/briefs/c2010br-01.pdf (last visited Jan. 6, 2012).