Has the Business Community Had Enough?

Wednesday, April 24, 2019

Page 9

IN MY OPINION (Column)

Has the Business Community Had Enough?

By JON COUPAL

There is a particularly nasty YouTube video that made the rounds several years ago where a school punk was bullying another student who was overweight. The punk kept punching the other kid who was forced to retreat until his back was against a wall. After several punches, the overweight kid picked up the bully and slammed him to the ground so violently that the punk literally bounces off the pavement.

For decades, taxpayers in California have been the punching bag for tax-and-spend politicians and the special interests that consume tax dollars. Periodically, however, those receiving the blows stand up and punch back. The recall of former Governor Gray Davis in reaction to his car tax increase is a good example.

For the most part, individual taxpayers and grassroots organizations are more vocal—at least publicly—against tax hikes than the business community. Certain business interests, especially large corporations, are more likely to have a “go along to get along” attitude which means that as long as a tax increase doesn’t hit their business directly (or can be passed along to consumers), they won’t put up much of a fight. The rationale for this is that many of these business interests are vulnerable to arbitrary government action that threatens their interests and it would be unwise to anger the politicians who could, with a stroke of a pen, put them out of business.

But the frequency and intensity of recent tax proposals out of Sacramento and from various city halls is causing pushback from even the business community. In the City of Los Angeles, the Los Angeles Unified School District jammed through a tax increase proposal that is an affront to taxpayers of all stripes. Measure EE, appearing on the ballot in a June 4th special election, would add hundreds of dollars to property tax bills and rents by imposing a tax of 16 cents per square foot of building improvements on properties within the district. That’s $160 for every 1,000 square feet. This would hit homeowners, renters and businesses with a huge new property tax increase.

Most insulting to many in the Los Angeles business community, which has traditionally supported many school bonds and other financial support for LAUSD, is that the tax hike comes with zero reforms. Moreover, the only reason the district needs the tax hike is because it agreed to a horrible deal with the unions creating big financial commitments for which it knew it couldn’t pay.

Because of Measure EE’s multiple shortcomings, major Los Angeles business organizations have come out strongly opposed. But this opposition caught Mayor Eric Garcetti and the unions by surprise because they naturally assumed the business community would simply roll over and either support the tax or remain neutral.

In an effort to save Measure EE, tax proponents began a bullying campaign against the business community. A political operative tied to Garcetti threatened, not only the business groups, but also individual corporate members of their respective boards. Specifically, the threat was that anyone who opposed the tax would be shut off from all future business with the city.

Fortunately, this intimidation campaign has mostly backfired when it was exposed in several media accounts, which further embarrassed the mayor’s office. While it is true that the “legal extortion” campaign has had some effect on the business community and, in fact, one corporation doing business with the city has contributed $250,000 to the yes side, the Los Angeles business community as a whole is standing firm against a punishing and foolish tax increase.

California has some of the highest tax metrics in America—highest income tax rate and highest state sales tax rate just to name two—and we hope that what is happening in Los Angeles is a harbinger of what could happen statewide: That all taxpayers finally stand up and aggressively oppose government overreach.