June 15, 2010; Source: Los Angeles Daily News | There is a reason we highlight this brief article about the Los Angeles plan to give new businesses there a three-year exemption from paying the city business tax. For all of the fights concerning municipal and state efforts to exact taxes or fees from tax exempt nonprofits—tax exempt by law, that is—state and local governments routinely hand out tax abatements and exemptions to for-profit businesses to, so they say, spur businesses to build, create jobs, and so forth—usually at an obscenely high cost per job in terms of taxes foregone. How is this justified? From the article: “Officials say any loss in revenue would be offset by new companies and their employees purchasing goods and sevices (sic) from existing firms, which, in turn, pay business taxes.” Experts at USC say the scheme will generate 55,000 new jobs. “There’s no down side,” said Councillman Bernard Perks. Oh really? If you add up all of the tax giveaways awarded by local, county, and state governments around the nation—tax giveaways to taxable for-profit entities—it would dwarf the cost of tax exemptions to nonprofits.—Rick Cohen
About The Author
Rick joined NPQ in 2006, after almost eight years as the executive director of the National Committee for Responsive Philanthropy (NCRP). Before that he played various roles as a community worker and advisor to others doing community work. He also worked in government. Cohen pursued investigative and analytical articles, advocated for increased philanthropic giving and access for disenfranchised constituencies, and promoted increased philanthropic and nonprofit accountability.