Mayor Antonio Villaraigosa on Tuesday proposed a business tax exemption for businesses that open in Los Angeles, and said recent expansion of an enterprise zone in East Los Angeles helped convince a large employer to stay in the area.
In a press event at the Baxter International Inc. manufacturing plant on Colorado Avenue, Villaraigosa said that the Illinois-based drug maker had decided to remain and even expand following broadening of the East Los Angeles State Enterprise Zone, which entitles businesses to tax breaks and other incentives. The plant, which makes plasma-derived therapies, employs 1,100 people.
“Baxter would like to thank the mayor’s office for providing the necessary information and support to aid in our decision,” said Joy Amundson, corporate vice president and president of the Baxter BioScience division. “We recognize the importance of nurturing a vibrant business community and appreciate the value in retaining and creating jobs in Los Angeles.”
The mayor, along with council members Richard Alarcon and Greig Smith, also discussed the proposed “tax holiday,” which would exempt any new business from gross receipts tax by the city of Los Angeles for three years when it opens or locates in Los Angeles.
The city’s current business tax exemption for new businesses only lasts two years and applies only to businesses coming from outside the city that have taxable gross receipts of less than $500,000.
According to independent analysis from the Marshall School of Business at the University of Southern California, the tax holiday will create revenue for the city because it will be an incentive for businesses to locate in the city, officials said.
“The new policy will lead to the creation of up to 55,000 jobs and generate additional revenue for the city of Los Angeles,” said Charles Swenson, a USC professor who conducted research specifically for the initiative. “In addition, the multiplier effect of additional economic activity in the city nets a positive revenue impact.”
In addition, it was announced at Tuesday’s event that the staff of the Los Angeles Department of Water and Power will propose to its board a package of incentives for new business customers that includes rate discounts up to 25 percent.
“Today we are bearing the fruit from an aggressive strategy by the Mayor’s Office of Economic and Business Policy, led by Austin Beutner, that is working to attract businesses and create the good paying jobs Angelenos need to see them through these tough economic times,” Villaraigosa said in a statement.
