Los Angeles Business Journal

Getting Started in Los Angeles

OP-ED: Mayor Eric Garcetti shouldn’t wait to ditch the city’s gross receipts tax and costly union work rules. By Arthur F. Rothberg Monday, October 28, 2013

The mayor needs to bite the bullet and eliminate the gross receipts tax in one fell swoop for all L.A. businesses, just as this was done for car dealerships. Not only is the tax a huge impediment to business, but it’s very inefficient — it’s hard to apply uniformly and results in expensive litigation that the city must defend.

If eliminating the gross receipts tax makes Los Angeles more business-friendly and results in more employers opening businesses here, which it surely would do, the added tax revenue generated by these businesses, along with the elimination of expensive litigation caused by the tax, would more than make up for the tax’s lost revenue.

The second area where I’d like to see the mayor focus his attention is on the public unions. Specifically, he needs to take a firm stance against many of the archaic and unproductive work rules that drive up costs but that unions insist on preserving, such as the more than 600 work rules of International Brotherhood of Electrical Workers, Local 18, the union representing Los Angeles Department of Water and Power workers.

I am not saying that union workers should not be treated fairly. But over the past couple of decades, there has been a complete reversal of roles when it comes to employers and unions, which were originally created to protect workers from dominant and often abusive employers.

Now, unions have gained the upper hand and their demands place many employers at a competitive disadvantage when compared with businesses in other cities.

I acknowledge that Garcetti faces enormous challenges when it comes to making Los Angeles a great city for American businesses again. The biggest is the simple fact that high taxes and excessive government regulation and bureaucracy have made California an unfriendly place for business.

But if he starts by focusing on these two areas — and preferably during his next 100 days in office – Garcetti can lay the groundwork for a pro-business agenda during his term as mayor. And that’s something we can all get behind.

Arthur F. Rothberg is managing director of CFO Edge, a provider of outsourced chief financial officer services.

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