H’w’d cheers L.A.’s reform of tax code

Greuel sez move designed to combat runaway prod'n

The L.A. City Council unanimously approved a reform of the city’s business tax that will exempt most independent screenwriters and producers from paying taxes on their showbiz earnings.

Changes, backed by council members Wendy Greuel and Eric Garcetti, exempt creative workers in the entertainment industry who earn less than $300,000 from paying the city biz tax.

Package also includes tax breaks for small businesses, including production companies, exempting firms that have less than $100,000 in revenues and lowering rates on all others.

Greuel said the reforms were designed to encourage showbiz to stay in L.A. She estimated that individuals would save $2.5 million because of the changes, but the bigger boon may be not having to wade through the Byzantine city tax code, which has 59 categories and tax rates for individuals.

“It’s not only about the dollars. It’s about the simplification of the system. It’s cumbersome and archaic, and it’s not competitive,” Greuel said. “We are trying to send the message that we want you to do business here.”

Garcetti added, “If Hollywood leaves L.A., you are left with an empty shell of what the city is supposed to be about.”

The tax relief will take effect in January 2006. Overall, businesses and individuals will save $92 million and exempts 60% of those paying the city biz tax, but the bill’s backers say the shortfall in revenue will be made up through improved compliance and enforcement of the simplified tax code.

Industry orgs cheered the tax reform. The Writers Guild of America, Screen Actors Guild, Directors Guild, AFTRA, IATSE and other showbiz unions issued a joint statement that read in part: “The Council’s unanimous vote in favor of reforming the Business Tax Ordinance will provide meaningful tax relief and equity for thousands of men and women working in the entertainment industry as well as for businesses throughout the city.”

Steve Caplan, exec VP of the Hollywood-based Assn. of Independent Commercial Producers, asserted that the revamps will make it far more attractive to shoot in Los Angeles rather than be pulled out of town by dual lures of government incentives and lower costs elsewhere.

“The change in the way the city taxes much of our industry will send a serious message that the city values the jobs and economic impact that commercial producers and other small- and medium-sized producers bring to the city of Los Angeles,” Caplan said. “This change to the city business tax provides equity and fairness to the current tax system.”

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