LA Mayor Joins City Council to Push for Tax Reform

Hopes to generate more production in Hollywood

On Oct. 26, Los Angeles Mayor James Hahn added his voice to those of several City Council members in calling for an overhaul of the city tax code that would ease the burden on small and medium-sized production companies as well as actors, writers and others who work as independent contractors.

Two measures - which are part of a general tax reform bill - are aimed at promoting production opportunities in Los Angeles. The first measure would raise the tax threshold for production companies from $50,000 to $2.5 million and cap it at $12 million rather than the current $4.2 million. The second measure exempts individuals from city business taxes if they generate less than $300,000 in annual gross receipts.

"We think we're losing opportunities to keep the movie industry where it belongs — here in Los Angeles — and it's time to fight back," Hahn said. "We recognize that both measures will cost the city treasury some money, but we think it's worth it."

Estimates show that the two proposals would cost the city about $3 million in tax revenue annually. Lawmakers believe that loss will be offset by the amount of business generated by the new rates

The measures must still clear the city's budget and finance committee before being voted on by the full City Council. A vote is expected before year's end. If the measures pass, the reforms would go into effect at the start of the city's fiscal year on July 1, 2005.