Council Extends Reduced Tax Rate for Internet Businesses

Councilmembers Bob Blumenfield and Mike Bonin praise Council action to continue attracting tech jobs to LA 

LOS ANGELES, CA – In a move that will protect high tech jobs in Los Angeles, the City Council today voted unanimously to extend reduced business tax rates for Internet-based businesses.

The job-creating legislation, which was championed by Councilmembers Bob Blumenfield and Mike Bonin, is the latest in a series of business-friendly efforts by the Los Angeles City Council and comes in the middle of “Los Angeles Innovation Week.”

“Internet based businesses are an increasingly important part of our Los Angeles economy,” said Blumenfield, who introduced the motion to extend the reduced rate and chairs the City’s Innovation, Technology and General Services Committee. “I am pleased to see the Council support these businesses and ensure that this highly mobile industry continues make its home and thrive within the City of Los Angeles.”

Without Council action, the tax rate for internet based businesses was set to see a five-fold increase this December as the 2010 ordinance reached its sunset date. The motion also seeks a study of the impact and effectiveness of the internet based business tax reduction.

Bonin, whose West Los Angeles District includes many of the businesses benefited by today’s action, and who has been an outspoken advocate for the Los Angeles tech sector, spoke on the importance of making Los Angeles a competitive destination for start-ups and other internet based businesses.

“There is tremendous benefit for all of Los Angeles when smart, creative and innovative technology companies choose to start businesses in LA,” said Bonin. “Incentives like this have helped draw startups to the Southland and I am thrilled that the Council is continuing to work toward making Los Angeles a great place to do business.”

Over the past weeks and months, the Council heard from executives at companies that have benefited from the reduced rate, and others for whom the reduced rate is an important factor in any plans to move to Los Angeles.

“This tax rate was one of the main catalysts behind our company’s decision to remain in Los Angeles,” wrote Rubicon Project CEO Frank Addente in a letter advocating for the extension of the tax rate. Addente went on to add that extending the tax rate “would provide businesses such as mine a greater sense of security when choosing to do business in the City of Los Angeles.”

Among the companies advocating for the extension was Intuit, whose Los Angeles offices are located in Woodland Hills, in Blumenfield’s West San Fernando Valley district.

"Intuit applauds the City’s action to extend the current business tax rate for Internet-based businesses,” said Mark Reed, Intuit’s Director of State and Local Government Affairs. “Moreover, we appreciate Councilman Blumenfield and Bonin’s leadership on this issue. Internet-based businesses are an important component of the L.A. economy. The City Council’s action today is an acknowledgement of that importance." 

"Our City Council is proving itself to be business-friendly and embracing the growing Internet and tech business sector in LA," said Blythe Holden of online marketing firm Connexity. "We are appreciative of the support of Councilmembers Bonin and Blumenfield in particular on the extension of the Internet-based business tax ordinance."

Just this week, the Los Angeles Economic Development Corporation released a report noting that high-tech employment is responsible for creating 9 percent of all jobs in Los Angeles County, representing 369,580 jobs.

“As Southern California continues to grow as a high tech hub, we need to take steps to ensure the City of Los Angeles leads the way in attracting those jobs,” concluded Blumenfield.

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