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Corporate Interest Tax Loopholes Are Back

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Old tax loopholes live again

(CalMatters) — Everything old is new again, at least when it comes to punching loopholes in state tax laws to benefit corporate interests.

As noted in a recent column, legislation is moving to re-establish “redevelopment” in California cities, albeit with a new name, just a few years after the program was eliminated.

It’s a way for local officials to subsidize certain kinds of businesses with property tax funds that would otherwise go to schools, thus forcing the state to backfill school money. The program was plagued by misuse and there’s no particular reason to believe it won’t be again, if it’s resurrected.

Former Gov. Jerry Brown persuaded the Legislature to eliminate redevelopment as a response to a severe budget crisis he inherited after returning to the governorship in 2011.

He also took aim at another tax boondoggle called “enterprise zones” that offered tax breaks to businesses that invested in designated poverty-ridden neighborhoods.

Critics, however, said while the program drained money from the state treasury, there was no evidence that it provided any net benefit.

“Most rigorous research has found that EZs do not create a net increase in jobs or increase the rate of job creation,” the Legislature’s budget analyst concluded in 2011 as it endorsed their elimination.

Two years later, Brown finally persuaded the Legislature to act, but he had to sweeten the deal with a replacement program of direct subsidies to some businesses that created new jobs.

However, the legislative analyst later examined the replacement and found that 35% of the awards, representing 15% of the dollar value, went to businesses that sold goods and services nearby, therefore generating little or no gain in economic activity for the state as a whole.

Another 65% of the awards and 85% of the money went to firms that marketed both in and out of the state, but the LAO said it was impossible to determine whether the subsidies had any net positive effect.

Bottom line: a lot of taxpayer money was being handed to businesses without any objective evidence that it was doing anything other than improving their bottom lines.

Moreover, Brown championed another tax break specifically for the motion picture industry that the legislative analyst also criticized.

Undeterred by the lack of beneficial evidence, Brown’s successor, Gavin Newsom, is proposing a new program of enterprise zones, now dubbed “opportunity zones.”

The recent federal tax overhaul, signed by President Donald Trump, coined the new title, offering hefty corporate income tax breaks for investment in the newly designated zones, including 879 in 57 of California’s 58 counties.

Newsom wants the Legislature to piggyback on the federal tax loophole, giving $100 million in state tax breaks to businesses that invest in low-cost housing or “green tech” in the zones.

In governmental circles, loopholes that benefit specific activities are called “tax expenditures,” and for good reason. They have precisely the same fiscal effect as direct appropriations in the budget, but are not subject to the same scrutiny as direct expenditures.

The state’s tax codes are already riddled with loopholes costing tens of billions of dollars a year. We’d all be better off if the narrowest ones, such as the handout to movie producers or the sales tax exemption for custom software programs, were eliminated and the money used for the broader welfare, such as education.

But don’t hold your breath. Politicians love to give out goodies to influential interest groups.

This article is produced as part of WeHo Daily’s partnership with CalMatters, a nonpartisan, nonprofit journalism venture committed to explaining how California’s state Capitol works and why it matters.

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21 Workers Test Positive for Coronavirus at Rock n Roll Ralphs

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Workers protest outside Ralphs in Hollywood where 21 have tested positive for coronavirus

HOLLYWOOD (KTLA) — Workers rallied Friday outside a Ralphs store in Hollywood where 21 people have tested positive for the coronavirus.

The group called on the store to take more aggressive action when staff test positive for the virus, and to ramp up efforts to protect the grocery store employees, who are considered essential workers on the front lines of the pandemic.

They said they speak for thousands of workers who are afraid they aren’t getting enough protection as the virus continues to spread countywide, infecting more than 24,000 as of Friday.

The Ralphs at 7257 W. Sunset Blvd. has had an outbreak involving several workers who tested positive for the virus, according to the Los Angeles Department of Public Health, which lists businesses and […]

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‘Stay Put, Order In’ and Dine With Friends on Zoom, Says Mayor

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WEST HOLLYWOOD — WeHo is home to some of the best restaurants in the world and our community members are used to gathering around restaurant tables and enjoying meals together. Now, there’s an opportunity to, instead, gather around kitchen tables at home and enjoy a meal (or many!) while supporting our local restaurants.

“One of the worst things about the Safer At Home directive is being disconnected from friends, neighbors, and the city around us,” said City of West Hollywood Mayor John D’Amico. “Don’t be alone if you don’t have to be – take advantage of the technology out there and invite a friend to Zoom in for Ziti or share some Farfalle over FaceTime.”

Mealtime is a wonderful opportunity to connect with friends, family, and loved ones using virtual teleconferencing technology, while partaking in your favorite delivered or takeout food.

City Encourages Residents to Support Local Restaurants During Safer At Home Orders

Many West Hollywood restaurants remain open and are offering takeout, curbside, and delivery meals, which are sensitive to social distancing during the emergency. The City of West Hollywood and the West Hollywood Chamber of Commerce have teamed up to offer a directory of “Stay Put, Order In” eateries in West Hollywood, which is accessible by visitingwww.weho.org/coronavirus (click the “Stay Put, Order In” link!) or www.wehochamber.com/dinein. This list is updated daily.

“We need to start hanging out together, and talking, and seeing each other again. So, why not plan to #WeHoDinnerConnect this week – maybe Saturday at 8 p.m.? Or Sunday at 7 p.m.? Or even just 15 minutes of screen-to-screen gossip,” said Mayor D’Amico. “And you don’t have to cook a thing… local restaurants have meals and menus tailored to take-away choices and they’re ready to send food over to your house or make arrangements for you to pick it up.”

If picking up food, remember to wear face coverings, which are required to enter essential businesses.

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Amoeba Music Won’t Reopen Original Sunset Boulevard Store

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Amoeba Music won’t be reopening its original Sunset Boulevard store

HOLLYWOOD (TimeOut) — In a statement posted to its Instagram account on Monday, Amoeba announced that it would not be reopening its nearly two-decade-old flagship on Sunset Boulevard. Instead, the indie record shop will divert all of its resources to opening its new shop on Hollywood Boulevard, which they still hope to have ready in the fall.

“There are so many unknowns and uncertainties for a business like ours right now,” the statement reads. “The only way we can keep Amoeba Hollywood alive in the future is to make this difficult decision now.”

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It is with a very heavy heart that we announce that the massive impact from COVID-19 has forced Amoeba Hollywood to remain closed until we can hopefully move to our new location this fall. We are devastated. We know you are too. We never envisioned not being able to give the store the send-off it deserves, to give you all a chance to say goodbye. But we are facing too many mitigating circumstances. This is not the end of Amoeba! We are moving to a new location at 6200 Hollywood Blvd in the fall and we feel fortunate that this plan was set into motion long before COVID-19. There are so many unknowns and uncertainties for a business like ours right now. The only thing we do know for certain is that we intend to survive. We want to continue to be there for our amazing customers and our incredible staff in our new location long after this pandemic disappears. The only way we can keep Amoeba Hollywood alive in the future is to make this difficult decision now. Thank you ALL so much for your support during this time and over the years. We have the best customers in the world, as evidenced by the tremendous outpouring of support for our GoFundMe. Your generosity is going to help cover health care for our employees at all three stores, and generally help Amoeba continue while we all must remain closed. We miss you all and cannot wait until we can be together again. Please read our full statement online at https://amoeba.com/moveupdate

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Our original story about the store’s GoFundMe campaign appears below.

It’s become a pit stop on music-lover’s tours of Hollywood, it’s hosted concerts from Patti Smith and Paul McCartney, and it’s weathered the Great Recession and the transition from CDs to MP3s to all things streaming. But with Amoeba Music’s future more uncertain now than ever, the massive independent record store is turning to its devotees for nearly half a million dollars to try to stay afloat.

In an essay on GoFundMe, Amoeba cofounders Dave Prinz and Marc Weinstein recount […]

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