At a low key meeting on Feb.12, 2020, at the Pataccia Room in City Hall, the Culver City Finance Advisory Committee quietly unveiled the results of an 18 month study that could change everything, in a good way.
Culver City has not changed the structure of its business taxes since 1965, so an overhaul is overdue. Committee member Darrel Menthe gave a presentation that covered the history of the tax structure, and the multiple options for changing it. These plans will be presented to the City Council, who will vote on which of these options – if any – will become law.
Business in Culver City has changed a great deal over the past 55 years, in ways that reflect the economy all over the country and the planet. While the majority of businesses in 1965 were storefronts, most are now office-based businesses in the tech and creative sectors, home based businesses (that do not require large infrastructure support) or multinational corporations, like Sony Pictures Entertainment, whose business has many factors extending far outside the city.
The tax code currently holds that for a $100,00 in revenue, businesses pay $100 in tax. When rent for a retail storefront downtown cost a few hundred dollars, and annual receipts may have been less than $5,000, it seems a very modest and reasonable tax bill.
How different are things now? The total self-reported gross receipts for 2018 were $10,895, 944,027. That’s just shy of $11 Billion dollars. But not everyone is a giant; of the 8000 businesses registered with the city, 3900 of them make less than $100,000 a year. The ‘mom and pop’ and/or ‘small start-up’ businesses are still very vital vertebrae in our economic backbone.
Among the proposed rate changes will be to have businesses in the $100,000 or less category as tax exempt. An option for a tax in graduated percentages falls into what kind of business it is; With a 0.1% tax for retail, restaurant, child care, theater, newspapers and other low margin businesses – a 0.2% for video, tech, residential rentals, personal services – and a 0.4% tax for medical, professional and commercial rentals.
The possibility of imposing an additional tax for businesses in the multinational category was also offered, with an eye to the large corporations that will be most challenging to the city’s infrastructure.
The city council will be reviewing the committee’s findings, and voting on what will change in the business tax structure.
It could change everything – in a good way.