Irvine Mayor Pro Tem Jeff Lalloway finally got his way, sort of, in eliminating Irvine’s $51 business license program. We say sorta, because while business owners no longer pay this tax, the program is still on the books for Irvine taxpayers and costs about $600,000 to manage.
On social media, Lalloway shared a friendly OC Register article touting his leadership on the issue with this tagline:
“We are trying to be one of the first cities to eliminate a tax and return almost $1 million back to our residents.”
Except its not returning $1 million to residents.
Irvine has about 250,000 people — half the city’s population rents and doesn’t pay property tax (but certainly does pay local sales tax and payroll taxes if they work or shop in the city). So if Lalloway’s claim were completely true, that is a savings of $4 a person. Except its not. Published reports say the program costs $600,000 to administer, and when we use the same formula, Lalloway’s move saves business owners $51 a year while costing each Irvine resident $2.40. Neither the Lalloway-claimed savings-per resident or the program’s cost-per resident will buy you a movie ticket unless its at the dollar theater.
But let’s break down the numbers further.
According to the Records and Business Services Bureau of the Irvine Police Department, which manages the program in order to track the sort of businesses seeking a license in the city, the number of total licenses issued were 22,343 multiplied by $51 is $1,139,493 in annual revenue paid for by local businesses. If the program costs $600,000, that’s a net “profit” (and I hate to use that term because government should never be in the business of making a profit), is $539,493, which helps pay for all the nice things we have in Irvine.
The business license application requires the business owner to list a home address. Of those who hold a business license in Irvine who also live in the city, Irvine issued 6,327 business licenses. That’s a long way from 250,000. So for those Irvine residents who hold a business license in the city, your $51 tax refund accounts for a total of $322,677 and you can take a business associate to lunch once a year on that tax savings provided you leave a nice tip for that hardworking waiter or waitress that served you (Full disclosure: I hold two business licenses in the City of Irvine and one in the City of Tustin yet I fully support this tax).
Another 5,739 business license holders have no residential address listed (as many use a P.O. Box) that accounts for $292,689 in savings to taxpayers who might live in Irvine or do not living in Irvine. Let’s assume for a moment, they all live in Irvine. A total of 12,066 compared with a population of 250,000 is not a tax refund for “our residents.” The actual number is, of course, far less.
Nearly 46 percent of all Irvine business tax licenses (10,277 to be exact) were issued to taxpayers who don’t live in Irvine. Factor in the P.O. Box licensees and its easily more than half.
Now Council member Christina Shea has her grandma panties in a bunch over the Living Wage ordinance using taxpayer dollars to compensate workers of companies with city contracts who don’t live in our city, but has no problem with the city refunding tax dollars to 10,277 out of town business owners to the tune of $524,127 at a cost to Irvine taxpayers of $276,000. She and council member Lynn Schott think its Christian to pay Latino janitors minimum wage instead of the city’s former Living wage of nearly $11 an hour, but out of town business owners, here’s your $51 back and our taxpayers will pick up your check.
And Shea complained about the unfairness of the Living Wage law that applied only to contracts greater than $100,000. Well, the business tax license was the same for every business in town. It’s $51 a year for my PR firm. And it’s $51 a year for Broadcom. It’s $51 a year for the Irvine Company. A $51 a year tax is 14 cents a day; just pennies under a dollar a week. Is that going to break your small business? Well, maybe Shea’s consulting business or Schott’s home schooling consulting business.
The repeal of this business tax license was done with an eye towards future election mailers.
Jeff Lalloway can say he led a movement to cut taxes in the city. And for some taxpayers, he did. Scott and Shea voted along with the program. They can say they voted to cut this tax program — which was first conceived by Republican Mayor Mike Ward years ago. But the actual benefit to Irvine taxpayers is chump change. Most Irvine residents won’t get a dime, while, maybe (if you count the P.O. Box holders as residents) 12,066 will get $51 back.
It’s often said the California Lottery is a tax on people who are bad at math. This is a tax cut on people who hope you don’t pay attention to the math as much as you might to the words on a mailer come election season.