By Colin McCarthy
2:09 PM PDT, August 2, 2013
The July 31 Daily Pilot article "Officials postpone business tax review," highlights a disturbing trend by a small but vocal minority in Costa Mesa — blame Nordstrom and South Coast Plaza for not paying their fair share of taxes.
For years, some in our community have used Nordstrom as a punching bag to argue that Costa Mesa's business license fee (tax) should be raised. Pundits love to highlight the fact that Nordstrom is no different than any other business in our city when it comes to paying its business license tax. This is simply their way of saying that we should raise our business tax.
Here are some interesting facts that don't get reported. Nordstrom is consistently one of Costa Mesa's top 25 sales-tax generators. More people travel from LA, San Diego, Europe, Asia, etc., to shop at South Coast Plaza, making it the highest sales-generating shopping center in the nation. Last fiscal year, South Coast Plaza contributed more than $15 million in sales tax revenue to our city general fund. In fact, the Plaza alone accounts for over a third of our city's general fund sales tax.
For some, Nordstrom and South Coast Plaza's contributions are not enough. They somehow believe that because large businesses like Nordstrom max out at $200 per year in business license taxes, they aren't paying their fair share.
This argument is absurd.
Nordstrom pays more than its fair share of taxes through sales tax, unemployment tax, workers compensation and a whole host of other taxes this state deems necessary to saddle businesses with. Now we want to soak them for more?
Costa Mesa is blessed to receive South Coast Plaza's sales taxes. We should be thanking large businesses like Nordstrom for being in our city and providing much-needed tax revenue. We certainly should not be looking for more ways to bleed them through a nickel and dime tax.
What do businesses like Nordstrom receive in exchange for paying this tax? Increased city services? Business outreach? Advertising? Something to help their bottom line?
The answer is very little — a certificate to hang on their wall. The business license fee is simply a tax-generating mechanism for the city that provides no tangible return benefit to local businesses.
I hope readers will ask themselves an important question about our major businesses. Where would Costa Mesa be without Nordstrom?
If we simply picked up South Coast Plaza and moved it one block north to Santa Ana, what would our city look like?
Without $15 million in sales tax revenue to support our general fund, how would we pay for police and fire services?
How would we pay to sweep our streets, or maintain our parks?
Most likely it would be through additional taxes. A parcel tax on our homes, a utility tax on our phone and cable bills.
If the stories of bankruptcies in Detroit, Stockton, Vallejo, San Bernardino and other cities have taught us anything, it's that we can't afford to take our revenue-generating businesses for granted.
Chasing away local businesses and then trying to backfill those financial losses with higher individual taxes doesn't work. Just look at Detroit.
We should appreciate what these businesses contribute to our cities and not simply view them as an ATM machine for more tax revenue. They contribute enough. If you believe a one-size-fits-all business license tax isn't fair to small businesses, then change the structure. But in doing that, ensure that businesses are receiving some tangible benefit to their operation in exchange for paying this tax.
If Costa Mesans are so shocked and outraged by the small amount of business license tax paid by Nordstrom, I can assure you that there are plenty of cities in Orange County that would love to have its business.
COLIN MCCARTHY is a Costa Mesa planning commissioner.