Are things looking up?

ROBERT Maguire's announcement last week that he plans to build an office skyscraper downtown is not just significant, it s an inspiring vote for downtown. Let's just hope it gets built.

Skyscrapers, such as the 50-story tower he envisions, have an outsized effect on morale. Call it a psychological effect, if you will, but when people drive into town and see a big building going up, one that transforms their skyline, they have tangible evidence in their windshield each day that smart money is making an important bet on the future of their city.

I've long been convinced that a conspicuously tall building boosts its neighborhood more than any other single development, event or enterprise zone.

True, L.A.'s downtown area has enjoyed real progress in recent years. There's been a significant amount of condo conversions and rehabbing of old buildings. And the $2.5 billion L.A. Live complex is obviously a huge deal.

Still, the fate of the downtown boom seems fragile. At least one developer has pulled out. The homeless have spread out, thanks to an appeals court decision, creating more challenges for downtown residents and businesses.

That's why a conspicuous tower going up in the heart of the city would be visible reassurance, a statement that this is a city worth a $300 million investment.

But if Maguire's building doesn't go up for whatever reason--and there are skeptics in the real estate community--it would have the opposite effect. It would be an outsized disappointment to a downtown that doesn't need disappointments.

I wrote a column in the Oct. 2 issue of the Business Journal saying that City Attorney Rocky Delgadillo's proposal to eliminate the city's business tax may seem silly. But it makes sense if you consider the Laffer Curve effect. The Laffer Curve holds that when truly burdensome taxes are cut or eliminated, the freed businesses and people will do more business or earn more income and they end up paying more taxes. The taxing authority may be surprised to discover that it actually gets more tax revenue. The headline was "Tax Less, Get More."

The Laffer Curve got its name from Arthur B. Laffer, who was among those who inspired the Reagan tax cuts of the early 1980s which led to much greater tax revenue for the federal government.

I got a nice e-mail from Laffer last week. He applauded Delgadillo's proposal, but he went on to say that Delgadillo and I were wrong to believe, as I wrote, that any elimination of the business tax should be phased in so as to cushion the revenue blow to the city. Instead, once a tax cut is approved, it should go into full effect as quickly as possible.

"If you knew that taxes would be lower next year than they are this year, what would you do this year?" Laffer asked. "We caused one of the deepest recessions ever by phasing in the tax cuts of 1981 and 1982."

I certainly don't have the credentials to argue with Laffer. He's right, of course. Passing a tax cut but postponing it invites a near-term economic contraction.

Unfortunately, the city isn't exactly rushing to cut the tax, so the professor's good point may be an academic one.

Charles Crumpley is editor of the Business Journal. He can be reached at [e-mail].