LivingSocial, the local company that offers daily e-deals to D.C. residents, is a booming business, making it one of the most profitable tech companies to come out of Washington. Keeping the successful company local is costing the city millions, however.
D.C. Council votes on a bill Tuesday offering breaks and assistance to local start-ups. This follows a $32.5 million tax deal offered to LivingSocial as an incentive to resist the urge to relocate to another city with a more lively technology community.
The LivingSocial deal is an excellent start to creating a good relationship between the District and the tech community, says David Zipper, director of business development for the deputy mayor's office.
"They have to pay hundreds of millions more over the next 10 years if they were living here in the region than if they moved out," says Zipper. "It was too great of a risk."
But the D.C. Fiscal Policy Institute argues offering tax incentive is not the right approach to help the city's economy.
"It would be better if we say to LivingSocial you will get your $32.5 million dollars, if you actually expand 2,000 employees, as you say you will, in the District," says the institute's Ed Lazere.
Lazere says tax incentive is a blunt instrument for retaining tech companies that would otherwise be here in the District anyway. Zipper and Lazere appeared on The Kojo Nnamdi Show yesterday.
Tuesday's vote will decide if investors in other local tech companies will get similar tax relief on their earnings.