There’s a reason Washington DC wants LivingSocial to keep their headquarters in the district. The company has grown to a staff of 5,000 with 1,000 of those jobs based in DC and plans to build a new office building to house all those employees in one building. The city also hopes keeping the company in the district would attract more top-level talent to an already burgeoning tech city.
And tax breaks designed to keep the company in the district may have gotten the support it needed. Last Thursday local business advocates, company executives, and city economic developers testified in favor of a D.C. council legislation that would save LivingSocial $32.5 million in taxes.
The legislation would tie corporate and property tax abatements with the percentage of new hires that reside in the district. These breaks would begin in 2015. LivingSocial expects by then to generate taxable income and add 1,000 local employees. They also plan by then to consolidate their workforce into one building. Currently the company has employees in six different buildings across DC.
The bill is seen as an effort to make the district more competitive with Maryland and Virginia in attracting businesses.
While most every voice in the room was supportive of a legislation there were some who wanted to see the tax incentives tied closer to the growth of the company.
Kwame Boadi, an analyst at the D.C. Fiscal Policy Institute, said the council should mandate a minimum percentage of the company’s workforce be District residents. The current version of the bill would grant LivingSocial half the tax incentives if none of the company’s employees or new hires reside in the District. LivingSocial said about half of its local workforce resides in the District currently.
In addition, both Boadi and Ken Archer, editor of the economic development blog Greater Greater Washington, said the council should make the tax incentives dependent on LivingSocial creating new positions. Their reason for that is to prevent the company from claiming credit for employees who are hired as a result of natural turnover.
The D.C. Council’s Committee on Finance and Revenue will mark up the legislation —called the Social E-Commerce Job Creation Tax Incentive Act of 2012 — next week. It will then be voted by the city council and could be sent to Mayor Vincent Gray’s desk as soon as next month.