Online coupon site threatens to leave Washington, D.C. if it doesn't get a tax break.
April 25, 2012
LivingSocial, the daily coupon website, is aggressively pushing for a deal of its own in the nation's capital.
The Washington, D.C.-based company is threatening to move its headquarters from the city if it doesn't get a tax break, arguing that it needs an incentive package to remain. "If not," company treasurer Lisa Mayr said, "we don't think we can stay."
"Cost-wise, it's prohibitive to stay if we don't get the incentives we need," Mayr continued.
Mayr's comments came Tuesday morning at an event hosted the non-profit Downtown DC Business Improvement District, a government-chartered group of property owners that tax themselves in order to fund some services in downtown Washington.
City officials are taking the company's threats seriously. Last week, D.C. Mayor Vincent Gray proposed legislation that would tweak the city's technology incentives program to benefit LivingSocial. The legislation doesn't mention LivingSocial by name, but its language is tailored to apply to the company (see the legislation below).
Five-year-old LivingSocial, which has nearly 5,000 employees worldwide, has about 950 employees in its Washington, D.C. offices. About half of them reside in the District.
Washington is competing with over cities to house a consolidated LivingSocial headquarters, according to both Gray and Mayr. As it stands, the company's offices are spread over several D.C. buildings.
Gray's proposal would reduce the company's local tax burden by as much as $32.5 million from 2015 through 2024.
As it stands, the company is estimated to generate $166 million in tax revenue for the city over the next decade. That figure includes direct revenue from the company's business taxes, as well as more indirect money like employees' income taxes and hotel taxes generated by the company's activities. Gray is betting it's worth giving the company a break, rather than risk losing that revenue entirely to one of the jurisdictions in the suburbs outside the city limits.
Mayr did suggest that if the company doesn't get the tax incentive, it might maintain its current D.C. offices while employing its new hires in another office.
To get the full benefit from Washington, LivingSocial would need to ensure that it maintains its hiring patterns so that by the time it reaches 2,000 employees in its D.C. offices, at least half are residents of the District.
The company would also have to hire young people to work summer jobs, provide classes for small businesses, and run programs to attract software developers to the city.
Democrats scored gains in numerous once-Republican suburbs in state and local races Tuesday, most notably in Pennsylvania and Virginia. Republican strategists are nervous about that trend continuing into 2020.
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