Can LivingSocial Help Establish D.C. as a Tech Hub?

Ken Archer opines on whether proposed tax incentives being offered by D.C. to retain the corporate offices of website LivingSocial are a smart trade-off amongst a backdrop of sparse public resources.
April 30, 2012, 5am PDT | Alesia Hsiao
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D.C.'s mayor, Vincent Gray, has initiated a full-court press to retain the city's prized tech tenant, LivingSocial, and its 956 employees, by offering tax breaks of up to $32.5 million over 5 years. "One major rationale for giving tax breaks to tech companies is to create a "tech hub," a concentration of jobs, talent, and investment that leads more potential tech workers, entrepreneurs, and investors to choose to move to, start companies in, and invest in DC," states Archer.

"The proposed tax breaks reduce LivingSocial's property and income tax from 2015-2020 on a sliding scale based on number of DC residents employed. At least half of their employees must be DC residents for the tax breaks to kick in at all." The major caveat introduced by Archer is that the majority of LivingSocial's employees work in sales and copywriting, not in engineering, and therefore would not contribute to growing a tech hub.

Archer explains that in order for DC residents to benefit from the deal, the company bring two critical elements of all successful tech hubs: smart money and smart engineers. Neither of which appears achievable through the proposed deal.

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Published on Tuesday, April 24, 2012 in Greater Greater Washington
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