Mayor Gray, Other District Leaders, Entrepreneurs and Tech Advocates Urge Council to Pass Tech-Sector-Incentives Bill

(WASHINGTON, DC) – Mayor Vincent C. Gray today urged the DC Council to pass the Technology Sector Enhancement Act of 2012, which will help continue to diversify and grow the New Economy the Mayor has envisioned for the District by incentivizing investment in DC’s growing technology sector.

Mayor Gray made the announcement at The Fort, the downtown headquarters of tech-company accelerator Fortify.vc, alongside other public and private sector leaders, including Deputy Mayor for Planning and Economic Development Victor L. Hoskins, Startup DC Chair Evan Burfield, DC Chamber of Commerce President & CEO Barbara Lang and Fortify.vc Founding Partner Jonathon Perrelli.

“Technology leaders and entrepreneurs are the District’s job creators in our emerging New Economy,” Mayor Gray said. “I urge the Council to pass this important legislation, which encourages investment and helps us remain competitive in our region as a technology destination via a highly targeted incentive.”

Mayor Gray continued: “We all know that 3 percent of something is much better than 8.95 percent of nothing – and nothing is what we’ll have if we don’t keep growing tech firms in the District.  The threat of sequestration underlines the need to move quickly to encourage diversification of the District’s economy and encourage growth in private-sector industries not dependent on federal spending. This is why I have pushed aggressively for this legislation so that the District becomes a more attractive place to our burgeoning technology industry and other growth sectors.”

The DC Council has passed the first portion of Mayor Gray’s tech-incentive package, but has delayed action on the Technology Sector Enhancement Act until this month. The legislation provides financial incentives that will encourage further growth in the District’s tech sector and discourage the many entrepreneurs who have started and grown successful technology firms in DC in recent years from relocating to Virginia or Maryland because those jurisdictions currently offer lower capital-gains-tax rates. The devastating impact of the Draconian federal budget cuts that would result from sequestration makes it all the more urgent to pass this important legislation that will help diversify the District's economy.

The bill’s proposed changes to the DC Tech Incentives program would modify the personal income-tax rate that “angel investors” – individuals who invest their personal funds in start-up businesses – would pay. Instead of the normal 8.95 percent rate, those residents who invest in program-participating companies will pay a 3 percent capital-gains rate on angel investments. The impending change is designed to entice angel investors and successful start-up company employees to remain in the District and continue fueling growth of the technology sector locally.

Additionally, the legislation aims to expand the incentives program beyond its current parameters – limited to businesses located in pre-identified technology development zones – to all qualifying District technology businesses no matter where in the city they are located.  The modifications to the program signal a major technical step forward in accomplishing the Gray Administration’s goals for DC’s tech sector.

Prior to the rally, Mayor Gray also visited local tech accelerator Acceleprise’s headquarters.  The visits highlight the Mayor’s continued focus on the local tech sector and respect for “tech hub” initiatives that coalesce creative, entrepreneurial entities in order to cultivate and spur long-term growth.

“My office stands committed to investing in the tech sector through whatever public sector avenues we can soundly create to enhance its growth while not obstructing the general flow of commerce,” said Deputy Mayor Hoskins. “I’ve said it before, and I’ll say it again – we are committed to continuing our work to make the District business-friendly, and that starts with making our incentive programs comprehensible.”

The D.C. Tech Incentives Program attracts technology businesses to the District and incentivizes locally owned technology businesses to grow in the District.  To qualify for incentives, businesses must be located in the District, employ at least two individuals and derive a majority of revenue from qualifying high-tech activities. Incentives include relocation-expense offsets and modifications to various tax rates. 

See the website of the Office of the Deputy Mayor for Planning and Economic Development for more information on doing business in DC