In two weeks, the DC Council will vote on a tax break for some wealthy investors in DC tech companies that would slash the capital gains tax rate on these investments to just three percent, which would be the lowest income tax rate for DC residents. Mayor Gray and his administration say this is absolutely necessary to spur DC’s growing tech industry, but DC offers several good incentives that already give companies good reasons to be here.
These policies are targeted for what are called qualified high technology companies (QHTC). These companies must be located in the District, employ at least two people, and make the majority of their revenue from qualifying high technology activities.
If a company that meets the HQTC criteria is willing to move to DC, it can receive a five-year freeze on assessed property value. This means that for five years, property taxes will remain flat even if the value of the property increases. The District is also willing to pay a $5,000 reimbursement for each employee who relocates to DC. That amount grows to $7,500 if that employee lists a property in DC as his or her primary residence.
Wait, there’s more.
DC also offers a reduction in the corporate income tax rate from 9.75 percent to 6 percent for simply existing as a high tech company in DC. If the company locates in a High Technology Development Zone, they will pay nothing in corporate income taxes for five years. And high tech companies don’t have to pay sales tax on software, hardware, or when purchasing goods or services from “qualified companies.”
Growing tech companies in the District get yet another set of incentives. For every new person a company hires, it can receive up to $5,000 in wage reimbursements. DC also offers a ten-year abatement on qualified personal property taxes.
DC has a strong set of incentives to encourage tech companies to locate, grow, and thrive in the District. In fact, DC’s favorable climate has made us the fifth best companies for tech start-ups in the country. That’s what brings them to the District. That, combined with a qualified talent pool and proximity to other tech companies helps them to grow’not cutting taxes.
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