A panel of local leaders weighed in on the implications of national and local economics and the affects of taxes on Washington, D.C. business at the City Tavern Club in the heart of the Georgetown business district on Thursday night.
“Our city is really strong today. Our downtown is being rebuilt and our neighborhoods are being rebuilt,” said Ward 2 Councilmember Jack Evans, at the forum’s opening. However, he said he worries that the “bad actions” of congress and the president, such as failure to act in stopping sequestration, will affect the District of Columbia “dramatically.”
The Georgetown Business Association held its first economic forum composed of Evans, former congressman Jim Moody, Georgetown resident and entrepreneur Ray Regan, and tax lawyer Payson Peabody. Davis Kennedy, editor or the Current Newspapers was the moderator.
Sequestration is a big word for millions in automatic cuts to federal defense spending that will go into effect this January, if a new congressional super committee assigned to writing a federal deficit-reduction plan does not agree on legislation to cut the national deficit by Nov 23. These cuts will come in waves from 2013 to 2021, and some estimate it may trickle down to a loss of 450,000 jobs in greater Washington.
On top of sequestration, the Bush-era tax cuts are set to expire this January. Peabody called January “the mother of all deadlines.”
Evans said sequestration and the expiration of tax cuts will dramatically affect the local economy by creating an unstable economy in which businesses are afraid to invest and hire.
“In an economy like ours, what businesses crave is stability. In order to invest money [businesses] want to invest money in a stable environment, knowing that the money they invest will then return some wealth to them,” said Evans.
Even Kennedy, the moderator, weighed in on the impact of unknown tax hikes and federal fund cuts on local businesses’ willingness to hire. A reporter recently left the Current Newspaper, and Kennedy decided to hold off on replacing the position until he knew what the economy looked like in 2013.
The national economy has affected business growth nation wide, but Evans also worries that the “unfavorable” taxes in the District of Columbia will push businesses over the District boarder and into Virginia, where the income tax rate is lower.
The income tax rate in the District of Columbia is 8.95 percent and 5.75 in Virginia. The corporate income tax rate in the District of Columbia is 9.75 percent and 6 percent in Virginia.
Evans said he wanted to make the District of Columbia more competitive with Virginia by lowering the income tax rate, to entice small business.
“We need to grow industries in this city…and we need to change our tax policies to do that,” said Evans.
Kennedy narrowed the conversation to Georgetown, when he asked the other panelists to give Evans advice on making Georgetown more marketable to new businesses.
“Do you have any suggestions for an area where rent and taxes are sky high, regulations are many and where market share is slightly declining,” Kennedy asked the panel.
Reagan said lack of parking was Georgetown’s biggest economic obstacle in attracting small businesses. He also said Georgetown should work to compete with other, “more flexible” District neighborhoods that are growing, such as H Street and 14th Street.
The Georgetown Business Associate spokesperson Janine said the group would like to hold more economic forums throughout the year and is open to looking for more business leaders willing to sit on a panel. The next Georgetown Business Association event will be the annual holiday reception on Dec. 12 at Dumbarton House. Members of the community will be recognized with community service awards at the reception.