January 12, 2012 | by Mark Lee
D.C. last again in ‘small biz friendliness’

D.C. Mayor Vincent Gray and a swath of D.C. Council members exhibited a startlingly unsettling posture last week in response to the long-overdue resignation of Ward 5 Council member Harry Thomas Jr.

Enlivening public commentary and online forums, the melancholy attitude exhibited by both the mayor and Council members – a majority of whom face their own official investigations or public suspicions for alleged financial improprieties and ethical lapses – seemed to strike the public as exactly the wrong chord at the moment this lengthy city embarrassment finally came to a conclusion.

Stepping down after more than a year of explicitly denying any wrongdoing as part of a federal plea bargain confessing to felony charges of embezzling more than $350,000 in city funds and falsifying his tax returns, even Thomas remained brazen and arrogant enough to hint that he may pursue elective office following completion of what is expected to be an approximately three-year prison term.

Rather than agonizing over the political demise of a public crook, the mayor and Council should instead snap out of an unseemly collective lament over one of their own and focus on another recent announcement – D.C.’s designation again this year as the jurisdiction most “unfriendly to small business” in the nation.

Little suspense precedes the District’s perennial dead last ranking in anticipation of the release of the “Small Business Survivability Index: Ranking the Policy Environment for Entrepreneurship Across the Nation” issued each year by the Small Business and Entrepreneurship Council. Not surprising, given the propensity for counterproductive policies and profligate spending that treat local businesses like ATMs.

Measuring the comparative public policy environment for small business and entrepreneurship among the 50 states and the District of Columbia, the well-regarded and widely reported analysis for 2011 again places D.C. at the bottom of the barrel – the same notorious distinction claimed by the District for as long as anyone can recall and echoed by other evaluative sources.

Among local jurisdictions, Virginia improved on its 14th place ranking last year to climb to the 10th most favorable position. Maryland, however, fell closer to the bottom at the 38th spot, down from its 2010 ranking at number 36.

As discussed in this column last winter when reporting D.C.’s identically dismal 2010 ranking, a negative small business culture disproportionately affects gays and lesbians due to the significantly higher prevalence of our numbers engaged in entrepreneurial activities, as reported by the National Gay and Lesbian Chamber of Commerce (NGLCC).

The nonpartisan SBE Council this year expanded its comprehensive annual national report to include 44 major government-imposed or government-related costs affecting small businesses and entrepreneurs.

The factors included in the Index – taxes, various regulatory costs, government spending and debt, and a range of other burdens and disincentives – determine the competitiveness of each state and the ability of small businesses to survive and thrive.

As detailed in the report, the District’s income and business taxes and other fees are among the very highest in the nation.

Additional considerations – obstacles such as Washington’s infamous parody of democracy allowing both small and unrepresentative groups as well as random cadres of disgruntled residents to employ an outsized ability to obstruct, delay and deny regulatory licensing and zoning approvals for community businesses, for example – were not included in the rankings. Small mercy, as including such barriers would merely add insult to our ignominious position.

For all the lip service that D.C. government officials pay to professing support for small business and a positive enterprise environment, is it any wonder they are followed on stage by local entrepreneurs belting out a hope-filled rendition of “I Will Survive” despite the reality of over-regulation, over-taxation and commonplace disregard?

The primary concern at the Wilson Building appears limited to how much money can be wrung from businesses, owners and consumers to enable even more record-level spending yet again next year.

Lost in this fiscal folly is comprehension that policies expanding opportunities for success among local businesses are the drivers of local economic development, a strengthened economy, job creation and the boosting of neighborhood amenities.

If Mayor Gray and the D.C. Council hope to salvage their collective reputation, as well as the District’s, that is where they should start.

Mark Lee is a local small business manager and long-time community business advocate. Reach him at OurBusinessMatters@gmail.com.

3 Comments
  • What is important to always remember when discussing DC taxes and how they are handled is that the District, contrary to every other state, doesn’t have the ability to tax its commuters. Therefore all our revenue to provide programs and services is based on only being able to tax about 64% of the income made by people working in the District. All those poeple working in small businesses who don’t live here don’t pay taxes here. It has been estimated that the District loses about $1 billion a year based on not being able to tax Virginia and Maryland residents who make their income in the District. I am in favor of doing anything we can to make it easier for small businesses to operate in DC and have fought many battles against some of our regulations. But we we must always look at the whole picture.

    • I agree with Mr, Rosenstein on this. Like so many people, Mr. Lee remains uninterested, perhaps willfully so, in gathering the facts that drive the macro economic picture of the 33 sq mile taxable property base in the District. Congressional mandates over building heights, the inability to tax all incomes earned within the jurisdiction and property tax exemptions for non profits all add to place an upward price pressure on the price of commercial real estates. He knows this. That his Sunday club used someone else’s property on a slow Sunday night for his lounge parties.

      In response to the cheap whine about the DC elected leadership, there is a federal ban preventing DC’s Attorney General’s ability to prosecute anything more than misdemeanors and property crimes. All felonious crimes are the purview of the Justice Department’s DA and being so busy, they can only focus on the biggest crimes. This has been in effect before Lee even moved here and widely reported. So if Mr. Lee and his plastic lizard friends want real change in DC, the Republican controlled House of Representatives is the first stop. Otherwise if they are so unhappy, they can move to GOP Virginia or park their butts drinking “tinis” from plastic bags on the beach in tax free Delaware.

  • Lots of good points raised in this article. Let’s hope that the effort to recall Gray gets some traction and that this loser is given the boot just like Harry Thomas. We need political leadership that is friendly to the business community rather than the “one city” focus that drains tax dollars to support the welfare state east of the river.

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