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D.C. Mayor Vincent Gray gets earful on recruiting tech talent, taxes

Friday - 2/17/2012, 3:30pm  ET

D.C. Mayor Vincent Gray dropped in Friday to the Georgetown headquarters of Personal Inc. for a semi-formal bull session with tech CEOs and investors.

The crowd no doubt appreciated Gray and his team reaching out to the tech community. But they were less than delighted with the startup-punishing tax structure the mayor inherited.

An especially sore subject was the headaches and additional taxation associated with forming a tech startup under an LLC (limited liability company) structure. Marc Katz, president and co-founder of Tysons Corner-based T-shirt design company CustomInk LLC, wondered how many entrepreneurs had been driven out of the city by that section of the D.C. tax code: “When you make the comparison between living in Virginia and living in D.C., it becomes not viable,” Katz said.

D.C., said Revolution LLC co-founder Tige Savage, is “a terrible place to be taxed.”

Much of the discussion revolved around how to attract additional software developer talent to the District — or at least, how to lure it out of the federal contracting world. Savage suggested creating new tax breaks for tech workers to move into the District, essentially, “solving the equation in the pocketbook of the employee.”

Gray’s visit, organized by iStrategyLabs LLC CEO Peter Corbett, served several purposes. First, it was an effort to show he’s not half-assing his outreach to D.C. tech. Gray also seemed legitimately in search of ideas on how to make the city friendlier to startups. And finally, it gave his team a chance to market some of the programs already in place, such as CAPCO.

“We recognize too that we are in a region where we are not as competitive as others,” Gray said. “The selling points we have are location … the downside is the tax scheme we operate under.”