But much of the meeting was spent on the debate over whether the District needs to do more to entice start-up technology and Internet companies to locate in the city. In a setback for Mayor Vincent C. Gray (D), the council rebelled against his proposal for a targeted capital gains tax cut for residents who invest in city-based technology start-ups.
Investors in the District are subject to an 8.95 percent capital gains tax. Gray sought to lower the rate to 3 percent on the returns of city residents’ investments in city-based technology firms, which he argued would boost the tax base and might create thousands of jobs.
But a strong majority of the council opposed the tax cut and asked whether it amounted to a giveaway to the wealthiest residents. The debate mirrored a broader national discussion playing out in the presidential race about how best to create jobs and balance the federal budget.
Council member David A. Catania (I-At Large), a supporter of the tax cut, noted that Maryland’s capital gains tax rate is 5.5 percent and that Virginia lawmakers approved legislation a few years ago that sets the rate at zero on investments in some Virginia-based technology companies.
“The reality is many people who invest in high-tech companies lose, only some win,” Catania said.
“It may feel good to continue a 9 percent tax on these individuals who can simply move across the river so they pay nothing, but I want to tell you what a hollow victory that is.”
Council member Muriel Bowser (D-Ward 4) countered that Gray’s proposal could set a precedent. “What we don’t want to do is give gifts of tax relief to some and not anything for others,” Bowser said.
To avoid the defeat of the bill that contained the capital gains proposal, another supporter, council member Jack Evans (D-Ward 2), moved an amendment to take it out of the legislation. The amended bill, which passed unanimously, expands existing city-recognized technology corridors to all commercial neighborhoods and eliminates the franchise tax for some start-up companies for five years.
Gray said the council missed an opportunity to make the city less reliant on federal spending.
“We have to find a way to be more self-sustaining, and this is a way for us to do it,” said Gray, who often speaks of District-based LivingSocial, an online marketing firm, as a model for future growth.
In another vote,
the council unanimously passed
emergency legislation that orders the Department of Motor Vehicles to apply reasonable discretion in out-of-state cases of reckless driving.
Under Virginia law, driving at more than 80 mph can be treated as reckless driving and, in some jurisdictions, is always treated as reckless driving.
The District’s DMV has been applying the city’s much stiffer penalty for reckless driving — automatic license revocation — to those offenses. The city has revoked the licenses of dozens of residents because of tickets issued in Virginia.
“I think the situation has been kind of embarrassing to the District, that the DMV was so inflexible, with a determination that defied common sense,” council Chairman Phil Mendelson (D-At Large) said.
The classroom pet bill, also approved as emergency legislation, was intended to make clear that city schools can keep hamsters, fish, frogs, small reptiles and other small animals in their classrooms.
Council member Tommy Wells (D-Ward 6) said the city Health Department recently threatened to remove several animals from Miner Elementary School in Northeast Washington under animal-welfare laws. Members said school pets and science lab animals were inadvertently included in the animal rights code when the council amended it in 2008.
“Schools have always believed they could have tadpoles that turn into frogs in their classrooms,” Wells said.
Earlier in the session, members introduced more than a dozen bills for consideration, including a proposal by Evans to mandate that D.C. public schools place a librarian and arts and music teacher in each school.
Council member Mary M. Cheh (D-Ward 3) also proposed an expansion of her nationally recognized healthy-school-meals legislation to all city parks and recreation centers.
Council member Marion Barry (D-Ward 8) moved to reverse a controversial Department of Corrections decision that requires jail inmates to talk with visitors through a video monitor. Barry and Evans teamed up to propose a commission to study the legalization of slots parlors, casinos or Internet gambling to help fund education.