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Some Firms Say Baseball Tax Looks Too High and Hard

By Neil Irwin and Dana Hedgpeth
Washington Post Staff Writers
Thursday, November 11, 2004; Page E01

On Monday, D.C. Mayor Anthony A. Williams stood in front of the press to make his pitch for a publicly financed baseball stadium, flanked by leaders of some of the city's largest companies -- Pepco, Verizon and Bank of America among them.

The image was clear: Businesses stand behind baseball in Washington, even though they will have to pay a new tax on revenue to help pay for it.

Some mid-size businesses say they can't afford Mayor Anthony Williams's plan to finance a new baseball stadium. (Katherine Frey -- The Washington Post)

But behind the scenes yesterday, a far more complicated mix of business views was apparent, as various groups launched last-ditch lobbying efforts to shift the brunt of a $26 million annual tax onto other companies. Confusion over which plan would emerge and the fast-evolving debate over the issue led some groups to move more aggressively to state their positions to make sure they weren't ignored.

Many mid-size businesses, especially those with low profit margins, complain that the mayor's plan puts too much of the load on them, and they are pushing to get more of it shifted to large companies. Major real estate developers, among the most stalwart supporters of baseball, are upset that the mayor's plan would treat each building they own as a separate enterprise, raising the total baseball tax burden the developers would face. They want that provision changed.

Meanwhile, business leaders who have embraced the baseball tax worry about the possible long-term impact of the confusion that resulted after D.C. Council Chairman Linda W. Cropp proposed a rival plan for a stadium at a different site, withdrew that proposal and then put forth a new idea on Tuesday for private financing. By yesterday, Cropp had backed away from the private financing proposal and said she was more amenable to the mayor's original plan.

Williams has also revised his original plan and shifted some of the burden from smaller to larger firms, and has said he would be willing to consider further changes. Under Williams's most recent stadium financing plan, businesses in the District would pay a fee based on their total revenue. Those with less than $4 million in revenue would pay no tax; the maximum, for businesses with more than $30 million in annual revenue, would be $48,000 each year until the stadium debt is retired -- perhaps 20 years, depending on how financially successful the team is.

Cropp has scheduled a meeting to vote on a plan in two weeks, although the vote could be moved to next week. Williams has said he has the seven council votes needed to pass the plan. Nevertheless, his staff expects to spend the time before the vote meeting with business and other groups, said Chris Bender, a spokesman for the deputy mayor for planning and economic development. Bender, too, said the mayor is open to further changes in the baseball tax.

Some companies with relatively high revenue but low profit margins say that the tax would be unfair to them.

"The way this tax is structured, it may drive businesses such as ours out of the city entirely," said Kenneth Goldstein, an oncologist at Washington Oncology/Hematology. His three-doctor medical practice has $5 million in annual revenue from sales of cancer drugs to patients, but he merely buys and dispenses the medications and makes no profit on them, he said. The pharmaceutical sales are enough to push his business's ballpark tax obligation to about $10,000 per year, which might make moving the practice to the suburbs more attractive, he said.

The Medical Society of the District of Columbia has come out against the ballpark financing act because of its impact on members like Goldstein, said the trade group's executive director, K. Edward Shanbacker. He has met with D.C. Council staff and representatives of the mayor seeking some provision in the law to make it less onerous to small medical practices and remains hopeful that changes might be made.

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