(Ironically, the most potent part of Carter's new proposal may not be the portion covering the industry's profits from his decontrol order, but the part that applies to increased earnings from price boosts imposed in future years by the oil producers' cartel. That part will continue indefinitely.)
In an appearance before TV cameras to announce the new plan, Carter called the tax "the only thing that stands between the oil companies and a huge bonanza of unearned profits." But because the tax would produce only $1 billion to $1.7 billion more revenue a year, there are serious questions about whether it all was worth the effort.
Also open to question new is the notion that the tax has no chance in Congress. That assessment had emerged early on from interviews with the heads of congressional energy committees who opposed oilprice decontrol any way. But the rest of the lawmakers generally approve the tax.
Previously, the big concern was that the measure would become mired down in squabbling. Besides the windfall profits tax, Carter also had promised to send up a measures to provide oil-price subsidies for lowincome persons and to enact a series of minor tax credits as sops to various interest groups.
But last week, the president eliminated at least part of this danger by convincing senior Democrats on the House Ways and Means Committee to separate the package into two parts by passing the windfall profits
A local giant inthe phonographrecord distributing and retailing industry recently decided to move its headquarters from the economic discord of the District to the more harmonious financial atmosphere of Price George's County. And the move was orchestrated to the tune of a $3.5 million incentive.
Schwartz Brothers Inc., owner of the 19-store chain of Harmony Hut record stores and distributor for about 90 record manufacturers, including Motown, Arista, Chrysalis and Fantasy, is the latest of at least 108 firms to havel left the District for more fertile land in Virginia, Maryland, Pennsylvania and West Virginia since 1970.
And the District finally has decided to do somthing about it.
The city's new business and economic development agency is undertaking a survey of businesses still in Washington and those that have left in the past several years to determine what's wrong with the business climate. The agency also is trying to determine how much in tax revenues it loses when these businesses relocate outside the city.
Until recently, the city was largely unaware of what light industries remained in D.C. and which had left. While the suburban economic development agencies crusaded across the area and the country preaching about their business opportunities, the District government sat idly by, relying on its location as the nation's capital to bring in the flocks.
But the District possesses a number of economic disencentives and lacks space in which new industries could locate or current city-based firms could expand. Losing these businesses has cost the District not only about $180 million a year in payrolls but also about 15,000 industrial jobs since 1970.
Although many trade associations and white-collar firms have deluged the city, light industrial business has been drying up. This has eliminated jobs for the less-skilled, the underemployed and the unemployed, according to Knox Banner, executive director of the city's newly created Business and Economic Development Agency.
The unemployment rate for the city last January was 7.4 percent, according to a Labor Department report issued last month. But the unemployment rate for the entire metropolitan area was 4.8 percent.
"The city has not been on the ball, but we're getting on the ball," Banner said. Until this year, no agency concentrated on luring or retaining businesses, he said.
One mechanism that the suburban counties use to influence businesses is financing industrial development revenue bonds. The bonds make it possible for financing institutions to make loans at lower interest rates, but at no cost to county residents. To encourage Schwartz Brothers to locate in the county, Prince George's authorized the issuance of $3.5 million in industrial development revenue bonds for the company.
The home-rule charter allows the District to issue such bonds also, but because D.C. books were in disarray for several years, Congress would not allow it to do so, Banner said.
The District also suffers from a number of other financial disincentives such as worker and unemployment compensation payments and business and license fees that are higher than anywhere else in the area, he added. For instance, the District is the only jurisdiction in the area required to pay unemployment compansations for workers who quit or are fired for cause.
Company President James Schwartz says Schwartz Brothers decided to quit the city partly because of the financing Prince George's County was able to ofer it and because "we were outgrowing our present facilities" at 2146 24th Pl. NE. "We were looking for a large enough area for parking, warehouse and office space. We didn't even look in Washington. We felt there was nothing available."
The company, which had sales of $31 million for the year ending Jan. 31, and net income of $635,308, is a wholesaler and retailer of phonograph records, prerecorded and black tapes, and carries audio equipment, musical instruments, sheet music and related accessories. It employes between 470 and 560 persons.
"Because of the lack of positive incentivies, we're unable to keep business here," Banner said. "In Maryland or Virginia, you buy acres; here, you buy square feet."
The city hopes to make use of the New York Avenue corridor to try to retain some of its labor-intensive industries such as food wholesaling, printing and the laundry industry, which has been on the decline recently, Banner said.
"Certain kinds of business" such as the trade associations and some other white-collar-oriented firms, "have been very good," Banner said. Several years ago, Washington was third in the number of trade associations located here. Now it is number one. But each of those organizations hire only 3 to 40 workers, Banner said, adding that they are not entry-level jobs and the employes often choose to live outside of the city.
"We can't be fully effective until we ge rid of these disincentives," Banner said.