Rankings are rarely favorable for the nation’s capital.
D.C. does well in soft-core assessments of livability. Or great bars. Or best cities for bicycling.
But on hard-core statistical studies on health, we are often ranked lowest among states. Take infant mortality and AIDS, for example.
Now comes the Small Business and Entrepreneurial Council with its “small business survival index” for 2009. The year is not yet over, but the District of Columbia comes in 51st, edging New Jersey as the worst place in the nation for people who want to start and grow a small business.
The first critique of any study that compares the District with states is that D.C. is not a state, that we are a city that has state functions. That canard does not fly in this case.
“Please note,” the authors write in a parenthetic statement, “that the District of Columbia was not included in the studies on the states’ liability systems, eminent domain legislation and highway cost efficiency, so D.C.’s last place score actually should be even worse.”
Thanks.
“D.C. has been in this spot for some time,” author and economist Ray Keating tells me. “It’s reliably come in last place every time I’ve done this.”
Keating and his group use 36 measures to assess whether a jurisdiction is friendly to small businesses. They measure taxes to electric utility costs to number of government employes.
“Across the board,” he says, “the District has made bad policy decisions.”
Keep in mind that the Small Business and Entrepreneurial Council, based in Oakton, Va., approaches its task with a bias: “In the end, government does not drive economic growth. Quite the contrary, growth comes from the private sector.”
To which many Washingtonians might say: Who needs the private sector when the federal government is such a reliable engine of business? The Washington region is prospering as the federal government grows to meet its greater regulatory authorities.
“There is the ‘fat and happy’ aspect,” Keating says. “D.C. has government workers and the revenues are pouring in. That’s unfortunate from a private sector point of view.”
I would agree. The District would thrive with better public schools and a more friendly environment for private businesses. What would Keating suggest?
“D.C. needs a radical change in thinking,” he says. “It has the highest capital gains taxes. Why not reduce or eliminate them?”
Likewise, he suggests D.C. deep-six its taxes on “S” corporations and limited liability corporations. “Very few states have those taxes,” he says, “and very little revenue comes in.”
And, he suggests, drop property taxes. Fat chance, since they finance the government. “You have to rethink what government is doing,” he says.
In D.C., that will never happen. The mayor and the city council have rarely seen a program they didn’t want to fund. My prediction: We will be dead last next year, too. And the next and the next.
E-mail Harry Jaffe at [email protected].
