LEONEL DE VELEZ/THE HOYA The daily deals provider may employ 1000 more D.C. residents as part of a tax deal to keep the business in the District.
LEONEL DE VELEZ/THE HOYA
The daily deals provider may employ 1000 more D.C. residents as part of a tax deal to keep the business in the District.

Mayor Vincent Gray has proposed tax benefits as a means of ensuring that LivingSocial, an online daily discount provider co-founded by a Georgetown graduate, keeps its headquarters in D.C. after the company failed to make a profit last year.

Amazon, which owns 31 percent of the company, reported in February that LivingSocial incurred a net loss of $558 million.

Though the company has sold over 63 million daily deal vouchers since it was founded as Hungry Machine in 2007, it has yet to turn a profit. Last year,Groupon, LivingSocial’s largest competitor in the daily discount market, suffered a $308.1 million loss.

D.C. officials worry that the financial strain of maintaining headquarters in the District could compelLivingSocial, which is one of the city’s biggest private employers, to move.

The company’s co-founder and chief executive, Tim O’Shaughnessy (MSB ’04), told Gray that keeping LivingSocial in D.C. would be more expensive than pursuing growth elsewhere, according to an April 17 article in The Washington Post.

“We’ll make a commitment to the District if the District will make a commitment to us,” he said.

In response, Gray proposed the tax incentives that, pending approval by the Council of the District of Columbia, are forecasted to save LivingSocial up to $32.5 million in taxes over a five-year period, beginning in 2015. In turn, this would bring the District $133 million during the next 10 years from corporate income, personal income, taxation on hotel stays and other spending by LivingSocial.

According to Doxie McCoy, senior communications manager for the mayor, Gray hopes that the incentives will allow LivingSocial to remain a substantial part of the D.C. economy.

“Mayor Gray’s proposal is an effort to assist the economic development of D.C. as part of his economic strategy,” McCoy said. “LivingSocial is an essential part of enhancing the District’s economy, and that is why Mayor Gray wants to keep it around.”

Brendan Lewis, LivingSocial’s corporate communications director, told The Hoya that even thoughLivingSocial has received a high number of compelling relocation offers, the company is unlikely to move out of D.C., especially in light of Gray’s proposed incentives.

“D.C. is LivingSocial’s home and in our DNA. We are very grateful to Mayor Gray for his leadership and support in designing this mutually beneficial legislation and look forward to working with the City Council on its quick passage, which will allow LivingSocial to continue to grow and prosper with the District,” Lewis said.

With these tax adjustments, LivingSocial expects to hire an additional 1,000 employees in D.C. In exchange for the tax breaks, LivingSocial will be required to ensure that the majority of these employees reside in the District or move to the city within six months of their employment.

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