Photo by @mjb.

The D.C. Council today passed on a first vote a bill that would provide incentives to tech startups to stay in the city, but it removed a controversial provision that would lower the capital gains tax for angel investors in the startups. Instead, it approved an amendment tasking a tax revision commission chaired by former Mayor Anthony Williams with considering if the tax break should be written into law or not.

During a debate on the measure, Councilmember David Catania (I-At Large) spoke against the amendment to remove the capital gains tax break, which was also favored by Mayor Vince Gray, saying that it would keep startups here, create jobs and provide revenue that the city would miss out on if startups opted for Virginia instead. “We are going to get eight percent of nothing rather than three or four percent of something,” he said once it became clear that he wouldn’t win over skeptics on the council.

Other members of the council supported the broader bill but said that tech startup investors shouldn’t get to jump the line when it comes to tax relief. “We don’t want to give gifts of tax relief to some but not others,” said Councilmember Muriel Bowser (D-Ward 4). “I don’t believe we should jump one sector ahead of that conversation.”

Bowser was backed by various of her colleagues, including Council Chair Phil Mendelson, Councilmember Tommy Wells (D-Ward 6) and Councilmember Marion Barry (D-Ward 8). They echoed concerns made by the D.C. Fiscal Policy Institute that the capital gains tax break wouldn’t help startups decide where to locate more than reward rich investors who had already put money into them.