Just weeks before the primary election, Montgomery County has lost yet another corporate headquarters to Northern Virginia. Spatial Front, a defense contracting firm, has announced it will be relocating from Bethesda to Crystal City. It will take 450 high-wage jobs with it. Spatial Front is a privately held firm founded in 2008 that specializes in artificial intelligence, machine learning, geospatial technologies, cloud services, and digital modernization for U.S. federal agencies.
Beyond the incredible tax advantages and superior infrastructure of Virginia, and the moribund economies of Montgomery County and Maryland, a person in the defense contracting field tells me that the new Maryland IT services tax may have been the last straw for Spatial Front. Beginning last July, Maryland’s Budget Reconciliation and Financing Act of 2025 instituted a 3% sales and use tax on data processing, computer systems design, and software publishing. As the Fort Meade Alliance warned Maryland elected officials, the IT tax could have the result of driving what's left of the defense contracting business out of the state to Northern Virginia. That's partly because the tax wallops companies operating under the NAICS 5415 code (Computer Systems Design), the industry group said, and could wipe out profit margins.
The Spatial Front departure again confirms all that I've been saying for years. Montgomery County and Maryland do not have competitive tax policies. In fact, Montgomery County has the largest total tax and fee burden in the Washington D.C. Metro area. All Northern Virginia counties enjoy direct access to Dulles International Airport, the only airport in the region that offers the frequency of flights to the largest variety of destinations that international businesspeople demand. Montgomery County, by contrast, has steadfastly refused to build the new Potomac River crossing that would extend I-370 to the Dulles area, an own-goal of increasingly-catastrophic proportions. And we also see the magnetism of winning these corporate headquarters. Crystal City has the Amazon HQ2, and companies want to be where the energy is.
To top off the irony of the loss, Spatial Front is moving into 2231 Crystal Drive, a building owned by Bethesda-based JBG Smith! "As Governor, I am proud that Spatial Front is moving its headquarters to Arlington," Virginia Governor Abigail Spanberger said in a celebratory press release announcing the victory. "The decision to relocate and bring hundreds of high-quality jobs to the Commonwealth reaffirms Virginia’s status as the nation’s premier location for defense and technology innovation. I remain focused on working with state and local partners to bolster that reputation, strengthen our business climate, and cement Virginia as the top state for talent so we can continue to openly welcome growing and expanding companies in every industry."
While Spanberger was closing the deal with Spatial Front, the Montgomery County Council was raising multiple taxes on its residential and business constituents, attending conferences at Hawaiian resorts, advancing a moratorium on data centers and an unconstitutional gun control bill, and passing a bill on the use of masks by law enforcement that violates the U.S. Constitution's Supremacy Clause. Doh!
Remember when Tennessee was sealing the deal after wooing Discovery away from Silver Spring, and the Montgomery County Council was simultaneously debating a ban on circus animals? Wow. Heckuva job, Brownie!
This is a no-brainer even though the current leadership in VA is completely corrupt and out of their minds. MD has an 8.25% corporate tax rate along with their shiny digital services tax. Better take notice as a lot of the middle class is leaving as well.
ReplyDeleteSomewhat odd that a defense firm was ever in MoCo over NoVa, but it certainly would be nice if MoCo got with the program and stopped letting more progressive counties steal our lunch money. Giving conservative, elderly NIMBYs so much power here has really put us at a competitive disadvantage, economically. Here's hoping Friedson or Glass can bring about significant change and turn MoCo into a 21st century powerhouse instead of a 20th century relic.
ReplyDelete8:55 is really funny thinking that conservatives have any say whatsoever in MC. The waterpipe must be hitting hard this morning.
DeleteDo you not pay even a small amount of attention to local politics? Boomer conservatives have been in charge of the executive branch in MoCo for years. Just because they're educated, i.e. not MAGA, and culturally progressive doesn't mean they don't cling to and vote for some inane fairy tale of 1950s MoCo with low density housing and driving 10+ miles to work every day. So long as MoCo keeps prioritizing those stuck in the past it clearly won't be able to compete with NoVa or DC when it comes to modern day growth.
DeleteAgain...which is it. Are we pro-business and therefore don't care if Geico cuts down trees to build their development, or not? I don't get how people who complain about the moribund business climate and lament how MoCo lost this company to VA, are somehow in the same breadth upset about losing a bunch of trees for a major commercial development.
DeleteAmazing amount of projection but that's typical of the left who can never take responsibility for their own actions. The Takoma Park liberal, Marc Elrich, is now a conservative boomer because he sells his soul to developers? Put down the crack pipe and return to planet earth. Most intelligent people, i.e. not democratic socialists, understand the MD business climate with one of the highest corporate tax rates, 8.25%, along with their digital service tax doesn't actually attract businesses.
DeleteAlso note that liberal NIMBY's are in charge of zoning. Search for the NYT YouTube piece by Johnny Harris. The real definition of progressive is hypocrite.
Delete@1:58 they want to have downtown Bethesda be nothing but soulless corporate HQ's and the next block over nothing but multi-million dollar houses. As with everything NIMBY's do, it's about keeping "the poors" out of sight and out of mind.
DeleteNow 9:33 is epic projection. The left doesn't give a wit about the people who can't afford to live in Bethesda so they can sit in traffic and enjoy the lack of density specifically because the council in coordination with P & P approve projects for their developer contributors. Talk about hubris, take a look in the mirror sometime.
Delete@11:25 sweaty, you tried.
DeleteYou seem to be racist against Jawando.
DeleteSince 7:37 has no answer because they support liberal cronyism.
DeleteIt’s not cheap to feed, house, provide medical care and education to thousands of illegal immigrants.
ReplyDeleteJust maybe when potential companies and organizations 'think tank' the future that Virginia, at least, has the chance for a Conservative redemption. Spanburger's subterfuge and horrible policy after such success last cycle will finally begin to crater. Maryland is just beginning it's destructive cycle with Moore, and Alsobrooks (Senator who?). In the end VA will swallow us up.
ReplyDelete12:13 Best comment of the thread so far!
ReplyDeleteYou're telling me that a defense contracting firm would rather be one mile away from the Pentagon than across the river in Maryland? Absolutely shocking, there's no way anyone saw this coming. Somehow this is taxes fault and not, you know, the free market choosing to be in walking distance of its biggest customer.
ReplyDelete9:30: That's an old excuse for Montgomery County's continued failure. Fairchild, COMSAT, and Vitro/BAE, to name just a few, were all located in Montgomery County. Lockheed is still here...for now. Defense firms don't make their location decision solely on being able to see the Pentagon from the window.
Delete9:30 is monumentally stupid as a company looks at long term financials first which can mean the difference between making money or closing its doors. Proximity factors more in actual manufacturing and that depends on what's being made.
Delete@9:50 Fairchild Aircraft and COMSAT have changed ownership multiple times. It makes sense that a new owner would consolidate their assets. And BAE is right down the road from a Navy building.
Delete@11:36 if this is who I think it is, you seem to be the expert on businesses closing their doors...
Delete7:38 keeps proving the obvious that everyone can see but themselves. Sad but very entertaining.
Delete"Montgomery County, by contrast, has steadfastly refused to build the new Potomac River crossing that would extend I-370 to the Dulles area, an own-goal of increasingly-catastrophic proportions."
ReplyDeleteThis is a joke right? MoCo does not fund an construct interjurisdictional transportation projects, which would benefit other jurisdictions. Get off the meth.
9:37: No joke. Montgomery County deleted the Potomac River crossing from the master plan. Nobody claimed MoCo would alone fund a new bridge, although we could move forward ourselves with a privately built toll bridge. A new crossing would not be an "interjurisdictional" project under any scenario, as Maryland has sole jurisdiction over the Potomac River and any facilities built over or on it. The new bridge would only benefit Montgomery County and Maryland, as Virginia already enjoys direct access to Dulles Airport.
DeleteSo, cross the river and the landing point will still be on Maryland soil? Right!!
Delete10:14: The Nice Bridge replacement landing point was in Virginia as well. This isn't a complicated issue for bridge construction.
DeleteIts not like there's a competition on where this company settles, they're LEAVING! Its a doubly pathetic situation.
ReplyDeleteCan you clarify the "Brownie" reference? If it's in reference to the governor, I'd like to know so I can no longer support this site I've enjoyed for years. You can disagree with someone's political views w/o being racist.
ReplyDelete2:49: It's a reference to George W. Bush's infamous praise of his FEMA director Michael Brown's Hurricane Katrina response in New Orleans. "Heckuva job, Brownie" became a sarcastic buzz phrase as a result.
Delete@2:49 Then I would guess you're not a Democrat.
Delete@7:07 - Roger that. We sure as hell don't want him on our side.
ReplyDeleteAs evidenced by democratic support for Platner, the true racists, misogynists, homophobes and antisemites are on full display.
ReplyDelete