Twitter receives tax holiday windfall from City of San Francisco

In an 8-to-3 vote, the San Francisco Board of Supervisors has determined in favor of an ordinance that will provide local business Twitter and others a tax break from the city’s corporate payroll tax on brand new hires, reports the Los Angeles Times. Twitter will benefit from a 1.5 percent payroll tax shield through the next six years. While Mayor Lee praised the move as a step in the right direction for maintaining the city’s reputation as a place for tech firms, critics believe such corporate tax holidays open the door for cities to be exploited by large companies.

It is ‘rejuvenation’ for Twitter to be there

Offering Twitter a payroll tax break was necessary to keep the social media giant in San Francisco for years to come, said Lee.

“This moment represents a real step forward in the effort to revitalize and transform the Central Market area,” he said. “Central Market and the Tenderloin have been burdened with high vacancies and blight for decades.”

While Twitter officials wouldn’t comment on the payroll tax exclusion Wednesday, Lee told the San Francisco Chronicle that he appreciated Twitter’s enthusiasm for helping revitalize those key business districts. The creation of jobs and services in sagging geographic areas would benefit San Francisco across the board.

“There is great synergy between Twitter and the arts organizations and small retail businesses who are looking to expand in the area," said Lee. "The city can work collaboratively with businesses, community-based organizations, property owners and area residents to catalyze meaningful change.”

The tax holiday for Businesses

The Twitter payroll tax break should be able to save about $22 million in taxes for the company in just six years, according to the Chronicle. That’s $22 million that San Francisco needs, said city supervisor John Avalos.

“I don’t believe giving an exception to our payroll tax is the way to go,” he said. “I believe that businesses in San Francisco and around the country should be socially responsible. … If we allow a company to threaten to leave, then give them a tax break so they don’t, we’re setting a bad precedent."

Citations

Los Angeles Times

latimesblogs.latimes.com/technology/2011/04/twitter-gets-6-year-payroll-tax-break-from-san-francisco-board-of-supervisors.html

San Francisco Chronicles

sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/04/05/BA7R1IQM9D.DTL

San Francisco Mayor's Office

sfmayor.org/index.aspx?page=330

Minnesota Gov. Tim Pawlenty on corporate tax holidays and offshoring

youtube.com/watch?v=MIRncAiu9Vw