Saturday, April 2, 2011

Twitter a Bad Neighbor in San Francisco?

Twitter,  a still relatively small (in business terms) company grew out of a project at a San Francisco firm,  has taken the Internet by storm with its very popular micro-blogging service.   Like many growing companies,  Twitter is need of more office space, projecting growing to a level of 3,000 employees.   San Francisco taxes businesses by a levy on payroll,  rather than the more common tax on earnings or,  as here in Washington state a tax on gross receipts.   This means that most tech companies who looked to expand a large work force would look to move out of San Francisco,  to an office park in Silicon Valley or to a completely different market outside of the Bay Area.  

Twitter however came to an agreement with the city of San Francisco under which they will lease for six years a much larger space in a vacant building only a block or so away from its current headquarters office.   In return,  San Francisco will exempt Twitter from the payroll tax for all new employees hired during the six year lease.   Twitter's neighbors complain that the gentrification will only increase rents in the area  (San Francisco is a notoriously very expensive city) and that Twitter's presence will not benefit them at all, given the tax exemption.    Seems to me San Francisco's tax policy does tend to favor smaller companies or smaller offices of large companies.    Whether San Francisco's tax break is a good deal or nor?    That's harder to call.

What do YOU think?

For more information see this article in The Seattle Times:
Twitter tax deal creates classic San Francisco row

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