Twitter Wringing $22M From Strapped Frisco
Company threatens to leave San Francisco without payroll tax break
By Mary Papenfuss,  Newser User
Posted Apr 7, 2011 2:37 AM CDT
Updated Apr 7, 2011 4:51 AM CDT
San Francisco downtown from Hawk Hill in Marin Headlands   (©Šarunas.)
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(Newser) – Pity poor Twitter. After recently raising $200 million on a $3.7 billion valuation, it doesn't want to cough up a city payroll tax. So the company is on its way to winning a major tax break from struggling San Francisco after threatening to leave its city digs for the 'burbs. The exemption on the tax—which levies a 1.5% charge on worker compensation—is about to be granted for new employees hired in the next six years at larger companies in a specific downtown area. It's clearly aimed at Twitter, which could hire as many as 2,000 workers in that time, saving the company an estimated $22 million. Twitter had hoped for a total exemption on all workers, not just newbies, for eight years. Supporters say the move, which will likely be finalized next week, is an incentive to keep firms in a city running out of money and slashing services.

"The bottom line is, if we don't do this we will not have their payroll to tax. Companies will leave," a city supervisor tells the San Francisco Chronicle. Critics characterize it as corporate welfare and a form of extortion. "If we're going to allow a company to threaten to leave, and give them a tax break so they don't, we're setting a really bad precedent," said another supervisor. "Part of social responsibility is paying taxes." The real rub is in Twitter's marketing itself as a good-guy business, notes Gawker. "Young companies like ours are well positioned to build altruism into the corporate culture from an early stage," Twitter co-founder Biz Stone boasted last year.