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Wednesday, February 9, 2011

A Moderate Move: S.F. Supervisors Try to Lure Twitter with Tax Breaks

Posted By on Wed, Feb 9, 2011 at 8:09 AM

click to enlarge Moderately progressive
  • Moderately progressive

Yesterday was the first real showing of how the political pendulum on the Board of Supervisors has swung the other way -- toward the moderates. Supervisor Jane Kim rolled out business-friendly legislation, which sparked criticism from progressives; even former Supervisor Chris Daly noted on his Facebook page late last night: "Jane Kim thinks being Progressive is attending three banquets in one night."

Kim, who was elected in November as a progressive, stepped out from the progressive mold and put forward legislation to try to save the city from losing the microblogging giant, Twitter, to San Mateo County. Under her proposed bill, Twitter could move to the less desirable Mid-Market neighborhood, where crime and liquor stores are rampant, and get steep tax breaks -- a proposal reminiscent of the Newsom administration.

There is good reason why it smelled like Newsom: The proposal was cobbled together in a last-minute effort with Mayor Ed Lee and Supervisor David Chiu, both moderates.

The deal would exempt growing businesses like Twitter from paying more payroll taxes on new hires for six years. The tax freeze would apply to the city's dilapidated Mid-Market area between Sixth Street and Van Ness Avenue, Kim's district.

As of now, businesses with a payroll over $250,000 pay a 1.5 percent payroll tax. Yet new businesses that start up in the designated tax-break zone will not have to shell out any payroll taxes.

The deal is being criticized by some as corporate blackmail, as Twitter threatened to move its growing business to Brisbane last month. The company, which has offices on Folsom Street, said it was running out of space and needed to move. Twitter was considering the former Wal-Mart site in Brisbane, a city of 3,500.  In a panic, the city responded by saying it would come up with a deal to entice Twitter to stay.

The city believed losing Twitter would almost certainly slow San Francisco's momentum to become a high-tech hub as it continued to lure venture capital dollars away from Silicon Valley.

Last year, former Mayor Gavin Newsom tried hard to push tax breaks through the progressive Board of Supervisors. At the time, Newsom lobbied for tax "holidays" and tax credits for businesses as a way to help stimulate job growth as San Francisco faced a 10 percent unemployment rate. 

Supervisor John Avalos, a progressive who was the chair of the budget committee at the time, initially refused to even schedule a hearing on Newsom's tax proposal, claiming tax breaks wouldn't make it through the left-leaning Board of Supervisors.

And he was right then, but he might be wrong now

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About The Author

Erin Sherbert

Erin Sherbert

Erin Sherbert was the Online News Editor for SF Weekly from 2010 to 2015. She's a Texas native and has a closet full of cowboy boots to prove it.


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