Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Techcrunch Attack On SF City Government - Should SF's Tech Stars Avoid Local Taxes?

Posted by Tom Foremski - March 16, 2011

Mike Arrington at Techcrunch, has attacked San Francisco Supervisor John Avalos for insisting that tech superstar companies such as Twitter pay the city's 1.5% payroll tax.

Mr Arrington resorted to name calling in his post: San Francisco Doing Everything It Can To Drive Zynga And Twitter Away.

The city isn’t thanking Twitter for bringing all these high paying jobs to San Francisco, either. Rather, some supervisors don’t want the tax break at all, and seem quite willing to see Twitter bail to tax-free Brisbane. Says Supervisor John Avalos: “Who are the [Twitter] investors? Probably some of the wealthiest people in this country. And we are giving them more wealth.”

The stupidity of that statement is self evident.

Why does Mr Arrington believe that businesses such as Twitter and Zynga need to be thanked and also be given large tax breaks?

[Mr Arrington moved to Washington State prior to the sale of Techcrunch to AOL. He was accused of moving from California to avoid taxes on the sale of his business.]

Surely, the point of innovation is that it creates jobs and pumps resources into communities. Otherwise what's the point?

Why should Twitter, for example, be exempt from paying payroll taxes for six years? (a current proposal). Twitter and Zynga employees work and live in San Francisco. The taxes go to support the employees by providing essential services to the very communities in which they live. Has anyone asked them if they'd rather work in Brisbane? Or that their employer avoid supporting their communities? There are plenty of other places to work.

Twitter founders Ev Williams and Biz Stone love to talk publicly about the company's strong focus on social responsibility. Yet they don't want to be socially responsible within their own community?

How will they avoid being labelled as hypocrites?

Ted Rheingold, head of Dogster, a San Francisco based business wrote in the comments:

Twitter and Zynga should be thanking San Francisco for inculcating a place where such creative, inspired, passionate, well-educated, social people want to be. It's these people that have made these companies so great any why these business didn't happen in Dallas or Tampa or even Cupertino. It's a tiny price to pay for so much greatness ...

Jeremy Carlos Robbins wrote:

Am I missing something here: if Twitter stands to make 100's of million what is wrong with paying a few 10's of million for some taxes.

Simon Owens:

Read "The Rise of the Creative Class." The reason San Francisco is able to charge such high taxes is because it has created the environment and infrastructure that attracts such businesses. If Twitter really wanted low taxes they could make a deal with some poor state like Alabama, but they don't because no engineer worth his salt wants to live in Alabama. Studies show it's the environment -- rather than just purely economic incentives -- that attract quality workers to a city.

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Please see:

Twitter's Response To Bad Press: Unfollow


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