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Twitter gets 6-year payroll-tax break from San Francisco Board of Supervisors

April 6, 2011 | 10:24 am

San Francisco Mart building

Twitter is getting a tax break that the San Francisco Board of Supervisors hopes will keep the social-media company and other growing tech firms in the city for years to come.

In an 8-to-3 vote, the supervisors approved an ordinance on Tuesday to give Twitter and others an exemption from having to pay a 1.5% city payroll tax for the next six years, as long as those businesses are located in the city's Central Market Street and Tenderloin areas, the San Francisco Chronicle reported.

Edwin Lee, San Francisco's mayor, applauded the move and said in a statement that it could lead to a rejuvenation of parts of the city that had struggled to attract businesses.

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

Lee said the payroll-tax exclusion will be a powerful tool that could create needed jobs and services in the downtrodden areas.

"I would also like to thank Twitter for making a commitment to remain in San Francisco and for their enthusiasm about joining our broad-based effort to revitalize Central Market and the Tenderloin," he said. "There is great synergy between Twitter and the arts organizations and small retail businesses who are looking to expand in the area. This new partnership with Twitter represents just one example of how the city can work collaboratively with businesses, community-based organizations, property owners and area residents to catalyze meaningful change in this neighborhood."

Twitter officials declined to comment on the approval of the tax break on Wednesday.

The proposal pertains to the newly hired employees of companies that move into or are remaining in the Central Market and Tenderloin areas over the next six years, the Chronicle reported.

Businesses, however, would still have to pay the 1.5% payroll tax on employees they already have, the Chronicle said.

Twitter had been on the fence about moving out of the city of San Francisco, where it is currently headquartered, or moving to a new location in the Central Market district.

With the tax exemption now passed, it is likely that Twitter will now move into office space in the now-vacant Market Square building, also know as the San Francisco Mart building, the Chronicle reported. Twitter has signed a letter of intent to move into the Market Square building after a payroll tax exemption was passed.

The payroll-tax break could lead to Twitter saving about $22 million in taxes over six years, the Chronicle said.

John Avalos, one of the supervisors who voted against the tax break, told the Chronicle that the move will create an expectation among businesses that will hurt the city.

"I don't believe giving an exception to our payroll tax is the way to go," Avalos said to the Chronicle. "I believe that businesses in San Francisco and around the country should be socially responsible, and part of that social responsibility is paying our taxes. ... If we're going to be allowing a company to threaten to leave, and give them a tax break so they don't leave, we're setting a really bad precedent for other companies to do the same."

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-- Nathan Olivarez-Giles

twitter.com/nateog

Photo: A Muni train passes by the San Francisco Mart at 1355 Market St., March 31, 2011. Credit: Jeff Chiu / Associated Press

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