Twitter’s San Francisco Shenanigans

Twitter is threatening to move its headquarters from San Francisco to Brisbane unless they receive a significant payroll tax exemption that would put a $250,000 cap on the company’s future tax bills.

Twitter currently employs approximately 350 people and has plans to double in size over the next few years. The company is also investigating office space on Ninth and Market streets, an area of of San Francisco that could certainly use the financial perks. Not surprisingly, city officials are under pressure. Here’s the schtick:

Payroll tax is confidential, but the San Francisco Bay Guardian (online edition) surmises that the tax break would not amount to much. If the 350 employees are paid an average of 70k per year, then the 1.5% tax amounts to a mere $294,000 – meaning that if the company does double in size, Twitter stands to save about $300,000 a year. This is not a lot in the grand scheme of things. Perhaps it’s not about money after all, especially considering that, from a legal standpoint, the city can’t just give a tax cut to Twitter – they would have to revise tax laws that cover the entire zone at the very least. If such a law were passed, it would benefit large companies, rather than the smaller ones who are more likely to require financial assistance. I, for one, would not hedge my bets on the passage of such a law. Not in San Francisco anyway.

It’s not surprising that headlines in San Francisco are screaming blackmail, but what is surprising is that such a ridiculous idea (if it is indeed as simple as it is laid out to be in the press) is being entertained and debated. A accusation of blackmail is bad press, obviously, and even more so considering Twitter’s efforts to appear to be a socially responsible company (or at least the PR department’s efforts to build a socially responsible looking facade). It is equally strange that Twitter would waste its time with an attempt to blackmail the city for so little return on their efforts.

Besides those niggling PR issues, there are a number of practical, operational issues to consider. For instance, if Twitter is going to remain a competitive employer that attracts the best techie minds on offer, relocating to Brisbane is not a good strategy. But Twitter know that, surely. The question, therefore, is not whether the city should give in to Twitter’s demands, but rather, what is actually going on behind the scenes.

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