Business tax breaks in SF jumped to nearly $17 million last year

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San Francisco taxpayers are subsidizing Twitter with millions of dollars in tax breaks, thanks to Mayor Ed Lee.
Joe Fitzgerald Rodriguez

Employers in San Francisco received nearly $17 million in special business tax breaks from the city last year, with the biggest ticket corporate welfare categories being the Central Market Street and Tenderloin Area Exclusion — commonly known as the Twitter tax break after its catalyst and biggest beneficiary — and a tax break given to small businesses.

On Friday, the San Francisco Treasurer and Tax Collectors’ Office delivered to the Board of Supervisors the required annual reports for seven separate programs that reduce the payroll tax burden on local businesses, most of them approved since Mayor Ed Lee took office. This year's corporate welfare total of nearly $16.8 million is up about $2.5 million from last year's total.   

The Net New Payroll Exclusion, a small business tax break for businesses with an annual payroll of less than $500,000 created in 2012 by legislation authored by Sups. David Campos and Mark Farrell, last year allowed 2,488 businesses to reduce their city tax burden by $5,258,572.

By contrast, just 11 businesses in the mid-Market market reaped $4,243,997 in payroll tax breaks last year, the biggest being Twitter. Taxpayer privacy laws prevent the city from naming the businesses involved in these tax breaks, but Twitter was also likely the sole company that reportedly benefitted from the exclusion of $37,922,531 in stock options from its tax obligation, saving another $568,837 there.

Biotech and Cleantech businesses also enjoyed tax breaks for their new employees, saving $1,595,687 and $765,360 respectively. Enterprise Zone Tax Credits saved another 176 businesses $780,686 in their payroll tax obligations.

Despite a booming local economy and record low unemployment, the city itself is still wrestling with annual budget deficits that are projected to continue growing for each of the next five years, from $66 million in the coming fiscal year to $339.4 million in 2017-18, according to estimates from the San Francisco Controller’s Office.

Even so, the city recently cut $500 tax rebate checks to 7,120 local business, for a total of $3,560,000, as part of the Surplus Business Tax Revenue program approved during the 1990s, which triggers a tax rebate when business tax revenues grown more than 5 percent in a year. 

Comments

Pro-cyclical economic hogwash.

Posted by marcos on Jun. 23, 2014 @ 12:18 pm

much higher than they used to be.

You focus on the odd incentive plan and overlook the fact that revenues are way up.

Posted by Guest on Jun. 23, 2014 @ 12:28 pm

Corporate tax rates aren't higher, which is why I didn't say they are. Yes, total business tax revenues are up this year, but so are associated city expenses. When corporations bring more employees into the city, they use city services that the payroll tax is supposed to help pay for, unless you want city taxpayers subsidizing that growth, which Mayor Lee and otherwise corporate shills in elected office apparently do.  

Posted by steven on Jun. 23, 2014 @ 12:35 pm

Inflation insures that more business activity means more revenues without specific hikes in tax rates, which should rarely happen.

Caps on taxes help focus the city on core services and keeping a cap on spending and the payroll.

Posted by Guest on Jun. 23, 2014 @ 12:43 pm

Guest, you are correct if your objective is to see more money delivered to the city coffers. In that case then yes, the tax rate is immaterial and what matters is the dollars delivered.

And Steven, if your objective is to punish companies for being successful in San Francisco then yes, raising the tax rate helps and the amount of dollars that they actually pay to the city is of secondary importance.

Posted by Guest on Jun. 23, 2014 @ 1:25 pm

I'm not a struggling business or a large corporate business who got a tax break - just your average neighborhood store on the block. My business tax went up 464%. I guess some small business owners have to subsidize Twitter

Posted by Dave on Jun. 23, 2014 @ 12:53 pm

have had to have paid an even higher business tax, to make up the loss the city would have taken on losing all those Twitter taxes.

Posted by Guest on Jun. 23, 2014 @ 1:04 pm

No, biz taxes would not have been raised had twitter bailed, the City would have had to engage in the neoliberal wet dream of cutting city services which clearly you oppose since you wanted to keep twitter in situ to pay taxes to for social services.

Posted by marcos on Jun. 23, 2014 @ 1:28 pm

because it is highly unlikely their employees would have consumed much in the way of city services.

Twitter being in Sf is pure profit for the city, which is why they wanted Twitter to stay so much.,

Everyone wins.

Posted by Guest on Jun. 23, 2014 @ 1:40 pm

The Twitter express Muni bus from CalTrain to Market and 10th.

Posted by marcos on Jun. 23, 2014 @ 1:54 pm

Really?

Posted by Guest on Jun. 23, 2014 @ 2:01 pm

If all you can do is point to a shuttle bus, which is available to the entire public to use (including the many thousands of people who actually live in the neighborhood and do not work for Twitter) and which also requires the same Muni fare to ride as any other Muni bus, then you will have to do better.

Also, in a City/County with a budget of billions of dollars, the forgone tax revenue is a drop in the bucket.

If you give a tax break, by definition, you give up some immediate tax revenue with the intention that you will win a larger long-term investment. Just in the past 20 years, the City has invested several hundreds of millions of dollars in public revenue (coming from taxpayers) in the Mid-Market area. The question is did this very large and sustained investment result in an improved neighborhood-- were there better work opportunities for residents, did the money create better infrastructure, lower crime, etc? I suppose compared to doing absolutely nothing, the answer might be "yes," but with all the money and failed redevelopment schemes and public investments over the years, the City still had left the Mid-Market area to devolve from a vibrant neighborhood into a delapidated slum (meanwhile, the money that produced very little results in the neighborhood could have instead gone to fund other city services that might had a greater impact). If a $14 million investment in the form of tax break can render better results than what the city has been able to achieve to-date, then it is money well spent.

Posted by Chris on Jun. 23, 2014 @ 6:07 pm

So Twitter employees don't use the roads, parks, Muni, police, the water and sewer systems, health and building inspectors, or any other city services? I suppose all the city staff time spent on the tax breaks and new police substation for Twitter were also free as well. These libertarian fantasy worlds you live in are miraculous places, I guess, where public services and infrastructure just spring up naturally. 

Posted by steven on Jun. 23, 2014 @ 2:00 pm

The vast majority of city spending is on throwing ludicrous benefits at city employees and giving insane benefits to the least productive folks in Sf.

SF would have lost a fortune had Twitter left and so we did the only thing we could do, and reverse the dumb stock options aspect of the payroll tax, which was always insane.

Posted by Guest on Jun. 23, 2014 @ 2:14 pm

Next time your house catches fire, call Twitter and see if they can help you.
Next time the streetlight on your street goes out, call Twitter and see if they can help you.
Next time there's a stray dog hiding in your garage, or a thief in your home, or a backup in your sewer line, call Twitter!

Posted by LisbethSays on Jun. 24, 2014 @ 1:20 pm

support invest in police, fire etc.

Much of the rest could be outsourced, privatized or simply not done at all.

Posted by Guest on Jun. 25, 2014 @ 6:13 am

I also suppose that there are no city real estate taxes collected on the Twitter offices or on the homes occupied by Twitter employees.

I also suppose that the tax break on stock options, which is about 90% of the total break, wasn't supported by progressives like Mirkarimi and Campos and wasn't in fact the centerpiece of a bill that they sponsored.

I further suppose that the Controller's Office report didn't say:

"Therefore, on balance, it appears that Twitter would stand to realize
significant savings over the next several years by moving
out of San Francisco."

or

"without a major private-sector magnet like Twitter, it seems unlikely that more than 50% of these future tenants would pay the payroll tax. Much of the employment base in the Central Market area now are government, non-profit, and small business employers, all of whom are exempt from San Francisco's business tax."

http://www.sfcontroller.org/Modules/ShowDocument.aspx?documentid=1865

Lastly, I suppose that Steven T Jones has a shred, an iota, a scintilla of documentation to counter the controller office's conclusion that the mid market tax break is a net positive for the city.

I DON'T suppose that I'll hold my breath waiting for that last one.

Posted by Guest on Jun. 23, 2014 @ 2:55 pm

So, Twitter employees don't buy anything in the City and contribute sales tax revenue? They don't live in the City and through rent or direct ownership contribute to the City's property tax revenue? Twitter employees never ride Muni and pay fares? Twitter employees never sell a condo or house and pay real estate transfer taxes? Twitter itself doesn't pay property taxes or business property taxes on business equipment? And, since Twitter only has a PARTIAL tax break, it never pays the business payroll tax? And, the businesses that sell goods and services to Twitter, including many locally owned busineses, never pay taxes to the City?

You cannot argue only one side of an argument.

I personally think Twitter the company offers a stupid service (the very idea of "tweeting" makes me cringe), but it is a successful nonetheless. And, Twitter along with other companies in the Mid-Market area have helped reinvigorate a neighborhood that has been in a steep decline since the early 1950's. Whatever the city was doing before (and it was spending many millions in tax revenue trying to bolster the neighborhood) was not working, and for what is a very small percentage of the total tax revenue the city collects, it seems this current investment, in the form of a tax break, has really paid off.

Posted by Chris on Jun. 23, 2014 @ 6:16 pm

You know Chris has lost the debate when he starts out a post with "Yes, Your Comment Is Pure Bullshit"

Posted by marcos on Jun. 23, 2014 @ 7:18 pm

And yet you can't rebut any of his argument Marcos. If you could've, you would've.

Posted by Guest on Jun. 23, 2014 @ 8:01 pm

We cannot have a debate with an opponent who is not committed to civility.

Posted by marcos on Jun. 23, 2014 @ 8:26 pm

So when Steven calls out someone's argument as bullshit and comes up with platitudes rather than facts, it's civilized? When someone else calls Steven's argument bullshit and rebuts it with facts, it isn't?

In other words, you still got squat to rebut any of Chris's argument.

Posted by Guest on Jun. 23, 2014 @ 10:21 pm

And it was Steven who started with the "Bullshit" uncivility

Posted by Guest on Jun. 24, 2014 @ 4:34 am

Nonsense, the reason why you all go into conniption fits around here is because I slay you all in fewer bytes than a tweet.

Posted by marcos on Jun. 24, 2014 @ 5:25 am

But the more interesting issue is observing the exact point at which you realize you have lost, because it is then you start out with the "idiot", "moron", "nonsense" verbal abuse.

Posted by Guest on Jun. 24, 2014 @ 5:43 am

That's because you're the ones who are trolling, idiot. it is not like I spend any time on conservative/neoliberal/developer websites like socketsite or curbed trolling you all the way you all get paid to dominate a progressive site. It is instructive to see that distinction in assessing the legitimacy of participation.

Posted by marcos on Jun. 24, 2014 @ 5:30 pm

I comment wherever the needs seems to be greatest, and right now that is here.

Posted by Guest on Jun. 24, 2014 @ 6:14 pm

Which means that you're trolling, idiot.

Posted by marcos on Jun. 25, 2014 @ 6:21 am
Posted by Guest on Jun. 25, 2014 @ 6:44 am

Right wingers trolling a barely liberal website is trolling.

Posted by marcos on Jun. 25, 2014 @ 7:05 am
Posted by Guest on Jun. 25, 2014 @ 7:33 am

By definition those who post within the political bounds set by a website are not trolling, those who post attacking the political bounds of the website from outside of those bounds are trolls. It is as simple as that, which is why you respond with such vitriol.

Posted by marcos on Jun. 25, 2014 @ 8:40 am

pontificating about non-issues like this?

Posted by Guest on Jun. 25, 2014 @ 9:43 am

Minutes, generally as I am waiting for some software task to complete.

Posted by marcos on Jun. 25, 2014 @ 10:03 am
Posted by Guest on Jun. 25, 2014 @ 10:11 am

I'll confess to once being mistaken in taking that stance, but It isn't trolling to voice a contrary opinion: It is trolling when you lie repeatedly to cause frustration and stifle debate and communication among some group you have targeted.

I facetiously refer to myself as a troll for the time I spent on Breitbart, but I never falsified an account of what others had said or done; I never impostered anybody; I never intentionally made an argument based on lies.

Trolls use dishonest rhetoric such as ad hominem attack. Trolls never admit to having been shown to be wrong or seek to find common ground with their victims.

Trolls argue for the sake of argument.

Posted by lillipublicans on Jun. 25, 2014 @ 9:41 am

with, that does not making them a liar. and it certainly doesn't make them a troll.

With your ill-fated barrier nonsense, you are the archetypal troll. And of course you were banned from SFGate from trolling.

marcos merely trolls in a different way, saturating host sites with hundreds of comments each day.

Posted by Guest on Jun. 25, 2014 @ 9:58 am

Again Marcos. Why is it anyone who disagrees with the progressive slant on things automatically paid by people you can never name? You have no tangible evidence but you keep hurling this same accusation over and over and over and over. Can you not get it through your brain that people actually disagree with your point of view? If your point of view was so popular you would've elected a mayor in the past 25 years.

And you STILL have not refuted ANY of Chris's points.

Posted by Guest on Jun. 24, 2014 @ 6:24 pm

the left must be paid is because, in their naivity, they are so certain that they are right, that they quite simply cannot imagine why anyone would disagree with them, if not paid.

They also probably think that all this criticism is from just one person because, again, they cannot envisage that they are wrong

Posted by Guest on Jun. 25, 2014 @ 6:15 am

I am not on the left, idiot. You are a troll, idiot.

Posted by marcos on Jun. 25, 2014 @ 6:22 am

hopelessly out of touch with reality you are.

Posted by Guest on Jun. 25, 2014 @ 6:45 am

You would not know what left was if it bit you in the right ass cheek.

Posted by marcos on Jun. 25, 2014 @ 7:05 am
Posted by Guest on Jun. 25, 2014 @ 7:33 am

We all know what type of people spend more time commenting on a website opposite their political inclination than people who share perspective with that website.

Posted by marcos on Jun. 25, 2014 @ 6:22 am
Posted by Guest on Jun. 25, 2014 @ 6:45 am

You can't handle the truth.

Posted by marcos on Jun. 25, 2014 @ 8:39 am

You clearly are in denial.

Posted by Guest on Jun. 25, 2014 @ 9:38 am

Please listen to Marcos and follow his example. College educated tech workers belong in the Mission. There are plenty of former rent-controlled apartments to purchase in the Mission. Then you can be part of the esteemed gentry class, just like Marcos.

Posted by Guest on Jun. 25, 2014 @ 8:01 am
Posted by Guest on Jun. 25, 2014 @ 9:39 am

No, this website is not for neoliberal/libertarian trolls.

Posted by marcos on Jun. 25, 2014 @ 10:05 am

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