Twitter is getting a huge tax break and it's going to make the rich, who happen to be Twitter investors, even richer.
In case you have been under a rock for the last five years, Twitter was set up in San Francisco in 2006 by Jack Dorsey, Biz Stone and Evan Williams. It had a few hundred employees, but now it is expected to increase that number to about 3000. And this is where it gets complicated.
As reported here, San Francisco is unusual in that it charges business tax on the amount that companies pay their staff rather than on how much the company makes. That's California!! So if Twitter were to increase its staff, it would move out of the building pictured above into new larger premises. Theoretically, that would put into a higher tax bracket. Keen to keep Twitter in San Francisco, the city has buckled up with a deal to die for. Associated Press reports that Twitter has signed a letter of intent to sign a six-year lease on several hundred thousand square feet of office space in a historic building in the struggling Mid-Market neighborhood but it's done it on one condition: the city must agree to exempt Twitter from paying any new payroll taxes on any additional hires.
It's outrageous. Why is a city facing massive layoffs, an enormous budget shortfall and high real estate prices, lawmakers now bailing out venture capitalists?
As supervisor John Avalos told the San Francisco Examiner: "Who are the [Twitter] investors?" he said. "Probably some of the wealthiest people in this country. And we are giving them more wealth."
This a company that has raised a boatload of cash from investors, now being bailed out by the city.
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