SAN FRANCISCO--(BUSINESS WIRE)--The union representing the largest group of San Francisco city workers today urged the Board of Supervisors to amend or reject a proposed $22 million tax break for Twitter, a San Francisco-based Internet communications company many analysts say is worth $10 billion dollars or more.
“Let me say this in 140 characters or less: It’s a taxpayer handout to a $10 billion company at a time we’re cutting basic city services,” wrote Service Employees International Union President Roxanne Sanchez, in a Tweet to city leaders.
Twitter-based messages, or Tweets, are limited to 140 characters.
“Our members applaud any effort to attract and retain businesses and create jobs in San Francisco, but there are serious problems with this legislation,” Sanchez said.
“First, the City estimates that this tax break will cost as much as $22 million over six years with much of that benefit going directly to Twitter,” said Sanchez. “Twitter recently rejected a rumored $10 billion takeover offer. Twitter CEO Dick Costolo sold his last business, Feedburner, for $100 million. While the amount of money Twitter would pay in payroll tax is desperately needed to restore public health cuts and re-open closed recreation centers, we doubt it really makes a difference in the location decisions of firms like Twitter and the City Controller’s analysis agrees.”
Citing economic studies on the subject, the City Controller’s analysis says tax credits of this type often are criticized because they “provide a tax subsidy to business location decisions that would have happened anyway.”
“Second, this type of tax break creates a potentially costly precedent for the City,” Sanchez said. “Our members are concerned that, after you offer this gift to Twitter, what's to stop existing businesses like Wells Fargo, SalesForce.com and others from threatening to leave unless they get a special deal?
“Third, there’s nothing to bind Twitter to their side of the deal. As drafted, this legislation grants Twitter a large special tax break but does nothing to guarantee they’ll keep the jobs they create in San Francisco.”
SEIU Local 1021 urges the Mayor and Board of Supervisors to adopt two changes to the legislation or to reject it:
1. The geographic scope of the legislation should be limited — There are already concerns that commercial landlords in the zone are threatening small business tenants with rent increases if the legislation passes. This legislation should be narrowed to just the Market Street corridor so that it produces the desired effect of creating jobs, not destroying viable small businesses with speculative rent increases.
2. Twitter should be required to reimburse the tax break if they move jobs out of town — Others cities that have granted tax breaks of this type have inserted “clawback” provisions that require the business receiving a tax break to pay the taxes they would have owed if they relocate their employees outside the city during the life of the credit. If Twitter receives a six year tax break to create jobs in San Francisco and then moves these jobs out of the city during the lifetime of the tax credit, the company should be required to reimburse the City 50 cents of every dollar in payroll taxes it would have raised.
Service Employees International Union, Local 1021 has nearly 50,000 members in Northern California that provide essential health care, security and other services to governments.