No sweetheart deal for Twitter

Over time, the tax break could cost San Francisco millions of dollars as the city struggles to close a $350 million deficit

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By Richard Marquez and Chris Daly

More than a decade ago, an epidemic of evictions severed the spine of San Francisco's working-class neighborhoods and communities of color. Thousands of low-to-middle-income tenants, immigrant families, small businesses, nonprofits, and artists lost their homes, leases, and livelihoods. Orchestrating this period of class warfare was a gang of shot-callers: dot-com companies, real estate interests, financial firms, and Mayor Willie Brown.

But a diverse and dynamic coalition of San Franciscans responded to save the soul of this Left Coast city. It was an epic battle against displacement, gentrification, and institutionalized racism. We marched, took arrests in the streets, righteously raged at City Hall, and fiercely forged a movement. No longer faking the funk, progressive activists reframed the civil rights debate for the next decade by asking: whose city?

Would San Francisco become only a playground for the rich, white, and powerful while real estate interests and new technology companies prevailed over the poor, people of color, and working-class folks? Or would we prioritize everyday San Franciscans and put human needs ahead of the developers and downtown corporate profits?

Now, more than a decade later, these same questions demand to be asked of the proposal from Mayor Ed Lee, Board of Supervisors President David Chiu, and Sup. Jane Kim to freeze the payroll tax for the Internet giant Twitter. Those who support the giveaway claim it will clean up the blighted areas around the Mid-Market Street area.

Poverty is aplenty in this portion of District 6, as even the rats and pigeons can attest. According to a 2007 study by the San Francisco Food Bank, more than 23,000 people in the Center City live with the threat of hunger, at or below 150 percent of the federal poverty line. With this scarcity comes a concentration of related social conditions — homelessness, substandard housing, mental and physical disabilities, and substance-abuse struggles, to name a few.

However, it's less than clear how Twitter's tax break will address any of these oppressive realities. Indeed, the opposite is more likely: a greater acceleration of economic and racial inequality. Over time, the tax break could cost San Francisco millions of dollars as the city struggles to close a $350 million deficit.

While the Health Department deliberates $75 million in devastating cuts, the Human Services Department has already proposed reducing shelter hours and slashing job training programs and housing services in the Mid-Market area. Ironically, as we were fighting displacement during the late 1990s, we also won an expansion of the city's homeless resource centers — now proposed for elimination!

Twitter may be a locally grown company, but its workforce doesn't look anything like the faces inhabiting residential hotels, apartments, or homeless shelters in the neighborhood. Twitter's elite management team more resembles an apartheid power structure with 11 white men and no women or people of color. This inspires no confidence that people living in Mid-Market would gain employment or otherwise benefit from Twitter's tax break. And any potential small business bonanza in Mid-Market would be negated by Twitter's contained consumption choices of catered meals and in-house yoga and Pilates classes.

Twitter shares none of the economic challenges that most Mid-Market residents face. Bertolt Brecht's infamous quote that "it's more of a crime to own a bank than to rob one" speaks to The Wall Street Journal report that financial investors have estimated Twitter's valuation at $8 billion to $10 billion, significantly more than the entire budget of the city and county.

Comments

By this argument, San Francisco should ignore the fact that other cities in the Bay Area want Twitter to come live there. Deciding in a vacuum that San Francisco should not work to keep Twitter here, with its jobs, commerce, and other taxes, is operating on ideology alone -- maybe tinged with a belief that making an "example" of this company and its employees will somehow cure all the grievances of past decades.

Twitter is not a Wall Street Bank. Willie Brown is not on its Board of Directors. And, if headlines are any indication, Twitter seems to be helping advance freedom and liberty for millions of people the world. If you don't want this kind of company in San Francisco, do you want any company here that has more than five employees and that (God forbid!) turns a profit?

Posted by DFowler on Feb. 16, 2011 @ 8:38 am

San Franciscans are being made to accept new development under the promise that the resulting property taxes will finance city services that we all hold dear. But in order to finance the infrastructure that these new developments require, policy makers are impounding the taxes generated by this new construction. So the bait and switch with development is that existing San Franciscans must sacrifice maintenance of our crumbling infrastructure and deteriorating public services to subsidize developer profit.

The same is the case with the Mid Market tax break. We are told that we've got to bend over backwards and fellate business because we need their taxes and we don't want them to move elsewhere as if San Francisco was a bleak hinterland where nobody wanted to ever be. Perhaps Mid Market between 8th and Van Ness is a bleak hinterland, but that is only because the same boosters who demand corporate welfare are the ones who pushed BART in the 1960s which tore up a thriving business cluster and replaced it with Soviet Era alienating upzoning including the Fox Plaza. This urban design malpractice created a shady cold wind tunnel that is not appealing in spite of the added density.

But in general, San Francisco is desirable and we should leverage that desirability in negotiations with employers. Did Newsom and Lee and Michael Yarne offer up a tax break as their first inclination as they are prone to do whenever a billion dollars comes up on their radar? Or did Twitter demand this as a condition of staying? I'd find it difficult to imagine that Twitter would make a big deal about a tax break that adds up to rounding error on their entertainment budget and which would inconvenience their largely SF based workforce.

Similar to development, we are told that we need to be keeping employers in town so that their taxes can fund social services that we all desire. But when we give tax breaks to employers, and the Controller shows that there there is no evidence from the biotech tax break that this keeps them in town, there is evidence that the net tax take goes down. As Muni is continuing through a fiscal death spiral, saddled with about a $2,000,000,000 structural deficit, is there really excess capacity in the subway and surface lines to carry hundreds more commuters to Mid Market without additional tax financed investment? Does Supervisor Weiner really want to tell his constituents on the J Church line that we're going to pile on that many more bodies onto streetcars that can't handle the existing loads?

Neoliberals are running San Francisco's government now. Their project is to tap all of our income streams and direct them to subsidizing the already well who will shed their taxation liabilities off leaving all of us who are very low income in comparison to these über riches to fend for ourselves.

-marc

Posted by marcos on Feb. 16, 2011 @ 9:10 am

I wonder Marc - does owning that condo qualify you as very low income or uber rich?

I cant see many other very low income people owning a condo in San Francisco.

Posted by Guest on Feb. 16, 2011 @ 9:20 am

Compared to those who would own this City's politics and to whom the neoliberal politicos cater public policy, we are all very low income, and we'd better get used to that because wealth distribution is only going to get more skewed.

-marc

Posted by marcos on Feb. 16, 2011 @ 9:50 am

So one can own a condo in San Francisco and pay property taxes of 1.14 % and still be considered "very low income"
Amazing

Posted by Guest on Feb. 16, 2011 @ 7:54 pm

I completely "get" some of the points made in this article. Data should be analyzed about whether tax breaks would benefit the neighborhood.

But it's really flagrant and out of line to refer to our management team as an apartheid power structure. Give me a break. You lose all credibility when you make statements like that without knowing any of the management team. We have a strong DNA of charity and philanthropy, and it is 100% truth that one factor in the mid-Market area interest was trying to help improve the neighborhood.

The leap that you make between "Twitters employees don't look anything like the population around it" and "This inspires no confidence that people living in Mid-Market would gain employment or otherwise benefit from Twitter's tax break." makes no sense. So to improve the area, we need to make sure anyone involved is middle class or lower, and a minority? People help people all the time, regardless of race or status.

I'm not going to comment on whether the city should approve the mid-Market tax break, but I am going to comment that there should be more data, and less rude conjecture on the matter from professionals like you.

Posted by Twitter employee on Feb. 16, 2011 @ 10:29 am

If Twitter DOES leave the city:

We immediately begin to lose large amounts of tax revenue;

There will be less people buying parking passes or putting change in meters;

Local businesses would see sales drop - everything from markets to coffee-shops to snazzy new bistros;

Mid-Market stays a $h!t-hole for Goddess knows how long;

Sounds groovy.

Actually it sounds like the opposite of progress.

Posted by Guest on Feb. 16, 2011 @ 12:27 pm

Of course the SFBG leadership team is positively Rhodesian in comparison.

-marc

Posted by marcos on Feb. 16, 2011 @ 12:34 pm

Richard Marquez co-authored this op-ed.

He's not right so much as he's late.

Posted by The Ghost of Debra Walker on Feb. 16, 2011 @ 3:26 pm

bitter pill Debra? swallow it already...

Posted by Guest on Feb. 16, 2011 @ 6:11 pm

Unfortunately it is a bitter pill for us all to swallow. This corporate giveaway gets even more costly when the IPO issues...and all of that potential tax revenue evaporates. But, hey...it's all cool.

Posted by Guest on Feb. 17, 2011 @ 12:08 pm

I get the argument that we'd like to "do what it takes" to attract businesses such as Twitter to mid market. I just think it's a little bit obscene that the way forward should come in the form of a tax break for a company that's worth billions, when we are being faced with a budget reality such as it is.

Once upon a time, when Henry Ford was rolling out his new cars back in the early to mid 20th century, who could have predicted the environmental consequences that so many cars on the road would have. Well, we're making adjustments to account for the very real effects of this reality.

I'd like to see a similar adjustment to our capitalist system based on current realities that we face, both fiscal and social. I'd like us to create a culture whereby Twitter would never try to escape responsibility for the community it wants to be in in favor of the proverbial "bottom-line". And I'd like to see politicians who are insightful and creative enough to promote this idea in whichever way possible. Perhaps we could offer Twitter a "discount" on a portion of its taxes—I don't know—rather than a tax break when it clearly can afford to pay it. In any case, those are the politicians I will favor at the polls, and I'll be watching carefully to see which ones have the vision to strike this balance.

Of course, I'm all for business. And of course, if I were a business person, I'd like to turn a profit as well. But isn't it possible to do just that, and at the same time give back to the community in ways that will truly make a difference? And isn't this good politics? To be for business, but also keep the large view of our society and its challenges and invest accordingly?

Here’s a quote I recently came across that I think relates to what’s going on here:

"When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it." —Frederic Bastiat (1801-1850), French economist

Let’s expect more of those who’ve come a long way and are worth billions. And let’s create a culture where that becomes the norm, as a matter of course, so that others will naturally follow, feel good about it, and so that our city might thrive.

Posted by Guest daniele erville on Feb. 17, 2011 @ 3:05 pm

and have it rain country gravy.

Posted by matllock on Feb. 17, 2011 @ 6:11 pm

Daniele,

Great comments. Particularly the French philosopher's, thoughts on how predators create legal systems that "legalize ... and glorify". City voters gave 20 million for solar panels on government bldgs and schools and housing projects. The SFPUC illegally gave the money to wealthy condo owners. Then, they went back and created a new law making it legal retroactively.

And, Twitter employee ... don't feel bad about being called racist by the Bay Guardian. They have an all white masthead and continually blame shift. A couple of weeks ago they called the new Free University project racist. Hell, they've even called me a racist and my much loved grandkids are black.

go Giants!

h.

Posted by Guest h. brown on Feb. 18, 2011 @ 9:36 am

If we continue in this downward spiral of ignoring those who are in need, and think that tax breaks to the wealthy are going to bring us out of the whole were in, think again. The wealthy and the politicians think alike, the poor and middle class must be brought down and kept down in order for them to succeed. Why? because the majority who I speak of and for, are the only one's who are willing to speak up and fight the corrupt system that we call a government, "we the people for the people" this was tossed out a long time ago and loopholes and corruption took over, the masses are not able and willing to fight a strong fight, but if we're to stand up and start fighting back with long and intense protests that cripple the daily necessities and routines of government and business, and get them to do what is right, then maybe we might start getting results that can and will make a difference.
As a person who has been a city employee for more than 25 years, I have seen things from the inside and let me tell you it's not pretty, it's heartless and lacks any pricncipals and commitments to those who are in need. As a close friend commented regarding these individuals he said " these people are walking and living heart donors" and he could have not been so right. You can keep writing and commenting on this article, but as a friend of the writer of this article, he is not only right, but one who was willing to fight for what is right, problem is that most who talk the talk are not willing to walk the walk, I call this spineless and a lack of commitment or sellouts. Lets stop talking and lets take action and take back the government that was once ours and make them do what is right so we can all benefit, especially those who are in need. Look at our streets, I grew up here and I can't believe the conditions most of us are willing to live in and not do a thing, shame on all of us!

Posted by Guest James on Feb. 19, 2011 @ 12:28 pm

Among the District 6 problems Richard Marquez and Chris Daly list in their editorial ("No sweetheart deal for Twitter," Feb. 16) are "homelessness, substandard housing, mental and physical disabilities, and substance-abuse struggles, to name a few." One problem they failed to mention is the metastasis of boarded-up storefronts and vacant buildings in the mid-Market area. One of those vacant buildings is the former Furniture Mart between 9th and 10th Streets on Market. By waiving the payroll tax for six years, the city would be encouraging a turnaround on Market Street.

It's not like there's a big line of tenants for these vacant buildings. If Twitter or other companies don't come to Market, the buildings will more than likely remain vacant. So the city is not losing payroll taxes it might ordinarily have been able to collect. It is gaining a company with the prospect of thousands of new jobs which will help revitalize the area and revitalize the city, not to mention the surrounding businesses and the city's treasury.

Allowing Market Street to remain dark is not going to address any of the oppressive realities the authors mentioned. Revitalizing mid-Market would.

Posted by Michael Zonta on Feb. 22, 2011 @ 1:52 pm

and then we moved to Fairfield.

Posted by Guest ebw343 on Feb. 25, 2011 @ 2:34 pm

Michael:
yeah, let's have a win-win situation...but why continue to promote a culture that promotes companies worth billions not paying their fair share? this is a view that sees one part of our society (the rich and corporations) on one side, and everyone else on the other.

tired of it...we are really more of a "circle" with no sides...i prefer to look at our society as a family. everyone should pay into san francisco equally, already. it's really pretty simple.

"By waiving the payroll tax for six years, the city would be encouraging a turnaround on Market Street."
I see it differently: By waiving the payroll tax for six years, the city would be continuing the same kind of policies that got our country in the mess it's in in the first place.

But change is afoot...you can hear the rumblings...and that's a good thing. sign me up.

Posted by Guest daniele erville on Mar. 09, 2011 @ 1:56 pm

Keep Twiiter in San Fancsico, you have allowed so much to leave, Mid Market needs to be cleaned up, but you do need buisnesses down there, Big business need small business which in turn needs big buisness. You will have have people earning a paycheck, using services and buying goods in around their offices.

Posted by Garret on Apr. 18, 2011 @ 1:51 pm

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