Twitter tax: It's not all about Jane Kim

|
(39)

Randy Shaw's latest piece announcing that (duh) the Small Business Commission supports the Twitter tax break makes it seem as if the entire opposition to the deal is based on dislike for Sup. Jane Kim:

Since announcing her candidacy for District 6 Supervisor, Jane Kim has been attacked by self-declared progressive power-brokers who vowed to defeat a candidate they could not control. After one of the city’s most progressive districts overwhelmingly elected Kim, these detractors continued their attacks – desperate to undermine Kim’s credibility as a progressive.

To this end, [Chris] Daly, [Gabriel] Haaland and others who failed to defeat Kim last November are now charging Kim with promoting “gentrification” by backing a payroll tax exemption to encourage businesses like Twitter to move to Mid-Market.

It's getting crazy, how Shaw is making this whole discussion so nasty and personal. Because it really isn't all about Jane Kim.

There are actual, legitimate policy differences here. Some of us don't think tax breaks are a good way to do economic development. Some of us think that we've tried lowering taxes -- for 30 years -- and it hasn't worked. Some of us (particularly me) wonder if a break from the city's annual payroll tax makes any difference at all to a company's decision where to move or whether to hire new workers.

In fact, it should come as no surprise that former Sup. Daly and Haaland, a union activist, are opposed to a corporate tax break. They're just doing what they've always done.

In ten years on the Board of Supervisors, Daly told me, he opposed every single tax cut or tax break that came before him. (He also said he's not a "longtime critic" of Jane Kim: "The first time I criticized her was over the board president selection, and that was two and a half months ago." He wasn't a supporter of Kim's main progressive opponent, Debra Walker, last November, and can hardly be described as somone who "vowed to defeat" Kim.)

Haaland did support Walker -- but he's not doing anything unexpected, either. He told me he's never once supported a tax break for anyone. "You can say a lot of things about me, but you can't say I'm inconsistent here," Haaland noted.

I've been at the Guardian for more than 25 years, and I've written more than 1,000 editorials, and I can't remember every one of them, but I'm pretty sure we've never supported this kind of tax break, either -- for anyone, anywhere. We would have opposed it if Debra Walker suggested it; Jane Kim happens to be a sponsor of this particular deal, but there's nothing surprising -- or personal -- in our position.

Randy Shaw is free to argue that we're wrong and to say that this tax break is good for the Tenderloin and for the city. Lots of people (although generally not people I call progressives) support all kinds of tax deals for lots of policy reasons. I disagree with them, but I'm happy to have the discussion; I love to debate tax policy (I realize I'm sick that way.)

But you wonder where Shaw is coming from with this "anti-Kim" personal shit. Is this the best case he can make? 

 

Comments

Trying to figure out how the Continental Hotel relates to the payroll tax break...

Posted by Guest on Mar. 15, 2011 @ 11:28 am

Part of the opposition to the payroll tax break for Twitter is that it will supposedly encourage gentrification of the Mid-Market area. Daly supported an upzoning of the site of the Intercontinental Hotel, despite some criticism that it would encourage further gentrification of the South of Market Area and further the growth of the tourist district. So, I believe the editorial in Beyond Chron is making the point that Daly is being a hypocrite.

In any event, does any of this petty sniping back and forth really matter? The Twitter tax exemption is a done deal--it will pass, Twitter will relocate to Mid-Market and life will go on. Maybe, certain people who spend all day posting on SFBG or Beyond Chron think this is some grand political battle with serious implications for the future of SF. But, it's not.

There are much bigger and more important issues facing the city, the state, and the nation. I wonder what all this energy focused on this minor issue could instead do to help tackle those more important issues?

Posted by Chris on Mar. 15, 2011 @ 12:46 pm

Randy Shaw is a multimillionaire who's looking after his own business interests.

I don't know why the Guardian gives him progressive credibility. He has none.

Posted by Left of the Left on Mar. 15, 2011 @ 11:41 am

it's at least possible that, since the establishment left in the City tried to dissuade her from running, and the SFBG voiced that she shouldn'r run in D6, that she's just decided to be a little more independent-minded.

She should feel confident in that stance, since she roundly defeated a much more mainstream liberal candidate. The D6 voters, with many more upwardly-mobile Twitter-type voters than when Daly was first elected, wanted a less partisan figure than either the downtown pick or the left pick. And she's rewarding that moderate constituency by going all mavericky.

Good for her. And if Haaland and Daly don't like her, that probably makes her look good in the eyes of many too.

BTW, Tim, non-profits get tax breaks. Do you support those?

Posted by TonyW on Mar. 15, 2011 @ 12:13 pm

"Independent minded" now means ignoring economic evidence and supporting policies that don't work because you now represent a different constituency than previously?

-marc

Posted by marcos on Mar. 15, 2011 @ 12:33 pm

matter of not voting a "party line" on any partcular issue.

There is plenty of evidence that tax breaks do succeed in attracting business, which is why almost every Nation, State and City offers them in some form or another. Indeed, the concept of "Enterprise Zones" is predicated on that.

Whether it's justified in this case is a matter for debate. But I happen to think that if it is the deciding factor for Twitter, then those are exactly the type of jobs we want right here in SF, and not down the peninsula somewhere.

Posted by TonyW on Mar. 15, 2011 @ 12:50 pm

"What does Twitter want from San Francisco? A tax break. A multimillion dollar tax break. Now, I’ve done a lot of work in this world, and the reality is: there’s no data ever, ever. Ever, ever, ever … to show that these tax breaks ever help you.

If you have to bribe a business to stay in your city, then there’s something wrong with your city. And you should take that money and use it to fix your city. Not to bribe a business.

And they’re probably going to get it. And they’re a big business.

I tweeted the other day, 'Twitter, don’t be evil.'"

- Eric Jaye

Posted by o rly on Mar. 15, 2011 @ 1:46 pm

That's always the internet chatroom copout isn't it? "Where's the evidence that tax breaks make a difference?"

Er, well, where is the evidence that it doesn't?

It's a competitive situation. A tax is just a cost, like rent, payroll etc. And anything that reduces that cost is going to make a difference at the margin.

Many businesses move out of the city, and the State, and the Country, because of costs. Whether that cost is a tax or something else is less important than realizing that SF is in a competitive situation here, and many cities would like a high-profile business like Twitter.

Nothing ain't for nothing.

Posted by TonyW on Mar. 15, 2011 @ 2:28 pm

"where is the evidence that it doesn't?"

In governance (and frankly, Adultland) one is not required to prove a negative.

"where is the evidence that rainbows and ponies WON'T materialize in the city's coffers?"

It takes a certain brand of naivete to call something a cop out by resorting to a logical fallacy. Try again.

Posted by Proggy Boy on Mar. 15, 2011 @ 6:24 pm

request for "evidence".

Clearly both sides of any debate have to justify their case.

Posted by TonyW on Mar. 15, 2011 @ 6:35 pm

I do not think that word means what you think it means.

Evidence is an available body of facts indicating whether a proposition is true or valid.

We've tried this proposition (payroll taxes) before. It didn't work. That's our evidence.

You don't have any. That's yours.

You're still not getting it. "Clearly both sides" is a false equivalence. Try again.

Posted by Proggy Boy on Mar. 15, 2011 @ 9:12 pm

Read The Great American Jobs Scam, a great book filled with strong evidence that tax breaks never produce anywhere near the jobs they promise. Besides, why is a great city like San Francisco deigning to "compete" with a place like Brisbane in this race to the bottom?

Posted by steven on Mar. 15, 2011 @ 6:41 pm

I support tax breaks for non-profits and small business but not for billionaire RE speculators like Shorenstein who just bet $100 million that Twitter will move to SF Mart regardless of a payroll tax break, or big investment banks like JP Morgan, which now owns a large part of Twitter.

Posted by Guest on Mar. 15, 2011 @ 12:34 pm

and so I assume he opposes tax breaks for all non-profits, no matter how close they may be to his heart.

Posted by TonyW on Mar. 15, 2011 @ 12:46 pm

Actually it was $110 million for "a majority stake" according to Marketwatch.com.

Something super weird going on as usual.

Posted by Guest on Mar. 15, 2011 @ 1:14 pm

That Shorenstein is willing to pay $100 Million for SF Mart is a good indication that Twitter will move into the building whether there is a payroll tax break or not.

Obviously the insider wisdom from all the due diligence of a deal that size indicate Twitter will definitely move into SF Mart.

Douglas Shorenstein is on the SF Federal Reserve Board of Governors and I'm not too sure Twitter and JP Morgan would want to cross him and make him lose all that money. The American banking system just doesn't work that way.

Posted by Guest on Mar. 15, 2011 @ 12:41 pm

I thought the whole point of moving into a blighted area was cheap rent.

Posted by Guest on Mar. 15, 2011 @ 12:49 pm

Kim's time on Rules Committee,

She provided the deciding vote to remove the Historic Preservation Commission's resident historian in favor of the husband of Willie Brown's top aide for 30 years (Eleanor Johns) and last week she voted to remove the Urban Forestry Council's senior expert on local streams and tree planting in favor of a realtor from the East Bay (Dan Flanagan) who'll use the seat to hand out business cards and get real estate listings.

Plus, she gave us Ed Lee for Mayor instead of a Progressive.

Twitter isn't Jane's first affair with Downtown interests.

Go Giants!

h.

Posted by Guest h. brown on Mar. 15, 2011 @ 1:04 pm

Taxing nonprofits is an interesting issue. The city of Berkeley managed to force the University of California to pay the equivalent of property taxes (to account for the services UC gets from the city). And some of the big nonprofits -- particularly hospital chains -- are "nonprofit" in name only, make huge amounts of money and sometimes have for-profit subsidiaries. So there's a case to be made for taxing some types of big nonprofits, particularly if they can't show that they provide a valuable public service (i.e. charity care at hospitals). Hell, I'd tax the Catholic Church if I could -- there's lots of money there.

I don't think small nonprofits that perform valid community service should pay business taxes. But I don't find that inconsistent.

Posted by tim redmond on Mar. 15, 2011 @ 1:47 pm

So you're in favor of some tax breaks, i.e. for "small non-profits that perform valid community service"?

Because you previously stated that you were never knowingly in favor of tax breaks. But now you've refined that position to be in favor of tax breaks for organizations that you favor.

And against tax breaks for those that you don't favor.

Posted by TonyW on Mar. 15, 2011 @ 2:32 pm

"Elected overwhelmingly?" I thought it was pretty close, between Debra Walker and Jane Kim.

Posted by Ann Garrison on Mar. 15, 2011 @ 3:08 pm

Kim's victory was that the official Democratic Party machine AND the organized left, including SFBG, were firmly behind Walker.

Normally that would give Walker a huge advantage. But it fact Kim won, through superior organization and (I believe) a genuine desire for a more modern and independent voice.

Perhaps "shocking" victory would be a better word than "overwhelming" victory but, either way, it was a comprehensive and significant win.

And of course the SFBG has looking to find fault with her ever since, e.g. by making a huge deal over a fairly small tax incentive to keep a market-leading company in the City. No brainer.

Posted by TonyW on Mar. 15, 2011 @ 3:26 pm

1000 votes is not overwhelming.
1000 votes is Valencia Street.

Posted by Proggy Boy on Mar. 15, 2011 @ 6:28 pm

If you want to cry about that into your milk, go ahead.

Posted by TonyW on Mar. 15, 2011 @ 6:36 pm

See the part where we were disputing your math, and then you lost that argument and so you switched up value statements?

1000 is a couple condos.
1000 is a precinct.
Try again.

Posted by Proggy Boy on Mar. 15, 2011 @ 9:16 pm

going to win by tens of thousands of votes. But Kim did win clearly and distinctly, she's our constituency representative, and since she wasn't the "official" candidate of the left, but rather beat Walker, she has a mandate to go a little "rogue".

Posted by TonyW on Mar. 16, 2011 @ 7:19 am

That's not actually the subject. The subject was her margin of victory.

Try again.

Posted by proggy boy on Mar. 17, 2011 @ 9:13 pm

Independent my ass -- she had Willie Brown and Rose Pak supporting her.

Posted by steven on Mar. 15, 2011 @ 6:37 pm
!

Kim won, and well, and rightly

If by "well" and "rightly" you mean... not.

http://www.baycitizen.org/elections-2010/story/jane-kim-campaign-hit-eth...

Posted by lol on Mar. 15, 2011 @ 11:18 pm

Hey,

Is the new set of lungs (TonyW) the actual Tony Winnaker? Not my politics but this guy's a good writer. Who does nuclear energy too. He and Eric are on a collision course for sure many more times.

go Giants!

h.

Posted by Guest h. brown on Mar. 15, 2011 @ 3:47 pm

Tony Winnaker, currently sucking down taxpayer's dollars as the director of communications for the San Francisco Public Utilities Commission?

Posted by Guest on Mar. 15, 2011 @ 7:39 pm

From the economic analyst report:

"The fiscal and economic impact of the legislation hinges on what one believes will happen to the large commercial properties Market Street between 7th and Van Ness if Twitter does, or does not, come to the area. Commercial real estate owners in the area have seen stagnating public sector demand, and declining private sector demand, for many years."

Fox Mulder over at the MOEWD has a poster over his desk. It says "I WANT TO BELIEVE."

-marc

Posted by marcos on Mar. 16, 2011 @ 8:04 am

TonyW, I am not in favor of business tax breaks. Nonprofits currently don't pay business taxes; I think maybe some of them should, other shouldn't, but that's hardly a tax "break." Twitter is asking the city to allow it an exemption from the rules that apply to everyone else. Yes, I'm opposed to that.

Posted by tim on Mar. 16, 2011 @ 1:30 pm

TonwW, you need to read the Bay Guardian. The incentive is not small at all, not when you include the idea of exempting Twitter from paying taxes on stock options -- and then you count the rather large area in which everyone would get a tax break.

Posted by tim on Mar. 16, 2011 @ 1:32 pm

there could never be a payroll tax (or an income tax) on stock option awards, since those awards only lead to a profit after they have been both exercized and sold.

And at that point, they are subject to capital gains tax, and not any form of income or payroll tax.

While for as long as an equity position is held in a company, no tax is due. We don't tax unrealized gains in this country. (They do in Australia, interestingly).

Posted by TonyW on Mar. 16, 2011 @ 4:49 pm

Section 902.1 of the San Francisco Business and Tax Code. It was amended in 2004 to include stock options....

SEC. 902.1. – PAYROLL EXPENSE.

(a) The term “Payroll Expense” means the compensation paid to, on behalf of, or for the benefit of an individual, including shareholders of a professional corporation or a Limited Liability Company (“LLC”), including salaries, wages, bonuses, commissions, property issued or transferred in exchange for the performance of services (including but not limited to stock options), compensation for services to owners of pass-through entities, and any other form of compensation, who during any tax year, perform work or render services, in whole or in part in the City; and if more than one individual or shareholders of a professional corporation or members of an LLC, during any tax year performs work or renders services in whole or in part in the City, the term “Payroll Expense” means the total compensation paid including salaries, wages, bonuses, commissions, property issued or transferred in exchange for the performance of services (including but not limited to stock options), in addition to any compensation for services to owners of pass-through entities, and any other form of compensation for services, to all such individuals and shareholders of a professional corporation or members of an LLC.

(b) Any person that grants a service provider a right to acquire an ownership interest in such person in exchange for the performance of services shall include in its payroll expense for the tax year in which such right is exercised an amount equal to the excess of (i) the fair market value of such ownership interest on the date such right is exercised over (ii) the price paid for such interest.

Posted by Guest on Mar. 16, 2011 @ 5:08 pm

on this topic, the City does not enforce this provision.

And realistically, it's really hard to get a handle on it. The data isn't available to the City.

Moreover there are real questions over it's legality, as discussed .

Posted by TonyW on Mar. 16, 2011 @ 5:14 pm

Tell Twitter that.

Posted by Guest on Mar. 16, 2011 @ 5:44 pm

There is no reason for Shaw to make this personal. That is what's wrong with politics these day, let's just focus on the issues and discuss solution instead of wasting time and resources getting personal with our opponents!

Posted by Guest on Mar. 16, 2011 @ 1:47 pm