Mercury News: A Good Business Climate Will Ruin California's Cities

While nothing is likely to top this Sacramento Bee editorial for mind-numbing idiocy, the San Jose Mercury News's Chris O'Brien did give us this piece of nonsense yesterday.

O'Brien's ire is focused these days on San Francisco's decision to approve the so-called "Twitter tax break", which grants a six-year break on the city's payroll tax for new employees of firms who locate in the sketchy Tenderloin and Central Market districts. The microblogging firm Twitter was among the most visible proponents of the tax break (hence the euphemism), and its passage has averted the company's plans to relocate to Brisbane. And O'Brien's cool with all that.

What he's not cool with is the precedent of giving tax breaks to private businesses, and the so-called "race to the bottom" it creates.

Other tech firms want the same break. And that could blow an even deeper hole in a city budget whose general fund is already reeling from a projected deficit of more than $306 million out of a $4.1 billion budget for the next fiscal year. For comparison, San Jose faces a budget shortfall of $115.2 million in its $934.6 million general fund for next fiscal year, with a slightly larger population.

Already two such proposals to extend tax breaks are in the works. One would provide a six-year payroll-tax exemption on stock options issued in advance of an IPO, a measure believed to be directed toward Zynga and Yelp. The second, even better, would end city payroll taxes on stock options, forever.

Of course, this is only a problem if you believe private enterprise exists to provide tax dollars for the government. If you believe it exists to provide goods and services that people want, then lifting taxes on its activity can only be viewed as a wonderful thing.