Wednesday, May 11, 2011

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.

The face of corporate evil.
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.


  1. Several points need making here.

    1) Twitter one of these days is going to just turn the lights off and cease to exist. I have no idea -- and neither does anyone inside or outside the company, for that matter -- how they plan on making money. In the meantime, they have employees and costs. Do. Not. Get. It.

    2) I think there's something to be said against targeted tax breaks for selected businesses or activities. These things tend to accumulate until the result is the current mess that is the income tax. What we should be aiming for is low taxes for all.

  2. Okay, "two" != "several", but you get my drift.

  3. Okay, a few more points need to be made:

    1) Be careful not to hit the "publish" button in Blogger when you just want to "preview". D'oh! I think my last paragraph is what your point #2 is getting at.

    2) I love Twitter, and I hope you're wrong. Because of its ubiquity and ease of use, I think it has incredible potential as an advertising and promotion platform, and I think it could replace the awkward blogs that many small businesses try to put on their websites. And firms can pay Twitter to "promote" their content.