A 1.5% payroll tax break for companies moving to San Francisco’s Mid-Market neighborhood is getting mixed reviews.
What became known as the Twitter tax break has boosted business activity in the area, but may have also accelerated the area’s problems, according to a report by the San Francisco Chronicle.
The city’s chief economist says that between 2010 and 2017, Mid-Market produced $6 million more in payroll and gross receipts taxes and added $750,000 in sales taxes to the city’s general fund than it would have if it grew at the same rate as the rest of the city.
In that period, 59 new companies large enough to have to report their payrolls to the city either moved to, or were created in, Mid-Market. The number of retailers grew by 3% in the neighborhood while declining by 1% citywide. The cost to the city was $70 million in lost tax revenue.
The negatives:
— Gentrification has led to higher housing costs and the growth of the district’s homeless population by 1,600 people between 2011 and 2017
— Drug dealing has increased in the neighborhood
— Some companies have failed to follow through on promises they made to aid non-profit organizations in the neighborhood
— Retail vacancies continue to plague the district’s main street
The tax break faces a May 20 expiration, and the consensus is that the city no longer needs to give major tech companies targeted tax breaks, the Chronicle reports.
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