City's Chief Economist Says Twitter Tax Break Has More Than Paid Off

Scott Lucas | October 28, 2014 | Story Tech World

Twitter's stock hasn't turned out to be a great deal so far, but the Twitter tax break has, at least according to a new report by San Francisco's Chief Economist Ted Egan. If that analysis is correct, it's a big win for Mayor Ed Lee and backers of the controversial tax break (including Supervisor David Chiu, who's locked in a close race with Supervisor David Campos for Assembly). As Supervisor Jane Kim told us last year, "The goal was to impact the vacancy rate and create jobs. Were we successful? Absolutely." Now the city's non-political economic referee has matched that with data.

According to Egan's report, the tax break reduced corporate tax liability for 15 businesses by $4.2 million in 2013. But businesses within the area paid $7.1 million more in payroll taxes than they otherwise would have—meaning that the city came out ahead $2.9 million in 2013. That's not bad.

It all depends on how one calculates the impact of the tax break. Just looking at the growth of the Mid-Market region on its own isn't enough—that doesn't let you measure the effect, if any, of the tax policy specifically. So Egan's office compared the growth of Mid-Market to the growth across the rest of the city, and found that Mid-Market grew more than 14 times as much as the rest of the city.

Of course, it may be the case, as Supervisor Campos argued, that "there is nothing in the report that shows but for the tax break this would not have happened." If that's true, then the city left $4.2 million on the table. Egan's report disagrees, saying that the tax break was "likely was the primary reason for the relatively greater of growth in businesses within [Mid-Market]."

No matter whether the tax break was directly responsible for the growth in the region, the report is also clear that its overall impact on the city was limited. Though commercial and residential rents, as well as home prices, in Mid-Market increased, they didn't outpace those of the rest of the city. Though the companies in Mid-Market added 3,000 jobs from 2010 to 2012, the city as a whole added 70,000 in the same time frame. The city has also signed community benefit agreements with six separate companies, including a Twitter-backed training center for low-income residents.

Read the whole report here.

Have feedback? Email us at
Email Scott Lucas at
Follow us on Twitter @sanfranmag
Follow Scott Lucas on Twitter @ScottLucas86


Photography by: