SF lawmakers try to keep high tech firms local

March 29, 2011 7:16:16 PM PDT
First it was Twitter, now San Francisco lawmakers are trying to keep other high tech companies in town with new tax cut proposals. This time the focus is on employee stock options and now supervisors are considering a payroll tax break.

Daniel Putterman has founded four high tech companies. His latest Cloud Engines manufactures an award winning product called Pogoplug.

"As entrepreneurs, especially venture-backed entrepreneurs, we watch cash very carefully," said Putterman.

Putterman is also closely examining the city's tax code which levies a payroll tax on salaries, bonuses, and stock options -- a key component for high tech companies.

"We could go a few miles south of where we are sitting right now, and that tax is not levied. So it gives us great pause and so we would consider packing up and moving somewhere," said Putterman.

The payroll tax is an only in San Francisco policy. All other California cities levy a gross receipts tax on businesses. One supervisor says it might be time to eliminate the tax when it comes to stock options.

"I don't want to be penalizing companies for succeeding and growing at a fast clip," said San Francisco Supervisor Mark Farrell.

The issue came to light when Twitter threatened to leave the city leading to a proposed tax break. Supervisor Ross Mirkarimi is now suggesting a deal for all large high tech firms -- a two-year moratorium on taxing stock options.

"The Twitter deal, in the way that it's been approached so far, only spotlights the fact that it's not an equitable policy because other businesses are saying, 'Where's ours?'" said Mirkarimi.

And some community groups want theirs. Angelica Cabande organized a protest to pressure Twitter to agree to community benefits including a $3 million investment.

"We're not saying we don't want them in the neighborhood. If anything, we would like to see this to be a partnership between Twitter and the community," said Cabande.

Mayor Ed Lee says he doesn't blame them for asking, but says, "We don't want the companies to feel they are being shaken down in any way. What they can do, what they can commit to is always a two-way street, so it's a balance."

He is convening a workgroup to look at reforming the city's tax structure.

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