Twitter Saving Millions in Taxes In Exchange For Promise To Make Charitable Contributions

Twitter is reportedly receiving over $20 million in tax breaks by promising to engage in charitable activities in the San Francisco community.

The agreement is set forth in a draft Community Benefit Agreement with the city that covers any local business with a $1 million payroll or more and addresses in the case of Twitter particularly such actions as making charitable donations, training and hiring “eligible” job applicants from San Francisco’s Central Market and Tenderloin neighborhoods, and Twitter employees volunteering at San Francisco nonprofit agencies. Among other things, Twitter has pledged $60,000 in nonprofit organization funding in the first year that the CBA is in force as well as donating $50,000 worth of computer hardware and software to schools. Twitter also plans to provide $60,000 worth of “promoted tweets” to nonprofit organizations.

According to BuzzFeed, the target amount for charitable contributions is 30% of the tax breaks but that figure is unofficial and has no legally binding application. BuzzFeed provides further information on the CBA:

“The tax breaks exempt companies in the [San Francisco] mid-market neighborhood from the city’s 1.5% payroll taxes on new hires for six years. Twitter tax breaks are estimated to be worth $22 million over six years …

“Besides Twitter, the companies include Microsoft subsidiary Yammer, a business-to-business social networking company; Zoosk, a Facebook for people in love to ‘share their romantic journeys’; One Kings Lane, an online home décor retailer; ZenDesk, a cloud-based customer service software developer; and 21Tech, which provides IT support and consultation for state and federal governments.”

The San Francisco Examiner provides background on how the Twitter local tax incentives came into play:

“Facing threats that Twitter would leave San Francisco to avoid paying The City’s 1.5 percent levy on employee payrolls — which includes stock compensation when a company goes public — the Board of Supervisors approved a tax break on new hires in the mid-Market Street area.

“For companies with payrolls in excess of $1 million a year to receive the tax break, they have to create such community benefit agreements — documents largely seen as an effort to placate progressive members of the Board of Supervisors who are ideologically opposed to such tax breaks.

Do you think its fair that Twitter and similarly situated tech companies and other firms receive tax breaks for which smaller or less politically connected companies aren’t eligible?