Twitter side steps $56 million in taxes, union not happy

The backlash against corporations being given tax breaks and other incentives to move to or stay in a particular area is going to have foot support in San Francisco on April 15th when union workers plan to march to the headquarters of Twitter Inc (NYSE:TWTR). They are going to present the instant messaging giant with a $56 million tax bill for the payroll taxes it has avoided due to the tax arrangement it was awarded with the city three years ago.

The Service Employees International Union Local 1021, which represents mechanics and clerical employees, is currently renegotiating its city contract and is protesting the loss of tax revenue to the city from the tax incentives offered to companies like Twitter. They claim that the tax breaks will cost the city a total of $100 million in revenue more than half of which is just from Twitter.

The tax break was offered to Twitter in 2011 in order to halt its plans to move its headquarters to an area with lower payroll taxes. At the time, Twitter was planning to hire a large number of new staff to cope with its growing popularity and was facing tens of millions of dollars just for the stock incentives it offers to new hires.

City officials, including the Mayor Ed Lee, maintain that the incentives persuaded companies to stay in the recession hit Mid-Market district. Their argument is that the total tax revenue, even with the tax break on payroll generated from the companies awarded the tax break, is higher than the lack of any tax income that would have resulted if companies like Twitter had packed up and left.