Twitter's IPO will cost San Francisco $55m in lost taxes - double estimates
At a per share price of between $17 to $20 Twitter's IPO [$TWTR] is priced at a large discount as its insiders prepare to sell their shares to sceptical public buyers. Its a big difference in strategy to that of Google and Facebook IPOs.
The San Francisco Chronicle reports that Twitter’s sweet tax deal with the city of San Francisco, in which it agreed to “gentrify” mid-Market street — one of the poorest city neighborhoods — will likely result in about $55m in tax savings. This is more than double the initial $22m estimate.
James Temple reports:
An analysis by The Chronicle and accounting firm James J. McHale, CPA of San Francisco found that if all employees unload their shares at the midpoint of the offering price range, the lost revenue to the city could add up to $34 million.
That's on top of the $22 million that the Board of Supervisors' budget analyst said would be lost in payroll taxes over the life of the six-year deal.
Weighing benefits of Twitter deal with S.F. - SFGate
Twitter is supposed to be actively involved in community projects, local education, hiring local people, and donating computer equipment, etc, to uphold it’s part of the agreement. So far, it has completed 18 out of 25 commitments this year. It also claimed it donated $60,000 in “sponsored Tweets.”
In adhering to the community benefit agreement, Twitter has, among other things, donated $75,000 to nonprofit groups in the Central Market and Tenderloin neighborhoods, provided 26 tutors to the Tenderloin Tech Lab, and contributed more than 33 hours to the Bar Association's eviction and homeless programs.
However, the community commitments have a value that is a tiny fraction of the $55m, or more, that Twitter gains. That money collected as taxes, would have been used by the city to help some of its poorest residents, which are Twitter’s neighbors in the Tenderloin district.
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