[drusenko]

"The number of companies who failed to go public in SF because of this tax is zero." Do you have a citation for that, or is it just a blind assertion?

The reason this is a hot button issue is that San Francisco is becoming more attractive to startups, many of which are now looking to IPO in a couple years. These startups will not be able to IPO in San Francisco if this stays the same.

Most people would consider startups in San Francisco a good thing; Although, admittedly, not all people -- some people just want everything to stay the way it is.

Further, education issues have no place in this discussion. Education will be impacted exactly 0% by eliminating this tax, because the city currently does not collect any revenues from it.

Might the city collect more revenues in the future by keeping the tax? Absolutely not: if it keeps it, it will become literally impossible for fast-growing startups to stay in the city, and San Francisco will lose a significant amount of payroll taxes from those startups leaving.

Blindly support all taxes if you will, but the facts are that San Francisco is the only major city to tax companies on employees' personal gain from stock options, that it would be untenable for any fast-growing startup to be based in SF with this tax, and that the city does not currently receive any revenue from it, so there will be no revenue to make up.

[tptacek]

San Francisco has been a hot location for startups --- maybe the hot location, but at least prominent in the shortlist --- for over a decade. Where's the urgency coming from?

[drusenko]

That's just not true. All tech companies have traditionally been down south. First San Jose, then Mountain View/Cupertino/Palo Alto. Few have traditionally been based in San Francisco proper.

The urgency is that this section of SF tax code was just discovered. The fear is that it will now be enforced, which would force the best SF-based companies to move.

[tptacek]

I know that not to be true, unless there was a fallow period between the time that my company paid ridiculous $/sqft for space in SF to be among the VC-funded idiots of the time (2001) and today. But I don't buy that there was such a time. And, if anything, SF seems to have gotten even trendier since ~2005.

If you want to make the point that the particular wave of companies domiciled in SFBA are now anomalously likely to be going public, I won't argue with you, but that's a narrower point than the one I feel you originally made.

[drusenko]

I was not around in 2001 so I will take your word on that one. It looks like there may have been a lull and then a resurgence around ~2007:

http://venturebeat.com/2007/01/14/weebly-offers-free-easy-we... "The company is just three people from State College, PA. Co-founder David Rusenko originally told VentureBeat he would move to Mountain View. He changed his mind, he said, because he found a vibrant Internet start-up ecosystem in hipper San Francisco — the latest sign that San Francisco has become more of a magnet for these kinds of companies."

http://replay.web.archive.org/20070118083006/http://www.bizj...?

[jeffreymcmanus]

You asserted that the tax is somehow driving public companies out of SF, so you get to back up your assertions first. Pointing out that Twitter threatened to move to Brisbane doesn't count since it didn't actually happen.

Bear in mind that every big company attempts to squeeze concessions out of the cities they're located in when their leases expire. If you think the Twitter in SF situation is unique, you're profoundly naive about how big companies and city governments interact.

SF is attractive to startups in large part because it has an educated population. As the frenzy to roll back taxes continues to take its toll on education (both K-12 and the public universities), that attractiveness will diminish. Technology companies will do just fine in this environment; they'll simply move their operations to states and countries with better education systems. But when the education system in California utterly collapses, it's the employees of these companies who are going to be left wondering what happened.

The phrase "it will become literally impossible for fast-growing startups to stay in the city" is utter nonsense. If that were true, why is there is a single startup in the city today?

[drusenko]

> If that were true, why is there is a single startup in the city today?

Because that section of the tax code is not enforced.

> If you think the Twitter in SF situation is unique

We're not talking about the Twitter situation. Twitter extracting concessions from the city for its normal payroll tax obligations. For the record, I'm against that.

We're talking about a completely different situation from Twitter, the issue with a company being taxed on employees' personal stock options gains. This has nothing to do with the Twitter tax break.

> You asserted that the tax is somehow driving public companies out of SF, so you get to back up your assertions first.

I currently run a startup that would not be able to stay in the city of SF if we went public. In a few years if we start going down that path, I really hope that this tax is no longer in place or I will be forced to move the company out of the city, which I don't want to do.

Not sure what else I can provide you to back me up on that one, besides a letter from our accountants saying the same.