Elon Musk is closing the headquarters of social media company X (formerly Twitter) in San Francisco’s downtown district, according to The New York Times, and San Francisco officials, including those who supported the tax incentives that lured the company there, are not exactly saddened.
The “X” logo hangs on the roof of the headquarters building of messaging platform X (formerly Twitter) in downtown San Francisco, California, US, on July 30, 2023. (Carlos Barria/Reuters)
The company’s remaining employees will be moved to offices in Palo Alto and San Jose, while Musk will set up a new headquarters in Texas.
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Why is X leaving San Francisco?
Elon Musk said that San Francisco’s gross sales tax, which taxes local businesses on all transactions that take place outside of city limits, unfairly penalizes companies involved in payment processing, which is what X plans to do.
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He also posted online in July that he was holed up in his company garage because “gangs are doing drugs on the street and he won’t move.”
What was the reason for X to stay in San Francisco until now?
Twitter was founded in San Francisco in 2006, but had plans to move to Brisbane, California, where there is no payroll tax.
With the city’s unemployment rate approaching 10%, then-San Francisco Mayor Ed Lee proposed a tax cut that would have exempted some businesses from paying a 1.5% payroll tax on new jobs.
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The tax break ended in 2019, and when the pandemic hit, offices emptied and Twitter cofounder Jack Dorsey and his then-CEO announced that employees could work from home permanently.
Why are San Francisco officials unconcerned about X leaving the city?
“I agree with the vast majority of San Franciscans: Enough is enough,” said David Chiu, a city attorney who once supported tax cuts as a member of the San Francisco Board of Supervisors.
The city’s chief economist, Ted Egan, said X’s departure isn’t a big deal because “in many ways, they were already gone,” pointing to the fact that X had already shrunk significantly, with Musk laying off many employees after buying the company in 2022. At that point, the headquarters had already become a ghost town.
Similarly, San Francisco Mayor London Breed said, “I’m not going to beg anybody,” adding that she believes Musk’s political policies drove him out of San Francisco.