New York: Elon Musk is shutting down the headquarters of his social media company X (formerly Twitter) in San Francisco’s downtown area, with operations moving to Texas, according to a report by The New York Times. Local officials, including those who initially supported tax incentives to attract the company, seem largely indifferent to its departure.
The final employees will be relocated to offices in Palo Alto and San Jose, as Musk establishes new headquarters for X in Texas.
Why Is X Relocating from San Francisco?
Elon Musk pointed to San Francisco’s gross receipts tax, which taxes local businesses for all transactions taking place outside city limits. Musk claims this unfairly penalizes businesses involved in processing payments, a key function X plans to pursue. He also highlighted personal safety concerns, mentioning in a July post that he was stuck in the company garage due to a gang using drugs on the street and refusing to move.
Why Did X Remain in San Francisco Until Now?
Though Twitter was founded in San Francisco in 2006, the company had plans to relocate to Brisbane, California, to avoid payroll taxes. In response to the city’s nearly 10% unemployment rate at the time, then-Mayor Ed Lee proposed a tax break, erasing the 1.5% payroll tax on new hires for certain companies, which helped keep Twitter in San Francisco.
The tax break ended in 2019, and during the pandemic, Twitter’s offices emptied after co-founder Jack Dorsey announced that employees could work from home indefinitely.
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Why Are San Francisco Officials Unfazed by X’s Departure?
San Francisco officials have expressed little concern about X’s exit. City Attorney David Chiu, who once supported the tax break as a member of the Board of Supervisors, echoed the sentiment of many locals, saying, “Good riddance.”
San Francisco’s chief economist, Ted Egan, added that X’s departure was inconsequential as the company had already diminished significantly under Musk’s leadership following mass layoffs. “In many respects, they were already gone,” he remarked.
Mayor London Breed similarly stated, “I’m not going to beg anybody,” suggesting that Musk’s decision to leave was influenced by his political views.
