Elon Musk is closing the headquarters of his social media company X (formerly Twitter) in San Francisco’s downtown area. The remaining employees will be relocated to Palo Alto and San Jose offices, while Musk plans to establish new headquarters in Texas.
Musk cited San Francisco’s gross receipts tax as a key reason for the decision. This tax applies to all transactions processed by businesses, including those outside city limits, and Musk sees it as unfairly penalizing companies like X that handle payment processing.
He also expressed concerns about safety in the city, referencing an incident where he was stuck in the company’s garage due to a gang doing drugs nearby.
Twitter, founded in San Francisco in 2006, had initially considered moving to Brisbane, California, to avoid payroll taxes.
However, in response to the city’s high unemployment rate, San Francisco’s then-Mayor Ed Lee introduced a tax break that eliminated the 1.5% payroll tax on new hires for some companies.
This tax break expired in 2019, and during the pandemic, Twitter’s offices largely emptied as the company, under then-CEO Jack Dorsey, adopted a permanent remote work policy.
San Francisco officials have shown indifference to X’s departure. David Chiu, San Francisco’s attorney who once supported the tax break, commented, “Good riddance,” reflecting a sentiment many in the city shared.
The city’s chief economist, Ted Egan, noted that X’s departure would have little impact since the company had already significantly downsized after Musk’s 2022 acquisition. San Francisco Mayor London Breed added that she wouldn’t “beg anybody” to stay, suggesting that Musk’s political views might have influenced his decision to leave.
In summary, the closure of X’s San Francisco headquarters marks the end of an era, but local officials are little concerned. They see the company’s departure as the final step in a gradual exit that began years ago.