"On the other hand, Sun used to generate annual sales taxes of $431,000 to $827,000 for the city. That's because the state levies taxes on physical goods like computers that it doesn't levy on virtual services like online ad sales. Having more employees on the campus means the city is going to have to expand services to accommodate them, such as hiring more police officers or clerks. And while new high-income Facebook employees moving into the area might send property assessments soaring, Proposition 13 will limit the amount of additional property taxes."
Read Chris O'Brian's story in the San Jose Mercury News
You want Facebook to move to your city right?
Think of all the job creation and tax revenues! The City of Menlo Park has mixed emotions about Facebook bringing its entire workforce into one mega campus formerly occupied by Sun Microsystems. Yes, there will be some upfront fees and revenues collected with the move-in but the long term liability is increased demand on city services with little increase in ongoing sustainable tax revenues.
What is Menlo Park doing? Why asking Facebook for a handout to subsidize low-income housing in one of the most expensive cities in the Bay Area. Facebook is more than obliging. It is truly being a good citizen and why not? It certainly is getting off virtually scott-free compared to actually paying taxes.
The issue is one of unequal and unfair burdens of taxation on different types of industries and sectors in the California economy. This is an antiquated tax code that does not respond to the realities of a new economy and the Bay Area's economic base moving from computer and semi-conductor products to the Internet.
The State of California is fighting to get Amazon to charge sales tax to residents of the state. But compare that tax income, to the revenues that could be generated by the virtual services of local Internet companies.
Facebook is a $500,000,000 company (I put all the zeros in to make a visual point). Why are they, and Linkedin, Groupon, Yelp, Zynga, and others not paying tax on their virtual revenues as Sun did on their computers and Apple does now on its iPhone, iPad and iPod?
The law needs to change and now. How ridiculous that a city is reduced to begging for a handout from a company. Let Facebook hire its own fire department, police force, street maintenance workers.