San Francisco Bites the Hand that Feeds

Twitter and Zynga are threatening to relocate elsewhere if San Francisco imposes a new tax on stock options.

"San Francisco taxes startups like no other city in the world," says Michael Arrington of TechCrunch. Not only is there a 1.5 percent payroll tax, but the city also is trying to tax stock option gains. Some argue that level of taxation actually can chew up most of the money any startup might raise in an initial public offering.

Twitter, Zynga and other startups are threatening to leave the city unless the taxes are waived for a period of time. The stock option tax appears to be the biggest issue.

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