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S.F. Mayor Says Tax Plan Would Create 10,000 Tech Jobs

San Francisco Mayor Edwin Lee said his proposal to ease business taxes, if approved by voters, would bring 10,000 technology jobs to the city in the next two years.

The proposition on next month’s ballot would phase out the payroll levy paid by companies and replace it with a tax on sales. That would expand on a policy that has spurred technology companies including Twitter Inc. to move to, or remain in, California’s fourth-largest city, Lee said.

“When we engaged companies, they wanted additional assurances that they can be here for the long term and that’s why we have Proposition E, which is a permanent fix,” Lee, 60, said today in an interview in the San Francisco office of Bloomberg News.

The city’s lawmakers last year approved a temporary, six-year payroll-tax exclusion for companies that opened offices in the Central Market and Tenderloin areas of San Francisco, long plagued by crime and homelessness. Critics of the payroll tax say it hinders hiring and punishes companies for growing.

“We focused a good portion of efforts on technology because we knew that they wanted to create jobs and they just wanted to get some incentives from the city to be able to do so,” Lee said.

San Francisco is the only city in California with a payroll tax. It’s levied at a rate of 1.5 percent against a company’s taxable payroll.

The new tax, with rates ranging from 0.075 percent to 0.650 percent, would vary depending on the type of business and the amount of gross receipts from its activity in the city, and would be phased-in over five years starting in 2014, according to the measure language. Companies with sales of less than $1 million a year would be exempt.

Lee said he hasn’t had to actively recruit technology companies to move to San Francisco because their employees want to be in the city for its diversity and culture.

Lee last year became the first Chinese-American elected to the city’s top office, after serving as interim mayor succeeding Gavin Newsom, who stepped down to serve as California’s lieutenant governor.

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