San Francisco supervisors approve 6-year break on stock-option taxes 

Tech startups were offered some relief Tuesday with a six-year tax break on stock options if they go public.

The fact that The City’s 1.5 percent payroll tax also applies to stock options when a company goes public was recently thrust into the spotlight.

As the Board of Supervisors was considering a tax break for the mid-Market Street area to keep Twitter from leaving town, other tech companies such as social-network gaming company Zynga said it, too, was concerned about the cost of doing business in The City.

If Zynga goes public, then it will be taxed on its stock options.

To address those concerns, the Board of Supervisors approved legislation in a 7-3 vote Tuesday providing a tax break to companies that go public. The tax break would kick in after $750,000 in taxes is paid on the stock options.

Supervisors Mark Farrell, Carmen Chu and Sean Elsbernd opposed the legislation. Supervisor David Campos was absent.

Tuesday’s vote is the latest effort by The City to offer tax breaks to certain businesses to keep them from leaving San Francisco. Less than a dozen companies are poised to benefit if they decide to go public. The tax break expires in December 2017.

Zynga has committed to keeping its home base in San Francisco with the stock option exemption.

Meanwhile, city officials are considering a major overhaul in how The City taxes businesses for the November 2012 ballot, the details of which have yet to be determined.

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