In 2011, San Francisco agreed to exempt Twitter from the city's payroll taxes on new hires in exchange for charitable contributions like, say, philanthropic retweets. The value of the tax break was estimated to be worth $22 million over six years. But according to the San Francisco Chronicle, the tax break could be worth more than $55 million after the company's IPO.

That's almost as much as much money as Twitter lost in the third quarter of this year.

As a back-of-the-envelope calculation from the Chronicle shows:

The city could forgo an additional $34 million in revenue over the next few years just from stock grants that can be exercised and sold after the company’s public offering, according to a rough calculation done in partnership with Jim McHale, a certified public accountant who operates the San Francisco firm James J. McHale, CPA.

That’s on top of the $22 million estimate produced several years ago in an analysis for the San Francisco Board of Supervisors, while the payroll tax issue was under debate. That prediction didn’t include the larger impact of a possible stock offering, only examining the effect from employee salaries, said Fred Brousseau, principal at Harvey Rose Associates, a budget analysis firm under contract with the supervisors.

Without the so-called "Twitter tax break," which was given to six other tech companies in an attempt to keep them in San Francisco and revitalize the Mid-Market neighborhood, the city could have taxed both outstanding stock options and restricted stock units:

Twitter has 42.7 million outstanding stock options, with a weighted-average exercise price of $1.84 per share. It provided employees an additional 85.7 million shares of restricted stock units. (See page 59 on the S-1.)

The city previously treated both as taxable compensation at 1.5 percent (and still would in certain circumstances, but none that appear to apply to Twitter).

Why secede from government when it's so willing to scratch your back?

[Image via Getty]