This article is poorly written, and written by somebody who doesn’t understand the difference between property tax and business profit tax. After reading it, I have no idea if Apple pays full property tax, or if the city was dumb enough to give them an incentive. And unless this city has a payroll tax, any discussion of off-shore accounts etc is moot, as far as this mayor is concerned.
The money quote from the mayor:
“Chang is now working on proposals for a business employer tax that would make companies with more than 100 workers pay $1,000 per employee.”
Great plan.
Layoffs. Fewer employees with less income, less consumption, less sales tax. Higher unemployment, higher unemployment benefits.
"California economics."
“Chang is now working on proposals for a business employer tax that would make companies with more than 100 workers pay $1,000 per employee.”
Cupertino is just trying to extend the period of time when they can spend other people’s money!
Apple pays the full freight property taxes. They were given no incentive to remain in Cupertino and in fact were enticed by quite a few other states with offers of ZERO property and state income taxes to move. They ignored them, preferring to stay in California, instead of forcing their employees to move.
Under Proposition 13, in California, that property tax on that building will be 1% of its assessed value. We know it is costing Apple about $2.8 billion to build plus the cost of the land acquisition which at the moment i don't recall. There is 155 acres on the campus, so pull a figure of $60,000 per acre out of thin air gives us with costs about $10 million, add improved buildings at another $130 million for HP's old campus, and let's round it all to $3 billion assessed valuation. Prop 13 limits property taxes to 1% of the value, so every year the local government will get $30,000,000 in property taxes, plus allowed assessments over and above that, usually about 30% extra added to the tax bill in "ad valorem fees." Call it $39 million per year. So, in just ten years, the local governments would get a $390 million.
Another thing this idiot mayor is missing is that Cupertino has an 8.75% Sales Tax, of which only 8% is the state portion. That means when Apple furnishes that building with new fixtures, Cupertino will be getting 0.75% of the sales tax on all those purchases or equipment put into service. They should be getting that on all the building materials being put into that building as well.
Rule of thumb is that labor and fees are 50% of the cost of any project. Ergo, building materials on a $2.8 billion building project would be $1.4 Billion. Let's apply a little sales tax math to that figure: there's about $10 million of the $100,000,000 right there.
Cupertino has a city Income Tax of 6%. . . which is applied to anyone working in the city. Apple estimates that it will employ 14,000 workers at the headquarters plus 2,600 more at 1 Infinite Loop, the old headquarters building, for a total of 16,600 employees each earning, again a wild assed guess, more than $100,000 per year which we will use as an average number for our example. Oh, my. Cupertino receives almost $100,000,000 in INCOME TAXES from the employees of Apple which they will lose if they chase Apple away by demanding too much.