Op-Ed: Cupertino City Council Should Hold Apple Corporation Financially Accountable

Cupertino, which lies right in the heart of Silicon Valley, is known for its high-achieving public schools and great cultural diversity. But above all else, we unequivocally associate Cupertino with Apple Corporation, which has long called the city home.

It’s impossible to drive through the city without encountering a dozen Apple facilities, each conveniently numbered to emphasize their ubiquity. While we have long given great deference to one of the richest corporations in the world—Apple provides about 23,000 jobs based in this city alone—Cupertino must finally hold the tech giant to higher ethical and financial standards.

Tara Sreekrishnan

This Tuesday, the City Council will consider a ballot measure that would place a local employee headcount tax on companies that employ more than 100 employees. The tax would generate roughly $10 million a year and would affect a handful of businesses vis-à-vis a tiered levy, with only Apple falling within the highest bracket—thus sparing the 3,000-plus small businesses comprising the lifeblood of the city. While some may spin this as economic radicalism, 71 percent of Cupertinans are ready to back greater taxes on Apple, according to a survey commissioned by the city.

And there’s a reason cities throughout the Bay Area, including San Francisco, Sunnyvale, San Bruno, San Jose and Mountain View have already imposed or considered similar measures. As President Donald Trump continues to cut corporate federal income tax and slash things like housing and transportation subsidies, the struggle to match job growth with respective public services has become increasingly difficult.

The reality is that along with job growth and economic prosperity, Apple’s ascendance has worsened traffic, upped living expenses and placed severe pressure on Cupertino’s aging infrastructure. Cupertino median home prices have reached an apex of  $2.3 million, a jump of more than $1 million from just five years ago, while traffic congestion in the Bay Area has gone up by 80 percent since 2008.

Meanwhile, Apple saw record profits of $20 billion for their most recent fiscal quarter, all while benefiting from publicly funded projects like roads, schools and the massive sales tax rebate the company enjoys from the city of Cupertino. The city continues to return 35 percent of total sales taxes collected back to one of the richest corporations in the world, a 30-year-old remnant from Apple’s early, financially precarious years.

Granted, we still need to tinker with the language of the ballot measure—for example, we need to specify an allocation for the funds generated by the proposed tax. But the intention is sound and the revenue sorely needed.

This is not about demonizing Apple, but rather expecting the company to be a good corporate citizen and responsible steward of its vast resources. We have become too complacent—like, say, when it comes to the rebates we provide or our tolerance of the company’s brazen tax avoidance that allowed it to stash away $250 billion overseas. The advent of Trump’s tax cuts and repatriation incentives has led to more money going back to Apple’s wealthiest investors instead of its workers or the community it calls home.

Our federal government has ultimately decided that the needs of big corporations far exceed those of ordinary people, yet Cupertino has a unique opportunity to do the right thing here. Luckily, Apple has expressed interest in working with the city to pursue a new headcount tax for the 2018 or 2019 ballot. Some are even hopeful that Apple could partner with the city on various civic projects that would be beneficial to all parties.

This still means that the city’s residents must be attentive and vocal during such a pivotal moment. The longer we wait, the more dire our city’s circumstances will become.

Tara Sreekrishnan is a candidate for Cupertino City Council. Opinions  are the author’s own and do not necessarily reflect those of San Jose Inside. Send op-ed pitches to [email protected].

22 Comments

  1. There are several issues not addressed in this article.

    1) The author herself mentions soaring real estate prices. This should be leading to increased property tax revenue for the city (it would be even more if taxes were on reassessed values, but that’s a different story). Where is this increased revenue going? What measures are being taken to solve the housing crisis? Where are the public transit proposals, and zoning improvements to build denser mixed-use developments? Where the money will go is huge deal, not a minor detail to figure out later.

    2) Even though the author says she doesn’t mean to demonize Apple, it seems like exactly what the proposal is doing… threatening it with a punitive tax for daring to be a successful business providing tens of thousands of high paying jobs to people in the area. Even if companies can easily absorb the hit, a tax on employees still discourages them from hiring in the area. High paying full time jobs with benefits are not something a city should want to discourage! It’s a good thing when the employee residents have benefits like health insurance, and money to spend at other local businesses to spread throughout the local economy.

    Instead, we should be taxing things we want less of, like environmentally wasteful sprawl and congested road use, instead of things we want more of. For example, I think a tax on people who drive themselves to work instead of taking buses or other transit is a far better way to deal with rush hour congestion than taxing employment itself.

    I think that the author’s other suggested approach is much more intriguing… engaging directly with Apple on mutually beneficial projects to their shared home. Now is the time for creative and sustainable solutions from the city to the dire problems we face in the bay. They will get us a lot further than politically expedient corporate-bashing.

    • Well, well stated and quite rational, unlike the author of the article who ignores all the facts you’ve stated and instead is wrapped up in an ideology which states that if someone is prospering someone else must be suffering.

      The truth is, Cupertino has boomed thanks to companies like Apple. The schools are some of the highest rated in the Bay Area. Public services look great to me, and my personal net worth – despite not working for ‘greedy’ Apple – has skyrocketed thanks to the desirable real estate and environment. When I move from Cupertino to a lower tax environment I will have profited on the sale of my house tenfold.

      Of course people will clamor around a ballot measure which sounds like it has no repercussions — just skim some off the top from Apple, no one is harmed and they are cash rich beyond remand. Well, they didn’t get that way by being stupid, or by writing checks. What do you think Apple will do? Simple, they’ll start closing those offices and moving people to the campus they’re building in San Jose. Now, that doesn’t mean the HQ will move or it’s a second HQ, but they can certainly move headcount to avoid taxes and *will*.

      You’re exactly right too — instead of the city council working with Apple to mutually benefit their “shared home” (well stated), they have to go with semi-punitive measures on a company that is prosperous because they want to enrich the city’s coffers. Well, again.. I don’t see Cupertino suffering, and give a California politician a dollar and like one of those souvenir coin presses they’ll just turn it into a crushed penny. What misguided thinking.

    • Please read in more detail friend. How is it a threat if Apple has agreed to work with the city? Also we can walk and chew gum at the same time. We can use corporate profits to provide public services which provide for ordinary workers in the area … while simultaneously working with Apple. If one of the wealthiest corporations in the world, well known for its tax avoidance among other huge ethical issues, is unwilling to suffer a small tax, then why is it the city’s fault?

  2. Seattle just tried to do that with Amazon. Did not go over well. Even after the city council voted to do it, they reversed themselves a month later.

  3. Unbelievably ignorant. Remember how well this worked in Seattle? You should be thankful Apple is here, not trying to redistribute their money. As the old saying goes “don’t bite the hand that feeds you”.

    • See above. The true story in Seattle was that Amazon and Starbucks, as well as other large affected businesses, banded together in staunch opposition because they did not want to lose money. There was a campaign fund created not just to oppose the new ordinance, but also to basically threaten councilmembers into repealing it. No reasonable governing body would repeal something a month after passing it, unless they were concerned about being reelected. They would have otherwise waited to see if the policy worked or not. Please actually read what happened there, instead of making blind comparisons.

      • And your point is what? That it cannot happen in Cupertino?
        I never understand why some people feel entitled to take other people’s money….

  4. As a long time Cupertino homeowner, I have to say Tara is exactly right. Apple has a enjoyed a free ride here forever -they are not “the hand that feeds us” they are a huge parasite, sucking up all the land and office space, saddling us with traffic nightmares, and paying almost NO taxes to the city. Unlike Google, they don’t even let people tour their new Campus. Cupertino has suffered a lot for the “privilege” of hosting Apple, it’s time for Apple to stop freeloading and pay their share.

    • $22,766,000 of Property Tax Revenue forecast to the city of Cupertino in FY 18/19. Cupertino’s property tax revenue has grown (up from about $10M in 2009/10). The rate of growth is just like the schools, county and fire district. It is about 20% of the city total revenue.

      Sale tax has grown from about $10M in 09/10 to $23M. Apple, Inc. is one of the Top sale tax payers in the city (I suspect the top payer).

      Hotel Tax has grown from $2M in 09/10 to $8M. This has been driven a lot by Apple’s business activities in the city.

      As an side, construction tax was ~$0 in 08/09, peaked at $9M in 13/14 (Apple) and is now back at Zero.

      Apple has been a huge contributor to the City of Cupertino’s massive financial expansion in the last 10 years.

      More can be found in the actual city budget. https://www.cupertino.org/home/showdocument?id=20771

      And PS: The picture of the Apple sign at the old Apple Campus is almost 10 years old. At least visit the campus and get a new picture…preferable at the New campus!

      • Howard, you are right, Apple has been a large tax base for Cupertino. Cupertino is financially stable. Our City Budget is balanced. The tax is being allocated to major transit and/or affordable housing, not normal city services. This is a regional issue caused by a jobs/housing imbalance in Silicon Valley. High-wage job centers can be directly linked to housing inflation. Couple this with lack of transit, and you create major housing, traffic, and environmental issues that work in conjunction. This all comes from irresponsible planning in the region. We are asking for things we should have asked for during approval of these projects.

        I’m sure you know that these regional issues need to be addressed. Big tech companies can be part of the solution.

        And, if you think about it, it would cost Apple more to relocate employees then pay $8,000,000 a year. What Cupertino is asking for is equivalent to 4 extra hours of pay per employee.

        With growing Trump tax cuts, cities are looking at new employee-based tax models. All current councilmembers showed interest in this model – although some think it should happen immediately, and some think the business community should be engaged more. The old square footage model for a business license tax doesn’t adequately relate to city services used. Why are small businesses in Cupertino paying the same as Apple?

        The only concern residents have heard from the business community is they want a specific allocation for the funds. A binding or non-binding allocation of funds would be great. No businesses have said they are afraid of being displaced.

        • Pathetic money grab by a bunch of socialists. What will you do when they decide that YOU have more money than YOU need and vote to take some of it from YOU via additional taxation? Move out of State like so many corporations and retirees are doing?
          Engage your critical thinking, this is a really bad idea once you get beyond the FREE MONEY punch line.

  5. The author sounds like another deluded politician creating a tangled word salad which amounts to a blind attack on the wrong enemy.

    It’s ridiculous to be demonizing Apple for leasing multiple buildings with their classic unobtrusive design because it is not only more attractive than a tacky Vegas strip but condenses their employees so they have less distance to travel between different branches of their organization. That is smart for Apple to reduce their shuttle trips, and helps traffic. Apple provides their employees with what is arguably the most extensive corporate shuttle bus service on the planet and incentivizes car pooling, walking, and biking to and from work. They have no more interest in leaving their employees in a daily traffic jam than we do, but unlike the region, Apple has actually spent their own money to help fix their transportation impact.

    To clarify: Cupertino grants Apple a reduction in their taxes due to an agreement made by City Council which will last 25 years. It is not unusual for cities to entice large employers with tax incentives as the competition for the new Amazon HQ will attest. The city is fiscally fit and the reduction was bumped up from 50% already.

    Home prices have gone up in thriving metro areas across the globe due to portfolio diversification globally. Canada combatted the issue to protect their locals through a 15% foreign investment tax. There is little political will here to do that because (cynically) creating a perpetual underclass of renters ensures the landlords’ profits. Cupertino’s rental percentage is approaching 40% and continues to rise.

    Cupertino has a traffic problem due to the ‘more for your money’ housing being south and east of the city with those commuters heading north and west up the peninsula. If Cupertino were the center of the traffic problems the traffic pattern would not be directional on both the I-85 and I-280. What this indicates is that Apple is not the cause of the traffic we are seeing. In fact, 25%, the largest chunk, of Cupertino’s employees head to San Jose to work, against the flow pattern. Cupertino is a cut through city for commuters.

    What this tax proposal put forth by some on the Cupertino City Council highlights, is that they, City Council, either approved Apple’s traffic study when they should not have, approved the 2040 General Plan Amendment traffic study when they should not have, or just want to grab some cash from Apple because they think they (Apple) can spare some change before the three council seats are open for November’s election. Two council members are up for re-election and another is trying for a new position.

    Cupertino’s Chamber of Commerce has a great presentation for a regional ballot measure for 2020 which makes much more sense than this blind and shortsighted money grab.

    • You posted the same comment twice. But supposing this is not astroturfing on behalf of the chamber of commerce (it reads just like it), it’s seriously worth considering what sorts of impacts privatization have in general. For example, sure Apple might provide an extensive shuttle service … but that still has a level of impact on farebox recovery for public transit. This is why cities like SF implement a small fee for shuttle handling. It’s not to demonize corporations, but rather to compensate for the levels of increased privatization. It’s about realizing that these corporations can stomach such fines because they create unprecedented wealth … while public services which provide for the poor are constantly in distress.

      • VTA does not deserve a reward for the dreadful service they provide. But by all means head to Cupertino tomorrow and suggest Apple hands over money to be burned by VTA over in San Jose. Cupertino is the South Bay’s forgotten transportation stepchild. At least when Apple spends their money on transportation we know they won’t willfully waste it or give it away. VTA…no way.

        What the Head Tax proponents on City Council want, and they have stated is to force Apple to pay for a study to fix the traffic the peninsula and San Francisco created on the I-85, not even the I-280 which Apple sits on.

        The CCOC has so far been the only rational voice with an alternative plan, to their credit. Blindly taxing Apple and then wishing some magic solution to traffic going to other cities will happen means Cupertino City Council is begging for handouts. The author suggests a City Hall…wow, does the City Council think Apple should buy them a new building after they begin with asking for money for a traffic study for the I-85? What next…

        https://cupertino-chamber.org/wp-content/uploads/Chamber-Transportation-2.0.pdf

  6. It’s ridiculous to be demonizing Apple for leasing multiple buildings with their classic unobtrusive design because it is not only more attractive than a tacky Vegas strip but condenses their employees so they have less distance to travel between different branches of their organization. That is smart for Apple to reduce their shuttle trips, and helps traffic. Apple provides their employees with what is arguably the most extensive corporate shuttle bus service on the planet and incentivizes car pooling, walking, and biking to and from work. They have no more interest in leaving their employees in a daily traffic jam than we do, but unlike the region, Apple has actually spent their own money to help fix their transportation impact.

    To clarify: Cupertino grants Apple a reduction in their taxes due to an agreement made by City Council which will last 25 years. It is not unusual for cities to entice large employers with tax incentives as the competition for the new Amazon HQ will attest. The city is fiscally fit and the reduction was bumped up from 50% already.

    Home prices have gone up in thriving metro areas across the globe due to portfolio diversification globally. Canada combatted the issue to protect their locals through a 15% foreign investment tax. There is little political will here to do that because (cynically) creating a perpetual underclass of renters ensures the landlords’ profits. Cupertino’s rental percentage is approaching 40% and continues to rise.

    Cupertino has a traffic problem due to the ‘more for your money’ housing being south and east of the city with those commuters heading north and west up the peninsula. If Cupertino were the center of the traffic problems the traffic pattern would not be directional on both the I-85 and I-280. What this indicates is that Apple is not the cause of the traffic we are seeing. In fact, 25%, the largest chunk, of Cupertino’s employees head to San Jose to work, against the flow pattern. Cupertino is a cut through city for commuters.

    What this tax proposal put forth by some on the Cupertino City Council highlights, is that they, City Council, either approved Apple’s traffic study when they should not have, approved the 2040 General Plan Amendment traffic study when they should not have, or just want to grab some cash from Apple because they think they (Apple) can spare some change before the three council seats are open for November’s election. Two council members are up for re-election and another is trying for a new position.

    Cupertino’s Chamber of Commerce has a great presentation for a regional ballot measure for 2020 which makes much more sense than this blind and shortsighted money grab.

  7. After the measure passes, every civil servant will get a 15% raise, and city services will remain the same.

    • > After the measure passes, every civil servant will get a 15% raise, and city services will remain the same.

      FREE MONEY!! Y-A-A-A-Y-Y-Y!

      And, when Google drops it’s hook in San Jose, San Jose we’ll be able to do the same.

      I’ll bet we can ask Google for some money “up front” before they move, just so they can demonstrate that they’re going to be good corporate citizens.

  8. As a lifelong Cupertino resident, I completely agree with Tara and fully support her in her run for Cupertino City Council.

    It costs more than what the city receives in home property tax revenue to provide the necessary services residents require. Cities need economic growth and businesses to help subsidize those services. Why should Apple pay less in percentage of their revenue in taxes than other smaller businesses in Cupertino?

    The City of San Jose is in a much tougher position financially as the City of San Jose has historically been a bedroom city for employees that work in surrounding cities. The revenue from home property taxes cannot sustain the required services the city must provide to its residents.

    We have a regional housing, traffic, and environmental crisis that can only be solved if all surrounding cities do their part to resolve our regional challenges. Tara is an extremely bright young woman, and is 100% correct.

  9. Please don’t tax apple, that will interfere with the trickle I have been waiting for since the 80’s…it is coming….down…almost here….wait for it….wait for it….

  10. How about we charge Apple and all others importing H1b workers a tax equal to 150% of the difference between what it pays an H1b import and what it pays a US worker to do the same work?

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