“A recent Bloomberg report unveiled how Apple and other retailers have dozens of long-standing agreements with California cities that divert sales tax revenue back to the companies,” The Bloomberg Editorial Board writes. “The cities made these deals, officials say, to lure the firms or make sure they stayed put.”
“The question is whether [these tax deals] work as they should — that is, case by case, are they well-designed to make those cities better off?” The Bloomberg Editorial Board writes. “Right now, taxpayers often have little way to judge. Details of these tax-rebate agreements are typically hard to find, and much of what’s available omits basic details.”
“States can help with audit resources — Texas has instituted an audit program for property-tax breaks — and with enforcement. They can also encourage cities to cooperate with each other in attracting investment, thereby keeping tax-and-subsidy competition within bounds,” The Bloomberg Editorial Board writes. “But as long as cities choose to compete, officials would do well to give voters an account of why the deals they’re cutting work for ordinary taxpayers.”
Read more in the full article here.
MacDailyNews Take: Full transparency seems logical, even though it would likely provide information that less honest people would cherry pick to use to support their point of view and attack the other.
One issue might be the utter complexity of calculating exactly what having Apple in Cupertino delivers to the cities in terms of taxes and sales (Apple employees buy houses, furniture, meals, food, gas, etc. and pay sales tax, school tax, gas tax, income tax, etc.); it’s impossible to quantify and therefore state accurately.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
” Apple employees buy houses, furniture, meals, food, gas, etc. and pay sales tax, school tax, gas tax, income tax, etc.”
My employees do all those things too, but I don’t get any subsidy. Any preferential tax treatment should be illegal. All businesses, including Apple, should be playing by the same rules.
Do you employ as many people in your community as Apple does in Cupertino? If so, you need to do some negotiating.
It’s called negotiation. They had the power and size as leverage. Business be business.
Notice that the poor and the dispossessed are never at the negotiating table.
You must not know how negotiating works. While it’s unfortunate that not everyone gets a seat at the negotiating table, the fact is, successful negotiating requires leverage. If you are poor and dispossessed what leverage do you have? Right, so even if they were at the negotiating table, they’d only be paid lip service since they have no leverage.
For every dollar of tax giveaways, that’s a dollar that doesn’t go into the pockets of teachers, firemen, policemen, infrastructure repairs, and investments vital to society, but DOES go into the pockets of the uber rich, who, sadly, will NEVER have ENOUGH money.
Jltnoi, that is a common meme but it isn’t true. The tax breaks are rebates from the revenues collected from an especially high-dollar taxpayer. If less valuable businesses were occupying the space or it was vacant, the city would be collecting less total money (without rebates) than it is from Apple (with rebates). In the case of their new site in Texas, Apple will be paying the county millions even after the rebates while the current owner paid $14 last year, and that is not a misprint.
A less valuable company would be paying less in taxes, true. Why are either entitled to a rebate?
The wealthy have more to protect, so they get a disproportionate amount of service from police, military, infrastructure, etc.
It’s corporate welfare, plain and simple.
Yeah, why are some taxes regressive and some progressive?
Everything is complex, nothing is ever “plain and simple”.
Now you are being deliberately obtuse, applecynic. Nobody is EVER “entitled” to a rebate and nobody claimed they were. Sometimes, however, giving a $50 rebate on $100 of revenue is a better deal for a local government than getting $45 in revenue with no rebate.
$50 > $45, I believe. That’s why Apple doesn’t worry about market share. iPhones make more money than Android, despite having a much lower unit sale volume, because each sale makes more money. Rebates make sense for local governments because big companies are worth so much more than small ones that they can still generate more revenue at a lower effective tax rate. To repeat the Texas example, $1,500,000.00 less a $1,000,000.00 rebate is still a lot more than $14.00.
I was being deliberately obtuse to highlight the absurdity of a rebate.
Why do you need tax incentive to hire people who will make you money? So they can pay a part of your taxes for you?
I for one, like the EU rule. Tax what you want, but for everybody the same per category.
While I believe the people of California should be able to have this information, I’m pretty sure once they find out we enforce this in Texas they will change their minds….
Are the tax breaks making cities better off? Of course, always focus on whether Government is gaining and growing more powerful… How about:
A. The cities cut a deal – live with it
B. Once the deal expires, make a new one.
How about an article that focuses on how many more jobs were created and companies that have stayed due to the tax cuts? How many lives have been enriched due to the tax cuts?
Never talk about individual liberties or helping businesses (which also means their employees they can now employ more of), being better off, just poor old government needing more of what you have. Ugh…
“Of course” it makes cities better off? That’s pretty funny and gives new meaning to the word ridiculous..
Show me some proof it works. Show me the money. Real proof the economic benefits exceed the cost borne by taxpayers. Every dollar company X does not pay has to be paid by me and you.
My favorite when the politicians are selling their BS to the public is when they say these $82 million in benefits/subsidies/tax eliminated will result in six times that amount of new economic activity. PROVE IT.
Our city/county gave away $32 million of taxpayer money to one company already leading their industry in profits. They claimed job creation, economic benfits, etc. Promised 350 new jobs in year one. 112 was the actual number. OF the 112, 78 were high paying, highly skilled positions that people from the outside were brought in for. Of the 78, 69 choose to live outside of the city or county. No state income tax so no money there.
Point being it is complete BS and I defy you to produce empirical research proving otherwise. Empirical research means provable facts, not statements from politicians, corporate execs or studies from economists withut full disclosure of who is paying their salaries.
Socialism and corporate welfare at its finest. And you thought Bernie and Ocasio were the problem … How naive.
The GAVE them 32 million or gave them 32 million in tax breaks or taxes breaks and incentives??
Was this a ‘green’ industry?
What city? Is it already rampant with corruption??
I think different situations exist for different types of business.
I’m betting that it was $32 million in rebates, which means that the company had brought at least $32 in taxable activity to the community, counting just taxes they owed and not taxes collected from their employees, contractors, etc. if they didn’t owe that much in taxes, they weren’t getting that much in rebates.
Also, most of these deals are contingent on meeting predefined goals. If they promised 350 jobs but only created 112, the should not have received the full rebate. If they did, it was a bad deal that can be blamed on the local elected officials, not the company.
I am not wild about these deals. I think they bring unmanaged growth that makes places like the Bay Area, Seattle, and Austin much less pleasant places to live. That does not make them giveaways. Most of them do, over time, increase public revenues. Whether it is enough to cure the headaches of growth is a separate question.
And how about the lives enriched for the war we fight to protect US business interests?
But how about an even easier question. How about applying the law equitably? Tax law is still law.
Apple doesn’t need it, they have flushed 300 billion dollars down the drain with buybacks…
Rather, I think of dividends, not buybacks, to be as flushing money down the drain.
Your comment reflects a complete lack of intelligence and understanding of basic obligations of a business to its owners. You give moron haters a reason to exist.
The time to ask these question is when a municipality makes the deal to give your tax dollars away.
There is almost zero empirical proof any of the claimed economic benefits are actually created. It’s the biggest political scam there is.
Profitable companies should not receive taxpayer subsidies.
The uber wealthy just love Socialism when it benefits themselves. Amazon abused Socialism by enriching itself, for example, by paying zero taxes last year to avoid funding the needed social safety net like food stamps all the while cynically underpaying its employees who had to go on them. That’s modern Capitalistic practice that is trying to return US governance to huge wealth disparities and breadlines that Capitalists ushered in during the Gilded Age for which Social Security was instituted as a needed remedy.
Actually Social Security was enacted because of the Great Depression and over 30 years AFTER the Gilded Age.
Also the Gilded age was a period of higher wages in America than most of the developed world. Yes, there was rampant poverty but that was mainly from the hordes of immigrants coming here to better their lives.
Sound familiar??
(and yes, I know….history is a bitch)