William Gallagher
Apple's home city of Cupertino faces losing almost $60 million after California authorities declare that the company's tax should be shared across the state.
In a move similar in principle to how the EU retrospectively sought to fine Apple over its tax agreement with Ireland, the California Department of Tax and Fee Administration (CDTFA) is changing the company's arrangement with Cupertino. Since 1998, Apple has declared all of its online sales made in California as having taken place in Cupertino.
As first spotted by the San Jose Spotlight, this means that of Apple's 7.25% sales tax, the local 1% portion goes to the city. Then under the same deal, Cupertino actually returns approximately one third of this revenue to Apple.
Consequently the benefit to Apple is clear, but also Cupertino profits because it sees significantly greater sales tax revenue than it otherwise might.
"The CDTFA has done an audit of one of our big taxpayers and has identified that there are dollars being allocated improperly," Cupertino Assistant City Manager Matt Morley told the publication, "and through that audit they are asking for that process to be corrected."
"The city obviously isn't happy with this and we don't believe the CDTFA is on base," continued Morley.
Reportedly, the CDTFA's state tax officials have concluded that the city of Cupertino owes it $56.5 million. This is for the period from April 2021 to June 2023, though it's not clear how those dates were determined.
At the same time, the tax officials are said to have decided that Apple must reimburse the state $20 million. This figure would then be reallocated to other areas of the state.
The impact on Cupertino could be significant, but the city is appealing the ruling — and the appeal could take anywhere from seven to ten years. Even so, the Cupertino City Council has agreed to set aside the $56.5 million to prepare for the potential future loss.
Should the CDTFA prevail, Cupertino's Morley said non-essential city services could be reduced or even cut. Annually, Cupertino would see a 73% drop in sales tax revenues, and would face having to cut almost a quarter of its operational costs.
It's important to note that the San Jose Spotlight says Apple has not officially been named in the present discussions. But it also says that sources among the city leaders have indicated that the company concerned is Apple, and others "have slipped out such confidential information" during a public meeting.
Apple has not commented.
Christine McKee
AppleInsider Staff
Chip Loder
Malcolm Owen
21 Comments
This doesn't make sense. Sales tax varies in every country/city depending on the local sales tax being added to support the local county/city. Apple, like any other company, is subject to state and local taxes so why is CA trying to take part of the local tax? Is this being done for every company in CA? If so, then it should not be included in the sales tax calculation but in corporate tax calculations. Local schools, utilities and public businesses (police, fire, etc.) depend on the local sale tax. Spreading it out among the entire state might sound like a good idea but I bet a high percentage of that money would go to the cities that need it the least (or the rich cities that vote against local sales tax increases--look at some of CA's cities with the most money and their streets suck!).
There’s likely some information missing here, but a portion of sales tax going back to a company? That’s fishy.
It's sad but unsurprising to see people squabble about how legalized theft (i.e., taxation) is distributed. When somebody lifts your wallet and steals something from it, it's considered theft that is prohibited by law. But when the government says it will do the same for the greater good, somehow that's A-OK. Pro-tax people will come out of the woodwork citing roads, bridges, schools and all manner of glorious things legalized theft has funded and is continuing to fund. But all those things, however good, still are paid for with stolen money. "Stolen" in that it was taken without giving the tax payer a choice not to pay it.
Regardless of the arguable need for taxation, it's still legalized theft. No matter how much good it does, theft is theft. As such, everybody in the business of redistributing the stolen loot is "a little shady." That remains true even when you consider that some theft via taxation is deemed necessary for our current lawless and loveless society to survive. Despite the need, taxation is still "theft." I repeat this refrain only because most people refuse to call it what it actually is.
So let's get off the high horses and admit taxation is theft so that "shady" and "criminal" and "embezzle" terms can be thrown in the garbage where they belong.
Money doesn't typically solve problems. It more often creates them. That's yet another thing most people still haven't figured out.
Real change begins in the human heart, doing things for the good of one's fellow man without being compelled by force. Only then will you see meaningful change in society. For now, society fights fire with fire, calls one type of theft bad and another type of theft good. It's a highly imperfect system we have, but most people brush it off by saying, "no society is perfect." Of course, that's just a cover to maintain the status quo. And so the infighting over stolen loot continues.
Deep breath.
Now we move on to the next news story.