Cupertino has awarded nearly $ 70 million in tax benefits to Apple over the past 20 years

Cupertino has awarded nearly $ 70 million in tax benefits to Apple over the past 20 years

Hosting one of the largest companies in the world should be a lucrative business for any self-respecting city, but the operation also has its sometimes very high costs, as this report from Bloomberg.

According to the matter, the city of Cupertino (California) has since 1998 granted an accumulated value of around $ 70 million Apple on tax benefits. At first glance, the value may even seem small in the face of Ma's economic power, but it should be remembered that Cupertino is a tiny city with less than 60,000 inhabitants, that is, we are not talking about any "bullet change" for the Municipality.

The reason for Apple's astronomical payments dates back to the late 1990s, when Ma was experiencing the worst crisis in her history and Steve Jobs returned from exile to save the company and bring it to its most glorious time. At the time, Jobs struck a tax-relief deal with Cupertino City Hall that would provide some security to Apple's fragile financial state while ensuring that the company would stay in the city for the foreseeable future.

What Cupertino could not imagine was that years later, Apple would scale the tables to eventually become a $ 1,000,000,000 company. Ma's metric growth has translated, proportionally, into greater tax benefits for the company last year, the city granted about $ 6 million Apple, and the value tends to increase until at least 2033, when contracts should be renegotiated.

Under the terms of the current agreement maintained by Apple and the city, there is a 35% pass-through of taxes generated from Ma's product sales to companies across California, as well as 35% of taxes generated from total sales of Apple. two Apple stores in Cupertino. Previously that rate was 50%, but both parties renegotiated the deal so that the Apple Park building could be released.

Obviously, not everyone is satisfied with this cash flow being subsidized to Apple. As Executive Greg LeRoy, Director of the Financial Supervisory Body Good Jobs First, defines:

I challenge anyone who tries to argue that this $ 70 million was critical to Apple's success. This is an unexpected source of income that Apple realized it could draw from its host city.

The city of Cupertino, for its part, fears that a termination of the deal will lead to reprisals by Apple. Of course, it is almost impossible for us to see the company leave the city after the billion-dollar building of Apple Park, but the company could, for example, redirect money from its sales elsewhere in the event of a disagreement that would be disastrous for Cupertino.

How did you put the BloombergIt is undeniable that Apple's presence (and its growth) has helped the city grow in the last 20 years, but, on the other hand, these company benefits represent a lot of money that Cupertino could have used to devote to his citizens and other companies. local. The balance, as always, is very fragile.

via Cult of Mac