Cupertino Delays Tax Change in Face of Apple’s Opposition

CUPERTINO, Calif. (CN) - Apple’s opposition to Cupertino’s attempt to raise revenue by changing up the manner in which they tax local businesses proved successful Tuesday night.

The Cupertino City Council voted unanimously to delay putting a wholesale change to its business license tax on the ballot until at least 2020, opting for a less adversarial approach with the company that employs two-thirds of the city’s workers.

“This is an example of a true public/private partnership,” said Mayor Darcy Paul right before the vote.

The council was considering letting voters decide to alter the tax code to levy taxes according to employee count rather than square footage, as a means to enhance revenues to pay for transportation projects.

Proponents of the business license tax change say the money is needed to alleviate traffic congestion and facilitate other transportation improvements in a community and region increasingly afflicted by traffic jams and other problems.

“We need to make these transportation solutions happen faster,” said Pete Heller, a 30-year resident during the city council meeting. “We do need a ballot measure to signal to other cities that we are serious about this issue and that we are ready to get going.”

Detractors say the tax would unnecessarily punish the city’s biggest employer and could cause the tech giant to seek greener pastures in cities more with more amenable tax structures which would be a fatal blow to the city’s revenue.

“Large job creators have choices when it comes to where they locate or relocate their employees,” said Matthew Mahood, president of the Silicon Valley Organization, a business advocacy group.

For its part, Apple urged the council to delay the ballot measure to at least 2020, while pledging its participation in developing and implementing a transportation solution.

“We’re ready to meet next week,” said Mike Foalkes, Apple’s director of state and local government affairs. “I think we can come up with forward thinking and creative solutions.”

Ultimately, the council agreed to defer the ballot measure until 2020 and work closely with Apple and other businesses to come up with solutions in the meantime.

“With the brilliant minds at Apple and the emergence of new technology, we can take the time necessary to come up with a spending plan and come up with some really good solutions,” said councilwoman Savita Vaidhyanathan.

City staff said they modeled their tax alteration policy on one developed by Mountain View, which will put a measure on the ballot in November asking voters to decide whether to enact a similar change to the business tax structure.

In Mountain View, Google approved of the city’s policy.

But Cupertino City Council members pointed out that Mountain View has a specific project attached to the ballot — an automated guideway transit system, which features autonomous vehicles travelling on an elevated highway.

Cupertino, on the other hand, started later and has no specific transportation projects attached to the proposed ballot measure. It could be strategic, as passing a ballot measure for general purpose dollars only needs a majority of voters to pass, while a ballot measure for specific use requires a two-thirds majority.

The city has conducted polling on the issue and slightly more residents support a specific use proposal, said Jacqui Gusman, deputy city manager.

Many of the nearly 20 speakers who participated in public comment on the issue said the lack of a concrete project and an associated spending plan was a reason to delay.

The city appeared eager to collaborate with Apple, a departure to some other notable business tax alteration fights at the city level, including the fracas between the Seattle City Council and companies like Amazon.

Seattle initially agreed to pass a per employee business tax of $540 per year, but after intense pressure from Amazon and other companies, the council agreed to reduce it to $275. The additional revenue is intended to help alleviate Seattle’s homeless problem, according to the city council.

While Cupertino’s city council agreed to defer any ballot measure to 2020, all four city council members expressed support for projects that alleviate worsening traffic conditions in Cupertino and the region in general.

“I wouldn’t favor putting the policy on the ballot in 2018, but I wouldn’t favor putting it off forever,” said Councilman Steven Scharf.

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