Comment by 35208654 | Hacker News Reader

Comment by 35208654 | Hacker News Reader

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>The agreement outlines that 35% of that local portion that is returned to Cupertino is handed by the city to Apple—to the tune of $107.7 million since 1998. California took notice and launched an audit.

So $4m a year?

>The Adopted Budget is budgeted at $130,587,325 and is funded by $130,244,157 in revenue.

So taxpayers are “missing out” on 3% of their budget in exchange for 65% of 1% of Apple’s online sales in California. How much does the city get in return for this deal? And, wouldn’t Apple just choose somewhere else to direct the funds otherwise?

Apple has to choose where to allocate the tax funds. That’s the law. That Cupertino offered the best deal for them is a quirk of the law, not a shady deal by Apple. As well: their headquarters are located there. It’s not like they shopped around for the best kickback deal by allocating it to some little town on the coast.

> Cupertino is facing a 73% reduction in local tax revenue. California is taking issue with the agreement and examining the extent to which the California purchases attributed to Cupertino are proper.

Err, what? There’s some math here there doesn’t add up. Did the article mean to say that Apple has contributed $107m per year since 1998 — so $2.6b? If so, Cupertino is facing a 96% reduction not 73%.

I must be missing something here. Could someone point me in the direction of the right math?

> Did the article mean to say that Apple has contributed $107m per year since 1998

No, Apple has received $107 million rebated from Cupertino since 1998.

Cupertino has retained (since the rebate is 35% of the total, so the total is 65/35 of the rebate) $198 million since 1998, and initially received $305 million.

But while that is probably increasing over time, not sure where the 73% comes from, as that’s ~$94 million/year.

Hmm… More research:

It’s 73% of sales tax revenue, not total city revenue. Cupertino currently gets $42.1 million per year in sales tax revenue, the deal going away is expected to drop it to $11.4 million per year. (And there are expected to be fines and returns of past funds, on top of that.)

https://appleinsider.com/articles/23/04/13/california-wants-...

From the linked article[0] in the first paragraph:

> Although Apple isn’t named in the city staff report, the company is Cupertino’s largest source of sales tax revenue. According to the audit, revenue will drop to $11.4 million in the current fiscal year from $42.1 million, and Cupertino may be required to return money to the state that it has received in previous years. The city may have to cut staff and other spending to cover the shortfall.

So I think the 73% number reflects whatever chagnes CDFTA are enforcing to take some of the online sales tax revenue away from Cupertino. Also from that other article, the $107m number appears to reflect total payments from Cupertino to Apple since 1998

> The company remits all sales tax it receives to the state tax department, which then allocates the local portion to Cupertino. The city passes on 35% of its total to Apple. Those payments to Apple have added up to $107.7 million since 1998, according to city payment records examined by Bloomberg Tax.

But TFA is very unclear about the specifics of the state-city-company revenue sharing...

[0]: https://news.bloomberglaw.com/daily-tax-report-state/apples-...

> That Cupertino offered the best deal for them is a quirk of the law, not a shady deal by Apple

These two things aren't incompatible with each other.

> So $4m a year?

A $2tn company shouldn't be concerned with losing out on $4m.

No need to defend a $2tn company. It's okay to right-size this error.

I may argue that the $2t became a $2t company because it cared about the 0.01% rounding errors it faced / faces in every part of it's operations.

Where that lands ethically, morally or legally is up to interpretation by the relevant people and jurisdictions.

> Where that lands ethically, morally or legally is up to interpretation

Maybe if this was Alice in Wonderland. Apple knows the law and they hire responsible people to balance their books. If they prioritize fixing those rounding errors above the law, that is an objective failure. It is about as morally, ethically or legally interpretable as killing a politician you disagree with.

This is a bad law. Tax revenue from online sales should be based on shipping address.

Wait until Cupertino hears about their secret hedge fund in Reno, NV

> And, wouldn’t Apple just choose somewhere else to direct the funds otherwise?

Ding! nailed it.

These sweetheart deals exist because they know they are in competition with others and just want to capture a piece of it or risk losing it all.

Then why didn't some little podunk town elsewhere in California work out a deal more lucrative to Apple than what Cupertino offered? Clearly this has a lot to do with Apple's HQ location. The actual money is just a pittance.

Because that would have fucked up Steve's commute. Apple HQ wasn't picked based on how much they could drag out of the local government. Their lawyers, however, were.

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