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MacRumors
Apr 27, 2012, 09:33 AM
http://images.macrumors.com/im/macrumorsthreadlogo.gif (http://www.macrumors.com/2012/04/27/apple-expressing-frustration-as-tax-incentives-for-austin-expansion-remain-in-limbo/)


Last month, the State of Texas announced (http://www.macrumors.com/2012/03/09/apple-investing-300-million-in-austin-texas-to-add-3600-more-workers/) that Apple would be making a major expansion of its existing customer support and administrative campus in Austin, investing over $300 million to add 3,600 workers at the site. The move would more than double Apple's workforce in Austin.

http://images.macrumors.com/article-new/2012/04/apple_campus_austin.jpg


Over the past several weeks, a number of governmental agencies, including the State of Texas, Travis County, and the City of Austin have been working on tax break packages designed to secure Apple's commitment to bring the new jobs to Austin. While most of the incentive packages have been approved, the Austin American-Statesman reports (http://www.statesman.com/business/official-apple-deal-in-peril-over-delays-in-2327590.html) that delays in work by Travis County are leaving Apple "frustrated" and the deal "in peril".Dave Porter, senior vice president for economic development at the Greater Austin Chamber of Commerce, said Thursday that Apple's plans to bring its Americas operations center to Austin are up in the air because of the county's continuing deliberations and calls for new conditions on its incentives deal with the company.

"This deal is not done. It remains in peril. And Apple is frustrated," Porter said.Travis County had been expected to offer tax breaks of $5.4-6.4 million as part of the overall incentive package of $35-36 million over 10-15 years, and while Travis County had given initial approval to its portion of the deal earlier this month, it has yet to be finalized.

The delays are related to objections raised by the opponents of the deal, who have claimed that the terms of the deal are too favorable for Apple and could see the company avoid penalties should it fail to meet some of the contract's terms.

Apple had been said to also be considering Phoenix, Arizona as a potential location for its new facilities, and while it seems likely that the company would much prefer to locate the new facility at its existing campus in Austin, it is likely continuing to weigh its options until a final deal for the Austin site is signed.

Article Link: Apple Expressing Frustration as Tax Incentives for Austin Expansion Remain in Limbo (http://www.macrumors.com/2012/04/27/apple-expressing-frustration-as-tax-incentives-for-austin-expansion-remain-in-limbo/)



Ingot
Apr 27, 2012, 09:35 AM
Wow. They will go to Phoenix. Too bad for Texas.

spiney
Apr 27, 2012, 09:43 AM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

polbit
Apr 27, 2012, 09:44 AM
Yes, let's give Apple tax breaks, they really need them.

lee14160
Apr 27, 2012, 09:44 AM
Why is it that some people just don't get it. You have to break an egg to get an. . .

G5isAlive
Apr 27, 2012, 09:46 AM
why is this news?

centauratlas
Apr 27, 2012, 09:46 AM
Exactly. It is competition which is healthy for everyone. You can compete to have someone bring jobs to your area or not and lose it all.

It is just the greedy, power-hungry politicians in Travis County who think they can squeeze something out of Apple.

Wow. They will go to Phoenix. Too bad for Texas.

lee14160
Apr 27, 2012, 09:46 AM
Yes, let's give Apple tax breaks, they really need them.

It's not the tax break it is the work. 3200 jobs is important to the people living in Austin. Get over the hate for Apple.

guzhogi
Apr 27, 2012, 09:46 AM
I honestly wonder why Apple wants/needs the tax breaks? Since I'm not privy to all the information, I'll reserve judgement.

Kyrra
Apr 27, 2012, 09:47 AM
This sounds like standard negotiations to me. Both sides what a deal that is favorable to them, but the customer (Apple) can go else-where to build their campus, so they are threatening to use a different supplier (of land).

----------

I honestly wonder why Apple wants/needs the tax breaks? Since I'm not privy to all the information, I'll reserve judgement.

Because they are saying "We will create thousands of jobs in your city". "After the tax breaks go away, you'll get lots of money from us."

gotluck
Apr 27, 2012, 09:48 AM
Texas is in a better economic position than much of the US right now. Maybe they don't need to bend over for Apple?

applesith
Apr 27, 2012, 09:49 AM
Not giving the breaks, then Apple should go somewhere else and take those jobs with them. Hate all you want. Apple can expand because of all the money it makes.

bad03xtreme
Apr 27, 2012, 09:49 AM
Money talks, bull$#$+ walks...

Bluesdealer
Apr 27, 2012, 09:50 AM
It is supposedly the "second Silicon Valley," but the leadership is so left, they tend to make poor economic decisions. Driving Apple away is not an intelligent move.

DubOverdose
Apr 27, 2012, 09:50 AM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

Apple will locate its offices where it is best to strategically, and that includes keeping an eye on associated costs. If building in Austin is more expensive (and thus less advantageous), then Apple will go elsewhere. If Austin wants a major employer to stay there and grow, then they will offer Apple some incentives. Make no doubt, it is beneficial for Austin to have that many more jobs in the area with all those added workers spending money in the area.

And being a profitable company does not mean that the company should be dicked around with. It is a profitable company because it is extremely well run and is a company you'd want in your city.

goodcow
Apr 27, 2012, 09:51 AM
Exactly. It is competition which is healthy for everyone. You can compete to have someone bring jobs to your area or not and lose it all.

It is just the greedy, power-hungry politicians in Travis County who think they can squeeze something out of Apple.

More like Apple is trying to squeeze something out of Travis County. Travis County is providing city services and infrastructure, paid for with taxes. It's absurd that we have any sort of corporate welfare like this, especially for companies with the cash reserves Apple has. How you can defend this is beyond me.

boyd1955
Apr 27, 2012, 09:52 AM
They don't need any tax breaks ... And why should they get any ... What a joke ... They need to keep this sort of stuff quiet or they'll be loosing sales ... And quite frankly its what used to be called corruption

Small White Car
Apr 27, 2012, 09:53 AM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

They don't need any tax breaks ... And why should they get any ... What a joke ...

3,600 people paying income tax and sales tax and homeowner taxes and car taxes provides lots of revenue.

It's up to Texas and Arizona to fight over that revenue.

What do you suggest? If you're on that city council you'd say "yeah, sure. Go send all that money to Arizona. We don't need it"? (Not to mention that your unemployment rate is worse since there are 3,600 fewer jobs than there otherwise would have been.)

That's not a move that will get you reelected.


How you can defend this is beyond me.

Then give us a solution. What should that city council do?

goodcow
Apr 27, 2012, 10:00 AM
Then give us a solution. What should that city council do?

Given the current situation, where they apparently do have to fight with Arizona over tax subsidies, is what is indefensible and no, I don't have a short term solution. The real solution would be to ban tax breaks, subsidies and corporate welfare nation wide for publicly traded companies.

BJMRamage
Apr 27, 2012, 10:01 AM
happens ALL the time all over America.

States think they can ditch the company tax breaks on certain businesses and boom, they move across the border.
Happened in my state.

tonytiger13
Apr 27, 2012, 10:03 AM
We live in a capitalistic country. Corporations are going to find any way they can to save/make money. Even the nicest, most sincere, least greedy politicians were raised to love money. I just wish corporations still acted like citizens of a nation instead of a government in their own right. Apple or anyone that does business elsewhere too seem to have a mindset that they're no longer Americans and are not patriotic enough to pay taxes (only b/c they try to get out of any tax they can). But they have the right to do that.

Small White Car
Apr 27, 2012, 10:03 AM
The real solution would be to ban tax breaks, subsidies and corporate welfare nation wide for publicly traded companies.

What?

You want to make it illegal for governments to set the tax rates? So who would decide how much they're supposed to pay?

gotluck
Apr 27, 2012, 10:04 AM
What?

You want to make it illegal for governments to set the tax rates? So who would decide how much they're supposed to pay?

flat tax baby :D

tekno
Apr 27, 2012, 10:04 AM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

They're a business. They want to make money not hand it to the taxman. And any sensible businessman keeps in mind that their financial situation could change very quickly (and judging by the fact that Apple have been churning out the same products for a few years now, that time may come sooner than everyone realises).

JHankwitz
Apr 27, 2012, 10:05 AM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

A 'tax break' is a far cry from 'no revenue'.

Small White Car
Apr 27, 2012, 10:06 AM
flat tax baby :D

But that doesn't fit what goodcow is saying.

So even if Texas has a flat tax of 10%. Then Arizona sets a flat tax of 9%...then businesses move, so texas sets theirs to 8%.

All of that would be illegal under goodcow's proposal...so what does that mean? How can a state or a city run itself if it's not allowed to change what it charges in taxes?

Chris Blount
Apr 27, 2012, 10:07 AM
3,600 people paying income tax and sales tax and homeowner taxes and car taxes provides lots of revenue.
Exactly! The 3,600 people with good paying jobs who spend that money in the local economy will bring in more than the tax that Apple would pay. A lot of people don't understand this concept. The jobs themselves are what matter.

The Austin leadership better get off their butts and make this deal. It would be a big loss to Austin if they blow it.

Thunderhawks
Apr 27, 2012, 10:08 AM
Given the current situation, where they apparently do have to fight with Arizona over tax subsidies, is what is indefensible and no, I don't have a short term solution. The real solution would be to ban tax breaks, subsidies and corporate welfare nation wide for publicly traded companies.

Your real solution will send more jobs out of the country.

To other posters , I don't get why it is ever an issue how much money somebody has. (Apple, IBM, Google, whoever)

A business is there to make money, as much of it as possible.

Once this is understood, the rest is obvious :

Go where you have the least amount of costs
Go where you can expand
Go where the business climate is friendly

etc.etc.

The county is free to run its numbers and see if this deal is really a deal and so is a company.

Given Apples track record, chances are okay that this could become a deal
after the tax break expires.

On the other hand none of the county dudes will be around to see this and most likely after that tax break period, Apple may go some other place for the next tax break.

Just business at work. Frustrating, yes. Can it be changed? No!

Money is a sensitive moving thing. Any obstruction and it goes someplace else.

angrynstupid
Apr 27, 2012, 10:09 AM
We'll give you a tax break!

tonytiger13
Apr 27, 2012, 10:10 AM
Another thing that is hotly debated is money made overseas. Once Apple brings that money (which is a good 1/2 - 2/3 of their cash revenue) into the US, it'll be taxed like no other. Businesses are asking the US Government for a tax holiday on money overseas. We all hope Apple and Google would spend that money for more infrastructure, hiring, and domestic investment but last time there was a tax holiday, they just bought back stock and did little to help their shareholders. But imagine if they did! That's a lot of money they could invest in more stores, campuses, etc.

JHankwitz
Apr 27, 2012, 10:11 AM
I honestly wonder why Apple wants/needs the tax breaks? Since I'm not privy to all the information, I'll reserve judgement.

So, why do you look for all the tax breaks when you pay your taxes each year? Anyone that doesn't has a few screws missing. Or, perhaps you're one of those that searches for the community with the highest taxes to move to?

Small White Car
Apr 27, 2012, 10:11 AM
To other posters , I don't get why it is ever an issue how much money somebody has. (Apple, IBM, Google, whoever)



What I most enjoy about that argument is that it implies Apple should just move all of their employees and factories to midtown Manhattan. After all, they can afford it, so clearly that's what makes the most sense!

As if having money and wasting money go hand in hand for some reason.

whooleytoo
Apr 27, 2012, 10:12 AM
Why is it that some people just don't get it. You have to break an egg to get an. . .

...Apple?

No wonder I failed Biology...

numlock
Apr 27, 2012, 10:15 AM
Exactly! The 3,600 people with good paying jobs who spend that money in the local economy will bring in more than the tax that Apple would pay. A lot of people don't understand this concept. The jobs themselves are what matter.

The Austin leadership better get off their butts and make this deal. It would be a big loss to Austin if they blow it.

so big employers should always get tax breaks because all their staff should in theory spend a lot in the local economy?

As if having money and wasting money go hand in hand for some reason.

no having money seems to go hand in hand with paying as little taxes as possible while your customers tax money pay for infrastructure and what else they demand.

tonytiger13
Apr 27, 2012, 10:15 AM
What I most enjoy about that argument is that it implies Apple should just move all of their employees and factories to midtown Manhattan. After all, they can afford it, so clearly that's what makes the most sense!

As if having money and wasting money go hand in hand for some reason.

I agree with that last statement of yours. Trying to find tax breaks is a good way for anyone to save money as long as it's not shady and perfectly legal.

I think Apple could help the situation by giving the county some incentives such as Apple sponsoring a park cleanup program or installing solar panels or electric car charging stations etc (I know, very hippy, very green, but Apple's MO nowadays). This, to me, is not "wasting" money. As you said, wasting money is not looking for tax breaks.

gotluck
Apr 27, 2012, 10:16 AM
But that doesn't fit what goodcow is saying.

So even if Texas has a flat tax of 10%. Then Arizona has a flat tax of 9%...then businesses move, so texas sets theirs to 8%.

All of that would be illegal under goodcow's proposal...so what does that mean? How can a state run itself if it's not allowed to change what it charges in taxes?

Haha, I was half joking. I have no comment on the details of the tax breaks, but Texas is one of, if not the strongest state in the US. Setting a (potentially unfavorable) precedent with Apple could damage their relationship with other companies in the area. I know Apple is the center of the universe here, but there are plenty of other big tech groups in Texas. I'm not privy to the companies specifically in the Austin area, but Apple's not the only game in Texas.

foodog
Apr 27, 2012, 10:22 AM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

The revenue comes from the workers paychecks, and sales tax from employees buying goods.

Small White Car
Apr 27, 2012, 10:23 AM
so big employers should always get tax breaks because all their staff should in theory spend a lot in the local economy?


I get a tax break for owning a home. And another for having a kid.

Governments give all kind of breaks to encourage behaviors they find desirable. I'm not sure where all of you people live, but in many places bringing that many jobs all at once is incredibly desirable to the local population. It's great that you don't need a job, but a lot of people do, and a government that is sensitive to that and trying to fix it is a good government.

tonytiger13
Apr 27, 2012, 10:23 AM
no having money seems to go hand in hand with paying as little taxes as possible while your customers tax money pay for infrastructure and what else they demand.

It sucks I know. The more money you have, the more resources you can put into finding more tax breaks, giving you more money. It's a cycle that repeats itself and if you can get to that level in life, congratulations, you're rich. But let's hope that's not everything to you.

Warren Buffet pays less taxes than his secretary. I think Americans in the $100,000 to $1,000,000 salary range have it hardest when it comes to taxes.

Corporations are they same way. There is unfair advantages to larger corporations and the smaller ones can't compete. Who's suppose to help them out?

whooleytoo
Apr 27, 2012, 10:24 AM
The revenue comes from the workers paychecks, and sales tax from employees buying goods.

Then maybe the workers should band together, and demand a tax break or else they'll move out-of-state. ;)

numlock
Apr 27, 2012, 10:27 AM
I get a tax break for owning a home. And another for having a kid.

Governments give all kind of breaks to encourage behaviors they find desirable. I'm not sure where all of you people live, but in many places bringing that many jobs all at once is incredibly desirable to the local population. It's great that you don't need a job, but a lot of people do, and a government that is sensitive to that and trying to fix it is a good government.

i live in a place where the local authorities were threatened regularly few years ago that big companies would elsewhere if they didnt get the tax rates they desired. ireland was often named as a popular destination. how did things turn out for them?

actually i do need a job. i also do have a job and a small company on the side and in both cases i pay the taxes that i am required to pay. i get no special treatment. i spend some of my money on products from companies that feel it is beneath them to pay the full tax amount

the tax breaks you get are pretty much by the book correct?

The revenue comes from the workers paychecks, and sales tax from employees buying goods.


that applies to every workplace and every workforce.

Small White Car
Apr 27, 2012, 10:27 AM
Warren Buffet pays less taxes than his secretary.

No, he pays at a lower tax rate. He definitely pays more than her in taxes.

I very much agree with Buffet that his taxes should be raised, so I'm not arguing with your overall point. I'm just pointing out that details like that make a difference.

iScott428
Apr 27, 2012, 10:28 AM
Much rather give Apple the tax breaks than oh I dont know, General Motors, Big Oil, Healthcare industries....the list goes on far too long for companies that IMO make terrible products.

Apple should add a gun range to the plans and we should see it pass in a week ;)

Or keep complaining, delaying, and pissing Apple off and they will send the jobs overseas to much more qualified workers at a lower cost. As a shareholder I vote for this option.:apple:

gotluck
Apr 27, 2012, 10:28 AM
Corporations are they same way. There is unfair advantages to larger corporations and the smaller ones can't compete. Who's suppose to help them out?

It pushes many small businesses to 'fudge' their tax returns and hope they get lost in the shuffle. Which, many do.

small businesses > large businesses in the grand scheme of things

I agree that priorities seemed to be screwed up.

IJ Reilly
Apr 27, 2012, 10:29 AM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

Yes, it's pretty much standard operating procedure these days. Until a story like this pops up for a company they know about, most people probably don't realize that local governments routinely rebate taxes to corporations to induce them to move to their area. Essentially, this shifts the burdens of providing infrastructure to the rest of the tax base. The problem is, pretty much every local government does it, and that makes it easy for corporations to play communities off against each other. They often walk away with huge gimmies like this one.

you people smh
Apr 27, 2012, 10:29 AM
or OR, how about they are a company that is sitting on almost $100 billion, that made $11 billion in the last 3 MONTHS alone.

How about they spend their own money, which they largely get from their huge profit margins on what are for most people toys, and expand their business on their own.

These tax credits are getting really out of hand.

Nah, who am i kidding. It's the bestest company in the world who makes the bestest products for people who really need them to be productive in life so the people of texas probably should pay to have the priveledge of them setting up shop in the vicinity.

BornAgainMac
Apr 27, 2012, 10:30 AM
They are not going to ask for free wi-fi from Apple?

Small White Car
Apr 27, 2012, 10:31 AM
that applies to every workplace and every workforce.

The math is pretty simple here. Apple has $300 million that are either going to pump into Texas or into Arizona.

The proposal here is that wherever they go will give them about $30 million back. You can argue all day about how bad it looks or how bad it sounds, but the fact is, getting $300 for paying $30 is not a bad deal at all.


How about they spend their own money, which they largely get from their huge profit margins on what are for most people toys, and expand their business on their own.


What part of that doesn't sound like "spending their own money?"

If you give me $30 and I give you $300 you're really going to tell me that I'm a freeloader?

you people smh
Apr 27, 2012, 10:31 AM
Much rather give Apple the tax breaks than oh I dont know, General Motors, Big Oil, Healthcare industries....the list goes on far too long for companies that IMO make terrible products.




Oooohhh. Inquiring minds want to know. Please provide a list of the "terrible products" that oil companies and healthcare industries make...

HeedJSU
Apr 27, 2012, 10:32 AM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

Tax breaks do not include income taxes (I know, Texas does not have an income tax) sales taxes charged when all these people spend their payroll, and all the other little assorted taxes that we as Americans are taxed to death with. Sure, they (the city) lose a little up front, but they gain in the long run. Please take a few business courses before you spout ignorance.

gotluck
Apr 27, 2012, 10:32 AM
Oooohhh. Inquiring minds want to know. Please provide a list of the "terrible products" that oil companies and healthcare industries make...

haha seriously, those companies make products we need

apple makes products we want

Moof1904
Apr 27, 2012, 10:36 AM
It is supposedly the "second Silicon Valley," but the leadership is so left, they tend to make poor economic decisions. Driving Apple away is not an intelligent move.


This.

Travis county has the dumbest legislators in the state of Texas.

IJ Reilly
Apr 27, 2012, 10:36 AM
The math is pretty simple here. Apple has $300 million that are either going to pump into Texas or into Arizona.

The proposal here is that wherever they go will give them about $30 million back. You can argue all day about how bad it looks or how bad it sounds, but the fact is, getting $300 for paying $30 is not a bad deal at all.




What part of that doesn't sound like "spending their own money?"

If you give me $30 and I give you $300 you're really going to tell me that I'm a freeloader?

Your math is incorrect. That $300 million is construction costs. It does not go to the local government. However the $35-36 million in rebates does come out of the local government, to be covered by the rest of the tax base. That's the correct math.

hetrigger
Apr 27, 2012, 10:37 AM
Living in the area, 3600 jobs doesn't sound like much, but, considering the area is growing in the tech side of the house. you have AMD, IBM, Intel and other tech groups here. If Apple wants to expand their campus here, then let them! It is incentives vs. unemployment. It should be a no brainer. Austin will still make money through sales taxes. Now I am no economist, but if a business that comes into this area and wants to expand here for the price of between 5-7 million dollars per year for 10-15 years after throwing $300 million into the economy I have no problem with it. Never mind the fact if you average the annual salary at about $50k times 3600 employees equals about $180 million per year! Bottom line: Austin and Travis County will make that money up in no time!

HeedJSU
Apr 27, 2012, 10:38 AM
With opinions like the ones I'm reading here, it's no wonder our jobs keep going overseas. :confused::confused::confused:

Small White Car
Apr 27, 2012, 10:39 AM
Your math is incorrect. That $300 million is construction costs. It does not go to the local government. However the $35-36 million in rebates does come out of the local government, to be covered by the rest of the tax base. That's the correct math.

Local governments care about local economies on the whole.

You can either find businesses to pay people (like construction workers) or you can figure out how to take care of them in homeless shelters and raise everyone else's taxes to do that.

$300 is coming into the economy, $30 is going out. HOW it comes in and out (salaries vs. taxes) is really not important. If it's going to pay people then that's less people the government has to take care of which means they have less things to pay for next year.

It's all one big mixing bowl.

numlock
Apr 27, 2012, 10:40 AM
Living in the area, 3600 jobs doesn't sound like much, but, considering the area is growing in the tech side of the house. you have AMD, IBM, Intel and other tech groups here. If Apple wants to expand their campus here, then let them! It is incentives vs. unemployment. It should be a no brainer. Austin will still make money through sales taxes. Now I am no economist, but if a business that comes into this area and wants to expand here for the price of between 5-7 million dollars per year for 10-15 years after throwing $300 million into the economy I have no problem with it. Never mind the fact if you average the annual salary at about $50k times 3600 employees equals about $180 million per year! Bottom line: Austin and Travis County will make that money up in no time!

i wish i could go into the apple store and say i want a macbook air so give it to me because i might then buy stuff from the app store and some ios device.

different rules for different people

With opinions like the ones I'm reading here, it's no wonder our jobs keep going overseas.

you think governments and people can play this bargaining game with companies like apple forever?

nike dosent have slave camps in s-america and asia because the salary demands in the US are too high or does it?

convergent
Apr 27, 2012, 10:40 AM
Given the current situation, where they apparently do have to fight with Arizona over tax subsidies, is what is indefensible and no, I don't have a short term solution. The real solution would be to ban tax breaks, subsidies and corporate welfare nation wide for publicly traded companies.

I agree, tax all the greedy corporations at 100%... no breaks for anyone. That would be a great plan. Then all the evil corporations would move out of the US and go somewhere else and we could all work for the government. That would be awesome.

But wait, where would the government then get their money? Oh yeh, the rich... tax them at 100% too.

Seriously, if you don't get why its a good deal for a community to provide incentive for a company to locate there, then I'm not sure what to tell you. Its not "just" 3600 Apple jobs... my guess is that its at least 10,000 jobs when you add in support organizations and other community jobs to serve that 3,600. As someone else said, a tax break is not no tax. Apple and their employees will be paying way more taxes to the county than they would get if Apple wasn't there.

Apple has to take the business risk to spend all the money to build the building, hire the workers, pay the workers, train the workers, etc.. They are going to chose to do that in a community with a government that is friendly to businesses.

How is a tax break to for a business to locate in a community any different from Best Buy having a sale to get you to come in and buy a new iPad??? Incentives help shape behavior.

gotluck
Apr 27, 2012, 10:41 AM
Living in the area, 3600 jobs doesn't sound like much, but, considering the area is growing in the tech side of the house. you have AMD, IBM, Intel and other tech groups here. If Apple wants to expand their campus here, then let them! It is incentives vs. unemployment. It should be a no brainer. Austin will still make money through sales taxes. Now I am no economist, but if a business that comes into this area and wants to expand here for the price of between 5-7 million dollars per year for 10-15 years after throwing $300 million into the economy I have no problem with it. Never mind the fact if you average the annual salary at about $50k times 3600 employees equals about $180 million per year! Bottom line: Austin and Travis County will make that money up in no time!

But you cant give a better deal to Apple or all the other companies will be coming back to get theirs. Apple may be asking for much more than what was given to the other companies in the area.

anubis
Apr 27, 2012, 10:43 AM
More like Apple is trying to squeeze something out of Travis County. Travis County is providing city services and infrastructure, paid for with taxes. It's absurd that we have any sort of corporate welfare like this, especially for companies with the cash reserves Apple has. How you can defend this is beyond me.

EVERY large company does this. It's very easy to understand and defend.

Typically, a company will shop around different cities to find the best deal. In exchange for temporary favorable tax treatment, they guarantee to bring a certain number of jobs to the area. Those workers will then buy houses, shop in stores, and pay sales and property tax. When considering the net revenue impact, the city expects to make more money in tax collections from those workers than it loses from tax breaks to the company.

Why should Apple forego those tax breaks that all other large companies enjoy just because it makes a lot of money? If Austin faulters, there are a hundred other cities that will bend over backwards to bring those guaranteed high paying jobs to their areas.

jkrarup
Apr 27, 2012, 10:46 AM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

...and elephants sit where they want to...

LethalWolfe
Apr 27, 2012, 10:47 AM
Did anyone read the article? The problem isn't really w/the tax breaks. The problem is with the wording of the contract.

From the article in the OP: (http://www.statesman.com/business/official-apple-deal-in-peril-over-delays-in-2327590.html)
Bill Aleshire, an attorney and former Travis County judge, and Ed Wendler, an Austin-area developer, picked through the county's draft final contract with Apple, pointing to parts of the contract they said will allow Apple to fall short of the requirements by the Commissioners Court.

Responding to Porter's comments that Apple is frustrated by the county's most recent action, Aleshire said: "I'm not sorry that Apple is frustrated. ... That's a sorry contract."

Apple "had it rigged so they could not comply with the contract yet end up with county staff basically renegotiating the terms that they would have to comply with," Aleshire said. "I just thought that was a major flaw. It showed up in several ways in several places."


Lethal

convergent
Apr 27, 2012, 10:47 AM
i wish i could go into the apple store and say i want a macbook air so give it to me because i will then buy stuff from the app store and some ios device.

different rules for different people



Do you own an iPhone? If you do, then you are doing the exact same thing. The cellphone company ate most of the cost of the phone because they were going to get the recurring income from you. That is EXACTLY the same thing that the county would do to give a business a tax break to bring a ton of jobs into the economy.

Do you get free apps from the app store, or pay $.99 for apps? Before Apple created the app store the average price of a smartphone app was around $10-30 each. These prices are subsidized because of volume. You take advantage of that and again, its very similar to what is going on here.

Have you never bought something on sale? Do you get a home mortgage tax deduction?

The mindset of many commenters here really tells me a lot about what is going on with our economy. If it continues, the US economy will be killed forever and Travis county, as well as the rest of them in the country can figure out how to feed all the people that don't have jobs.

PinkyMacGodess
Apr 27, 2012, 10:47 AM
I'm surprised this is happening in Texas. Here in Michigan, there was an attempt to stop these tax giveaways to corporations that then fail to accomplish what they promise. Things like job creation, etc. It appears to have failed here, so it's odd that the notoriously pro-corporate Texas legislature is acting so concerned... Odd...

jumanji
Apr 27, 2012, 10:48 AM
you can argue the merit of tax breaks. that one is clearly debatable.

the deal with the travis county tax break is that they want Apple to hire people that are under the poverty line. i don't agree with it. i have no problem with a community that offers tax breaks requiring that Apple hire county residents but to force apple to hire poor people is ridiculous. you have to hire qualified people and if they're qualified, sure but apple shouldn't be forced to seek out poor people just to meet some qualifications.

IJ Reilly
Apr 27, 2012, 10:48 AM
Tax breaks do not include income taxes (I know, Texas does not have an income tax) sales taxes charged when all these people spend their payroll, and all the other little assorted taxes that we as Americans are taxed to death with. Sure, they (the city) lose a little up front, but they gain in the long run. Please take a few business courses before you spout ignorance.

Careful who you call ignorant. Local governments set tax rates to pay for local services, such as police, fire, schools, water, sewer, roads, etc. If they allow some taxpayers to pay less than their share, then by definition, the rest of the locality's taxpayers have to make up the difference. The argument that the jobs created offset the shortfall is null, since computing their tax value is speculative, at best, and as far as I can tell, nobody even tries to make this calculation. It's a subsidy, plain and simple. Companies threaten local governments with moving or locating elsewhere, and get a gift of the taxpayer's money.

JohnStrass
Apr 27, 2012, 10:51 AM
Wow. They will go to Phoenix. Too bad for Texas.

SO, the most profitable company in the world can only expand if they get local tax breaks.....

IJ Reilly
Apr 27, 2012, 10:56 AM
Local governments care about local economies on the whole.

You can either find businesses to pay people (like construction workers) or you can figure out how to take care of them in homeless shelters and raise everyone else's taxes to do that.

$300 is coming into the economy, $30 is going out. HOW it comes in and out (salaries vs. taxes) is really not important. If it's going to pay people then that's less people the government has to take care of which means they have less things to pay for next year.

It's all one big mixing bowl.

No, it is not one big mixing bowl. Not where the provision of government services are concerned. They are paid for out of tax collections. The "economic development" benefits are amorphous, at best. Construction doesn't even have to go to local firms. The jobs can be low-paying and go to people who don't live in the city and county. For certain these inflows don't make up for the tax loss. It's cost-shifting. Companies extort these give-backs out of local governments because they can.

BassPlayer
Apr 27, 2012, 10:56 AM
This is exactly what SJ meant when he told Obama that it's too expensive for companies to do business in America. This is why they outsource manufacturing to China and Brazil. They offer the incentives (taxes, land, what have you) that make it worth Apple's while to build/invest there.

You have to give something to get something. You want a big business in your back yard to greatly boost the local economy? Then you have to give them a reason to do so. It's also not just local businesses reaping the benefits, it's the taxes people pay by moving to the area to work there, which boosts property value and hence higher property taxes and more income to the govt. It's foolish to think that Austin is bent over the barrell when they stand to benefit from way more than solely Apple's property taxes and maybe their employees eating around the corner at Applebee's on lunch.

Kaibelf
Apr 27, 2012, 10:59 AM
They are not going to ask for free wi-fi from Apple?

HA! totally was thinking of that very same video.

Rot'nApple
Apr 27, 2012, 11:01 AM
Get over the hate for Apple.

It's not the hate for Apple. It's a cross between the jealousy and envy of certain successes, be it certain corporations or certain people.
/
/
/

Kaibelf
Apr 27, 2012, 11:02 AM
SO, the most profitable company in the world can only expand if they get local tax breaks.....

People who are rich stay rich by not buying the exact same thing for more money. It's moronic to think they should just spend money because they have it, and frankly that's why many Americans are in trouble financially.

flash84x
Apr 27, 2012, 11:02 AM
Come on over Apple, you're welcome in PHX! I am pretty sure the spot they considered previously is right by my house next to the Mesa Airport.

hetrigger
Apr 27, 2012, 11:06 AM
i wish i could go into the apple store and say i want a macbook air so give it to me because i might then buy stuff from the app store and some ios device.

different rules for different people



you think governments and people can play this bargaining game with companies like apple forever?

nike dosent have slave camps in s-america and asia because the salary demands in the US are too high or does it?


Have you heard of the phrase "you have to spend money to make it"? This is what is going on here.

Austin and Travis County have to give a little to get more. They did it with every major corporation that is in the area. Think of it as a prenup agreement that can open the door to more money.

chrmjenkins
Apr 27, 2012, 11:06 AM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

Yes, let's give Apple tax breaks, they really need them.

See below. There's a reason Austin is a hot-bed for the IC industry in the US. Sometimes tax breaks are worth the trade of getting high income earners in your state.

It's not the tax break it is the work. 3200 jobs is important to the people living in Austin. Get over the hate for Apple.

Texas is in a better economic position than much of the US right now. Maybe they don't need to bend over for Apple?

Not really. They take more in federal aid than they give in taxes.

jay_app
Apr 27, 2012, 11:07 AM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

1) Corporation are owned by the shareholders, the executives and the board have a responsiablity to the shareholders to be efficient with every penny.

2) A state, town, or county does not have to give tax breaks to anyone or any corporation. They do so in order to get the huge benefits of increased tax revenue from the future employees. Its a small trade off. Otherwise the business may leave to another area that is more business friendly.

509
Apr 27, 2012, 11:08 AM
In Idaho, a steel company wanted to relocate to Lewiston.

The city was willing to work on zoning, permitting, and other issues. The company then asked about tax breaks.

The reply was along these lines...." we would love to have you as part of our community. However, being part of the community means paying taxing and supporting the services that we provide to you and your company".

Shame on Apple. I understand bottom line. That's why they make their products in China. And why I always buy from small businesses that support the community I live in whenever, possible.

Zaphodsplanet
Apr 27, 2012, 11:11 AM
Austin/Travis county is notorious for reneging on deals. What do you expect from a bunch of hard core liberal/progressive commies? If you're rich or your company is doing well, come to Austin so they can stick it to you. That's what liberals/socialists are all about. Stick it to the man. Class warfare under the guise of being "fair". Never mind if you provide an area with thousands of jobs, if you made the mistake of having a company in a liberal area they are going to soak you for as much as they can because they think it's fair. If Apple moved 5-10 miles north to Williamson Co/Round Rock (conservative area)whatever deal they made would be the deal they got. Austin is insane. Far too many dope smokers. Can't wait to leave this godless, self-indulgent cesspool.

numlock
Apr 27, 2012, 11:12 AM
Have you heard of the phrase "you have to spend money to make it"? This is what is going on here.

Austin and Travis County have to give a little to get more. They did it with every major corporation that is in the area. Think of it as a prenup agreement that can open the door to more money.

i have heard of that phrase. im not sure its original intention was meant for cheap companies like apple.

im just worried about the future where major corporations can continually push and threaten like this.

gotluck
Apr 27, 2012, 11:15 AM
Not really. They take more in federal aid than they give in taxes.

So that's the barometer of a state's health eh? I'd like to hear who is in better shape than Texas. You better not say california

hetrigger
Apr 27, 2012, 11:16 AM
Austin/Travis county is notorious for reneging on deals. What do you expect from a bunch of hard core liberal/progressive commies? If you're rich or your company is doing well, come to Austin so they can stick it to you. That's what liberals/socialists are all about. Stick it to the man. Class warfare under the guise of being "fair". Never mind if you provide an area with thousands of jobs, if you made the mistake of having a company in a liberal area they are going to soak you for as much as they can because they think it's fair. If Apple moved 5-10 miles north to Williamson Co/Round Rock (conservative area)whatever deal they made would be the deal they got. Austin is insane. Far too many dope smokers. Can't wait to leave this godless, self-indulgent cesspool.

Please tell us how you feel, and don't hold back! :D

IJ Reilly
Apr 27, 2012, 11:20 AM
2) A state, town, or county does not have to give tax breaks to anyone or any corporation. They do so in order to get the huge benefits of increased tax revenue from the future employees. Its a small trade off. Otherwise the business may leave to another area that is more business friendly.

I can't see where you've read any of my posts on this subject, which refute every part of this argument. The truth is, local governments are forced to gift taxpayer's money to corporations because they threaten to locate elsewhere if they don't. Extortion by any other name is still extortion.

Apple, like any other corporation, has internal reasons for making its locational decisions. Proximity to other facilities, cost of land, cost of construction, labor market, etc. They keep all of these locational criteria close to the vest even as they threaten to go elsewhere if they don't get a big gift of public funds to build where they'd already decided to build. They do it because they can. It is no cause for joy for anyone but the corporation.

iScott428
Apr 27, 2012, 11:20 AM
Oooohhh. Inquiring minds want to know. Please provide a list of the "terrible products" that oil companies and healthcare industries make...

How about hybrid cars, Bio Diesel, The Chevy Volt, Prescription drugs. But staying on topic, its about running a profitable business and if governments do not promote good businesses they will leave. Some one posted earlier that money is very sensitive and will move where there is least resistance.

foodog
Apr 27, 2012, 11:21 AM
that applies to every workplace and every workforce.

Correct but using tax breaks to entice a company to create new jobs in an area raises the revenue, and make a happier community.

d0vr
Apr 27, 2012, 11:22 AM
It's not the tax break it is the work. 3200 jobs is important to the people living in Austin. Get over the hate for Apple.

Yup, 3200 new jobs = 3200 new taxable incomes.

hetrigger
Apr 27, 2012, 11:22 AM
But you cant give a better deal to Apple or all the other companies will be coming back to get theirs. Apple may be asking for much more than what was given to the other companies in the area.

You are correct. Though, we are not privy to what the contracts have in them, I am sure the phrase: "if you give a better deal to someone else, we want the same". It could be in there, but I doubt it.

iScott428
Apr 27, 2012, 11:35 AM
haha seriously, those companies make products we need

apple makes products we want

I live just fine without a hybrid car, prescription drugs, and well I give it to you we need oil because there is no other option really to get around the majority of this country.

But I need my iPhone, I do a lot of business off of it. I need my Mac bc I will not be forced to use a PC or I guess you are suggesting people just want computers and dont really need them?

I do love that you admit Apple makes products we want, and the other companies make you believe they make products we need. I see it the other way around.

Thunderhawks
Apr 27, 2012, 11:38 AM
In Idaho, a steel company wanted to relocate to Lewiston.

Shame on Apple. I understand bottom line. That's why they make their products in China. And why I always buy from small businesses that support the community I live in whenever, possible.

No, shame on you! for not reading up on the fact that the products Apple and many other US companies make cannot be made in the US in the numbers needed.

NOT ENOUGH PEOPLE including qualified engineers.

State of education in the US.

As for taxes I like what George Carlin used to say: (paraphrasing)

The rich don't pay taxes
The middle class pays all the taxes and
the poor class is there to remind the middle class
where they will be if they don't pay the taxes.

gotluck
Apr 27, 2012, 11:44 AM
NOT ENOUGH PEOPLE including qualified engineers.



I think you mean not enough people willing to live in dorms on call 24/7 for an incredibly repetitive manufacturing process for far below the us minimum wage.

Konrad
Apr 27, 2012, 11:46 AM
When corporations often receive special treatment, the local citizens have to fight for variances, permits, pay set costs for the overregulated local governments often ridiculous processes. I would say, the hell with it, unless you give overyone the same break. Whether you employ 3600 people or just 2 should not make any difference.

gotluck
Apr 27, 2012, 11:48 AM
small businesses are better for society

brianbauer04
Apr 27, 2012, 11:57 AM
How much does a customer support person get paid at Apple? My guess is nowhere close to what an engineer or software developer gets paid.

These are probably hourly jobs (fairly good ones at that); not anything that would increase Austin's standing as a tech mecca, except to be able to say "Apple has X+3600 employees here" without saying anything about what they do.

If I were Austin, I wouldn't give tax breaks for anything but the best jobs. Texas doesn't need any more people punching the time clock. They've got plenty. They need more exempt professional jobs.

509
Apr 27, 2012, 12:01 PM
Yup, 3200 new jobs = 3200 new taxable incomes.

Texas does NOT have an income tax.

I hear your argument on American education.

Here is Washington, Boeing and Microsoft get tax breaks that are not available to other businesses. They also complain about the lack of state support for higher education for the trained professionals they need for their companies.

BTW a friend has a software startup. He pays FIVE times the tax rate than Microsoft does on their products. Why shouldn't he pay the same rate as Microsoft??

You think there might be a correlation between state support for higher education and tax revenue??

Rocketman
Apr 27, 2012, 12:11 PM
If they just say forget it and locate in AZ, they will be closer to their government and southwest growth markets. If they locate neat Tuscon they would be close to government customers. When TX withdraws from the US they will still be in the US. :D

Based on the Austin aerial view the first thing they should build is a large parking structure so they can use more land for offices. Heck, buy a parking lot on the other side of town, build a parking structure there too and install a PRT like they want to in Cupertino.

Rocketman

hobo.hopkins
Apr 27, 2012, 12:13 PM
It would be incredibly foolhardy for Texas to risk losing this deal. Why they would shoot themselves in the foot is beyond me.

GermanyChris
Apr 27, 2012, 12:16 PM
As NJ public schools prove, the education system doesn't need more money it needs fixed.

Tracking will go along way to fixing the system.

IJ Reilly
Apr 27, 2012, 12:17 PM
How much does a customer support person get paid at Apple? My guess is nowhere close to what an engineer or software developer gets paid.

These are probably hourly jobs (fairly good ones at that); not anything that would increase Austin's standing as a tech mecca, except to be able to say "Apple has X+3600 employees here" without saying anything about what they do.

If I were Austin, I wouldn't give tax breaks for anything but the best jobs. Texas doesn't need any more people punching the time clock. They've got plenty. They need more exempt professional jobs.

Ironically the city and county are bargaining with Apple to bring them entry-level (read: low-wage) jobs. One of the hangups seems to be whether Apple would agree to fill these positions with local people. (How anyone would even track this is impossible to say. Maybe the new hires would have to present valid Texas passports.) In the end Apple can get away with little or no accountability in exchange for their 60% property tax rebate, and that in fact seems to be the main point of contention.

hetrigger
Apr 27, 2012, 12:25 PM
Texas does NOT have an income tax.

I hear your argument on American education.

Here is Washington, Boeing and Microsoft get tax breaks that are not available to other businesses. They also complain about the lack of state support for higher education for the trained professionals they need for their companies.

You think there might be a correlation between state support for higher education and tax revenue??

This is true...but, consider this: We pay federal taxes. We pay sales taxes. We pay property taxes.

This is how services and education (lottery helps on this, too) are paid for. After I read an article in the Austin Statesman, the jobs are geared towards the "lower" income and unemployed people. How "technical" it gets is not clear.

If they decide to bless off on the "incentive", the wages will be taxed, families will prosper, and sales taxes on items purchased. This will not only happen to Travis County, but, to surrounding counties. There is a spiral affect as well.

As said in a previous post, it is not just the 3600 jobs directly from Apple, but, it will add more jobs that support the facility as well.

d0vr
Apr 27, 2012, 12:26 PM
I hear your argument on American education.

I hear your argument for it as well. After all, only an American would believe all internet users live in the USA. That they don't have income tax surprises me though. Thanks for informing me.

Gasu E.
Apr 27, 2012, 12:27 PM
Apple is unhappy with the state of taxes in the State of Texas.

IJ Reilly
Apr 27, 2012, 12:28 PM
Apple is unhappy with the state of taxes in the State of Texas.

You mean in Dollars, Taxes?

lilo777
Apr 27, 2012, 12:39 PM
What?

You want to make it illegal for governments to set the tax rates? So who would decide how much they're supposed to pay?

That's not what he said. Let them set the tax rates but require that those be equal for all companies.

oliversl
Apr 27, 2012, 12:42 PM
I wonder how many conditions will China o India put on Apple if it ask to expand operations. Maybe thats why outsourcing works.

a.jfred
Apr 27, 2012, 12:43 PM
Tax breaks do not include income taxes (I know, Texas does not have an income tax) sales taxes charged when all these people spend their payroll, and all the other little assorted taxes that we as Americans are taxed to death with. Sure, they (the city) lose a little up front, but they gain in the long run. Please take a few business courses before you spout ignorance.

Texas has no state income tax. We do, however, have high property tax to make up for it. I'm in Travis county, in a 650 square foot condo, homesteaded, that the county values at a little over $75k, and paid over $1500 in property tax last year. Sales tax in Austin is 8.25% (state at 6.25%, city adding another 2% on top of that).

lilo777
Apr 27, 2012, 12:50 PM
I wonder how many conditions will China o India put on Apple if it ask to expand operations. Maybe thats why outsourcing works.

Maybe it's time we require that CEO of the company lived where the company does its business.

Thunderhawks
Apr 27, 2012, 12:52 PM
I think you mean not enough people willing to live in dorms on call 24/7 for an incredibly repetitive manufacturing process for far below the us minimum wage.

No, not enough people, regardless of the hourly wages.

Read this and you may understand:

http://http://www.appleinsider.com/articles/12/01/22/apples_overseas_manufacturing_operations_offer_much_needed_flexibility_not_just_savings.html

ericinboston
Apr 27, 2012, 01:03 PM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

I agree...and am not just singling out Apple. I am also not a guru on tax incentives...however, non-small companies, in general, get very favorable incentives to open/expand offices. Yes, it's part of the way business is done in America...but I feel that our gov't hands out too many freebies a high percentage of the time. The taxpayers are left holding the bag. If the economy slows or the company goes out of business, etc. then "the deal" doesn't favor anyone except the company.

With Apple being on top of the world right now, I would tell Apple to stop being so nitpicky and man up and get the shorter end of the stick on a few of these deals. Apple's not going to pay billions in taxes on deals like this...it seems to be they want to pay $5 million instead of say, $10. Just agree to the $10 deal, consider all the OTHER EXTREMELY FAVORABLE ones Apple has gained in the past, and as a whole everything still probably favors Apple greatly.

How often does Apple open offices? twice a decade? Seriously. Retail stores are a different story.

taylortm
Apr 27, 2012, 01:06 PM
The truth is, local governments are forced to gift taxpayer's money to corporations because they threaten to locate elsewhere if they don't. Extortion by any other name is still extortion.

I don't get it.

Honest question:
Why would Austin care if Apple "threatens" to leave? What does the city have to lose if Apple locates elsewhere?

Apparently it's not revenue. Then what? :confused:

gotluck
Apr 27, 2012, 01:15 PM
leaving a little meat on the bone is classy

apple is usually a classy company

ericinboston
Apr 27, 2012, 01:18 PM
Yup, 3200 new jobs = 3200 new taxable incomes.

Not really. If Apple opened up an office in Town X, Town X is not going to make a penny of Fred who lives in Town Y and drives to Town X everyday (other than getting gasoline or buying lunch or some kind of local purchases inside Town X).

If Apple hired 3200 new employees in the state (which work now in Town X), sure, the state now has THE POTENTIAL of 3200 people NOW OFF UNEMPLOYMENT which is nice. But unless Apple promises to hire all 3200 people who are currently unemployed, the state is simply going to get higher/lower tax revenue from the employee. If the employee currently makes $100k and goes to Apple to earn $110k, it's $10k more that the state can tax. Big whoop.

It drives me nuts when companies state "we're creating 1500 new jobs!" when they may in fact me creating "1500 new jobs as our employees instead of the competitor's employees". It also sickens me to see companies promote "we're going to create 50 jobs"...that's really something to impress us or the state? 300+ million Americans and you're going to create 50 new jobs in Utah...wow...lets have a parade.

Gasu E.
Apr 27, 2012, 01:26 PM
Not really. If Apple opened up an office in Town X, Town X is not going to make a penny of Fred who lives in Town Y and drives to Town X everyday (other than getting gasoline or buying lunch or some kind of local purchases inside Town X).

If Apple hired 3200 new employees in the state (which work now in Town X), sure, the state now has THE POTENTIAL of 3200 people NOW OFF UNEMPLOYMENT which is nice. But unless Apple promises to hire all 3200 people who are currently unemployed, the state is simply going to get higher/lower tax revenue from the employee. If the employee currently makes $100k and goes to Apple to earn $110k, it's $10k more that the state can tax. Big whoop.

It drives me nuts when companies state "we're creating 1500 new jobs!" when they may in fact me creating "1500 new jobs as our employees instead of the competitor's employees". It also sickens me to see companies promote "we're going to create 50 jobs"...that's really something to impress us or the state? 300+ million Americans and you're going to create 50 new jobs in Utah...wow...lets have a parade.

It can be worse than that. Sometimes these can just be old jobs relocated from another state. In the case of Apple, they may indeed be new jobs, but those jobs would have appeared somewhere else, probably in the USA, if the state hadn't bribed them.

ThunderSkunk
Apr 27, 2012, 01:29 PM
There are at least 49 other states that would bend over backwards to get a solid, stable, & growing tech company to open an operation on their turf, and a hundred million people in all of them for whom such a job would be a significant improvement.

Why anyone would choose Texas over any of the others is a mystery.

gotluck
Apr 27, 2012, 01:29 PM
regardless of the hourly wages.


Haha, keep telling yourself that. If they paid $25/HR people would trample eachother for the job in the us and pay to have the appropriate training beforehand.

you can never say...regardless of the hourly wages.

taylortm
Apr 27, 2012, 01:31 PM
...we little guys get them too. I was able to deduct the full price of my new iMac, iPad, and printer along with a portion of my iPhone, iPad, and home data charges because I have a (very) small business that has me using those devices.

I agree...and am not just singling out Apple. I am also not a guru on tax incentives...however, non-small companies, in general, get very favorable incentives to open/expand offices. Yes, it's part of the way business is done in America...but I feel that our gov't hands out too many freebies a high percentage of the time. The taxpayers are left holding the bag. If the economy slows or the company goes out of business, etc. then "the deal" doesn't favor anyone except the company.

It's simple. Whether we like it or not, money talks and it drives 99.999% of decisions made in this country (and most others). Not just "big business" decisions. Every decision.

Should I send my kid to this school or that one?

Should I buy that car or this one? Or no car?

Should I buy a house in this state or that? Which city?

Should I get my hair cut at Fantastic Sam's or Chez Hair?

Should I buy Guiness or Milwaukee's Best?

But I digress.

The point I wanted to make is that I find it interesting that people state, almost as fact, that the government is handing out "too many" incentives. It's just how things work. One organization (Austin) incentivizing -- yes... with MONEY, how shameful! -- another organization to do something that the first organizations perceives to be "good for it." It's for them to decide how much is right. When the two organizations converge on an agreement, the deal is done.

Pretty simple, it seems to me. No?

d0vr
Apr 27, 2012, 01:32 PM
Not really. If Apple opened up an office in Town X, Town X is not going to make a penny of Fred who lives in Town Y and drives to Town X everyday (other than getting gasoline or buying lunch or some kind of local purchases inside Town X).

If Apple hired 3200 new employees in the state (which work now in Town X), sure, the state now has THE POTENTIAL of 3200 people NOW OFF UNEMPLOYMENT which is nice. But unless Apple promises to hire all 3200 people who are currently unemployed, the state is simply going to get higher/lower tax revenue from the employee. If the employee currently makes $100k and goes to Apple to earn $110k, it's $10k more that the state can tax. Big whoop.

It drives me nuts when companies state "we're creating 1500 new jobs!" when they may in fact me creating "1500 new jobs as our employees instead of the competitor's employees". It also sickens me to see companies promote "we're going to create 50 jobs"...that's really something to impress us or the state? 300+ million Americans and you're going to create 50 new jobs in Utah...wow...lets have a parade.

I get what you're saying, I really do. I just don't understand why it is wrong for a company to shop around for their next development and try to get the best deal. To me it's no different than when someone looks for the best mortgage.

Les Kern
Apr 27, 2012, 01:33 PM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

They "sort of" do via the 3,600 new workers paying taxes year over year. That's the "line" anyway. The truth is much more painful... for the fine citizens of Austin.

burne
Apr 27, 2012, 01:36 PM
Why anyone would choose Texas over any of the others is a mystery.

I guess you've missed the point of those tax breaks completely. :rolleyes:

It's not Apple demanding tax breaks, it's cities offering them in the hope to reel in certain companies.

scott911
Apr 27, 2012, 01:38 PM
We have MOOG in our community - western New York.

Any to the person, everyone I've ever talked to is happy that Moog is in town because we know they pay their fair share in taxes, and that helps DIRECTLY to make our community the great place it is.

pay your taxes big companies - the rest of us do.

alhedges
Apr 27, 2012, 01:40 PM
[QUOTE=Zaphodsplanet;14784149]Austin/Travis county is notorious for reneging on deals. What do you expect from a bunch of hard core liberal/progressive commies? If you're rich or your company is doing well, come to Austin so they can stick it to you.

*Austin* approved the tax breaks. This is about Travis Co.
That's what liberals/socialists are all about. Stick it to the man. Class warfare under the guise of being "fair". Never mind if you provide an area with thousands of jobs, if you made the mistake of having a company in a liberal area they are going to soak you for as much as they can because they think it's fair. If Apple moved 5-10 miles north to Williamson Co/Round Rock (conservative area)whatever deal they made would be the deal they got. Austin is insane. Far too many dope smokers. Can't wait to leave this godless, self-indulgent cesspool.

"Doing LSD was one of the two or three most important things I have done in my life." -Steve Jobs

burne
Apr 27, 2012, 01:44 PM
We have MOOG in our community - western New York.


The MOOG in "The company asked for a 10-year payment-in-lieu-of-taxes arrangement, plus a sales-tax exemption and a mortgage recording tax break. (http://blogs.buffalonews.com/strictlybusiness/2012/01/biz-links-5.html)" or is that a different one?

hetrigger
Apr 27, 2012, 01:55 PM
http://www.statesman.com/business/official-apple-deal-in-peril-over-delays-in-2327590.html

This is the link to the article posted last night. See if this makes any sense to anyone.

hobo.hopkins
Apr 27, 2012, 01:56 PM
Not really. If Apple opened up an office in Town X, Town X is not going to make a penny of Fred who lives in Town Y and drives to Town X everyday (other than getting gasoline or buying lunch or some kind of local purchases inside Town X).

If Apple hired 3200 new employees in the state (which work now in Town X), sure, the state now has THE POTENTIAL of 3200 people NOW OFF UNEMPLOYMENT which is nice. But unless Apple promises to hire all 3200 people who are currently unemployed, the state is simply going to get higher/lower tax revenue from the employee. If the employee currently makes $100k and goes to Apple to earn $110k, it's $10k more that the state can tax. Big whoop.

It drives me nuts when companies state "we're creating 1500 new jobs!" when they may in fact me creating "1500 new jobs as our employees instead of the competitor's employees". It also sickens me to see companies promote "we're going to create 50 jobs"...that's really something to impress us or the state? 300+ million Americans and you're going to create 50 new jobs in Utah...wow...lets have a parade.

I get what you are saying about a city potentially not benefitting when people commute from outside the city.

I do have an honest question though - if an employee leaves their current company to go work for Apple, doesn't the now vacancy of their job mean another person is hired in their place? That is, after they have moved to Apple, won't their former job be filled by someone else? The net effect, it would seem, is still increasing jobs. This would mean a fair bit of increased revenue to the state, even if it is bit by bit.

scott911
Apr 27, 2012, 02:04 PM
The MOOG in "The company asked for a 10-year payment-in-lieu-of-taxes arrangement, plus a sales-tax exemption and a mortgage recording tax break. (http://blogs.buffalonews.com/strictlybusiness/2012/01/biz-links-5.html)" or is that a different one?

actually no - that article is about three different companies - the headline is MOOG - and a blurb about them.

Then, the second paragraph is about a small tee-shirt shop looking for the tax break

IJ Reilly
Apr 27, 2012, 02:06 PM
I don't get it.

Honest question:
Why would Austin care if Apple "threatens" to leave? What does the city have to lose if Apple locates elsewhere?

Apparently it's not revenue. Then what? :confused:

A fair question. Because it would make the decision-makers look bad if those jobs went to another state. Revenue really isn't at stake here, if only because they are more-or-less guaranteeing that the project will be revenue negative for the next ten years. What is typically at stake is the appearance of promoting economic development. So it has more to do with politics than economics, and even less to do with good government.

FWIW, I worked as a city planner in local government for many years. One of the reasons I changed careers is I got tired of this kind of wheeler-dealer attitude that treated property owners differently based on who they were instead what they were doing. Especially in this state (not Texas) the property tax revenue burden has shifted steadily away from the commercial/industrial rolls towards the residential rolls. This happened for a variety of reasons, but one of them is the red carpet treatment that some companies get in the form of tax give-backs. This can't help but to shaft everyone else, and it does. Somebody has to pay for services and if it isn't going to be the favored corporations, it's going to be us.

mjtomlin
Apr 27, 2012, 02:06 PM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

It's an incentive to bring companies into a particular region to stimulate growth. For the most part, these aren't cases of companies demanding tax breaks, because they don't want to pay.

I seriously doubt Apple worries about whether it gets tax breaks or not, like you mentioned they make money hand over fist. But the ability to progress and get started building the extension is being held up by bureaucracy and that's what is frustrating.

Hotbroker74
Apr 27, 2012, 02:10 PM
It's simple math and it is an absolute no brainer.

3600 jobs times an average 30,000 salary = 108 million dollars that will be put and spent into the Austin community. well after fed tax at 30% it is 75 million
Property tax, sales tax, tag tax and title for a car gas tax. All of that will be put into the Austin community. We can't afford to lose that to Phoenix. Apple is not being greedy just smart. They are always smart. How do you think they have more cash than the united states government.

IJ Reilly
Apr 27, 2012, 02:12 PM
It's an incentive to bring companies into a particular region to stimulate growth. For the most part, these aren't cases of companies demanding tax breaks, because they don't want to pay.

I seriously doubt Apple worries about whether it gets tax breaks or not, like you mentioned they make money hand over fist. But the ability to progress and get started building the extension is being held up by bureaucracy and that's what is frustrating.

Of course they want the money. And all they have to do to get it is threaten to go somewhere else. It's a sweet deal, subsidized by the taxpayers.

dumb terminal
Apr 27, 2012, 02:14 PM
What do you expect from a bunch of hard core liberal/progressive commies?.

You keep using that word, I do not think you really know what that means.

And 1951 called, they want their paranoia back.

apolloa
Apr 27, 2012, 02:15 PM
Now, forgive me for thinking this. But if Apple own that land, and they have all this money, is it not a bit 'petty' to refuse to expand your buildings etc without getting a free ride from the tax payer?
I know that big corporations effectively demand tax breaks, but really? Apple? Oh well it's not some manipulating control freak money obsessed bank at least..

xStatiCa
Apr 27, 2012, 02:35 PM
is it not a bit 'petty' to refuse to expand your buildings etc without getting a free ride from the tax payer?
There should be rules that do not allow negotiations for tax breaks like this. Every state should have it's taxes known and published. If they are too high or too low then they should be fixed for every business and not allow changes that only apply to a single company. It is sad that the government has come to this type of behavior. And even more sad that big companies seem to expect it.

LethalWolfe
Apr 27, 2012, 02:45 PM
Of course they want the money. And all they have to do to get it is threaten to go somewhere else. It's a sweet deal, subsidized by the taxpayers.
Keep losses public and profits private. Real World Capitalism 101.


Lethal

apolloa
Apr 27, 2012, 02:45 PM
There should be rules that do not allow negotiations for tax breaks like this. Every state should have it's taxes known and published. If they are too high or too low then they should be fixed for every business and not allow changes that only apply to a single company. It is sad that the government has come to this type of behavior. And even more sad that big companies seem to expect it.

I can assure you America is not the only country that practices this though! But what is even more sad, when it's a giant corporation that can more then afford to not have any tax breaks, is when you think what else that tax could be used for? Hospitals, schools, police, small start up business even, etc etc etc. Services everyone can gain from.

But that's the modern corporate world run by banks and idiot governments for you.

Glideslope
Apr 27, 2012, 02:59 PM
I honestly wonder why Apple wants/needs the tax breaks? Since I'm not privy to all the information, I'll reserve judgement.

Liberal Arts Major? ;)

----------

There should be rules that do not allow negotiations for tax breaks like this. Every state should have it's taxes known and published. If they are too high or too low then they should be fixed for every business and not allow changes that only apply to a single company. It is sad that the government has come to this type of behavior. And even more sad that big companies seem to expect it.

Really? Sound a little jealous to me? :)

ericinboston
Apr 27, 2012, 03:07 PM
It's simple math and it is an absolute no brainer.

3600 jobs times an average 30,000 salary = 108 million dollars that will be put and spent into the Austin community. well after fed tax at 30% it is 75 million
Property tax, sales tax, tag tax and title for a car gas tax. All of that will be put into the Austin community. We can't afford to lose that to Phoenix. Apple is not being greedy just smart. They are always smart. How do you think they have more cash than the united states government.

Just because my job is located in Austin does not mean I LIVE in Austin...thus paying property taxes. Sure, I may buy lunch and pump gas into my car, but that's about the only guarantee.

Each town/city is different and offers more/less things to do for a person. I used to work in Cambridge, MA but lived in Boston. 2 different cities. Yet often I would go out in Cambridge after work for dinner and sometimes lunch. That's all that Cambridge got out of my salary. Again, I'm not a tax expert...so many the company was paying some yearly taxes to Cambridge. I also used to work at a high tech company in the boonies of suburbia (while living in Boston)...I very very rarely went out after work in that town and almost never buy lunch there because the town had nothing to offer in the form of food/drink/fun. Every night I would return to Boston and go spend my cash there. In fact, I don't EVER recall even getting gas in that town (I worked there for 2.5 years). As far as I recall, that town got $200.00 from me over 2.5 years in the form of food and that's it.

IJ Reilly
Apr 27, 2012, 03:14 PM
Keep losses public and profits private. Real World Capitalism 101.


Lethal

Do tell. You just summarized everything I've said in a few words.

Not that this is really a new idea. The theory that government's main role is the care and feeding of industry goes back to the middle of the 19th century.

ericinboston
Apr 27, 2012, 03:17 PM
I get what you're saying, I really do. I just don't understand why it is wrong for a company to shop around for their next development and try to get the best deal. To me it's no different than when someone looks for the best mortgage.

Of course...and I totally agree. But I do think, in general, businesses run America too much and get the better end of the stick on a vast majority of business incentives.

I'm not saying we need widespread reform or that businesses get totally shafted...but it just seems the towns/states concede so much. Most of us know the theoretical benefits of the incentives/negotiations but at the end of the day the raw MONEY never seems to show up in the form of TAXES. Am I the only one sick of NUMEROUS large businesses legally evading tens and hundreds of MILLIONS of dollars EVERY SINGLE year? You add up all that cash per year and it's easily into the TENS OF BILLIONS of lost tax revenue...PER YEAR...that the government can use this RAW CASH for improvements, services, and if they were smart, a rainy day fund for when the economy sucks. Currently it's just a shell game...theoretical what-if scenarios about # of employees for X years, supposed property tax revenue increases, supposed employee shopping locally, supposed "enrichment" of the town because Company X is now situated there, etc. Blah blah blah. Some of that stuff is fine...but where's the raw money from the company?

I'm not blaming the last 10 years of economical horror on this single topic...but it sure doesn't help. I think as a whole, the USA needs to bring back the notion of paying taxes. Period. Incentives? Sure...but pay the darn taxes.

Capt Underpants
Apr 27, 2012, 03:25 PM
Austin/Travis county is notorious for reneging on deals. What do you expect from a bunch of hard core liberal/progressive commies? If you're rich or your company is doing well, come to Austin so they can stick it to you. That's what liberals/socialists are all about. Stick it to the man. Class warfare under the guise of being "fair". Never mind if you provide an area with thousands of jobs, if you made the mistake of having a company in a liberal area they are going to soak you for as much as they can because they think it's fair. If Apple moved 5-10 miles north to Williamson Co/Round Rock (conservative area)whatever deal they made would be the deal they got. Austin is insane. Far too many dope smokers. Can't wait to leave this godless, self-indulgent cesspool.

One of the reasons Apple wants to locate in Austin is because of its large numbers of godless, self-indulgent [oh, and did I mention highly educated?] workers -- the millenials. Austin draws millenials at least in part because it's a bastion of liberalism in the middle of an otherwise conservative state. We value our education. We accept other cultures. We enjoy our night life.

You don't seem to appreciate this. I hope you find your way out sooner, rather than later.

Goratrix
Apr 27, 2012, 03:29 PM
The theory that government's main role is the care and feeding of industry goes back to the middle of the 19th century.

Yes. It's called "fascism".

IJ Reilly
Apr 27, 2012, 03:54 PM
Yes. It's called "fascism".

Well, no, it isn't. In the U.S., the 19th century idea of government as the promoter of business was the platform of the Whig Party. Abraham Lincoln was a prominent member.

burne
Apr 27, 2012, 03:57 PM
There should be rules that do not allow negotiations for tax breaks like this.

Why? Shops offer discounts, people accept lower offers on their house. If a city wants a certain kind of company or even a specific company bad enough they have the freedom to offer 'discounts'.

IJ Reilly
Apr 27, 2012, 04:14 PM
Why? Shops offer discounts, people accept lower offers on their house. If a city wants a certain kind of company or even a specific company bad enough they have the freedom to offer 'discounts'.

Government is not a business. Those "discounts" are paid by other taxpayers.

extrachrispy
Apr 27, 2012, 04:18 PM
There are at least 49 other states that would bend over backwards to get a solid, stable, & growing tech company to open an operation on their turf, and a hundred million people in all of them for whom such a job would be a significant improvement.

Why anyone would choose Texas over any of the others is a mystery.

Come and visit Austin sometime. You will will understand.

gigaguy
Apr 27, 2012, 04:18 PM
Wow, lots of comments from people who know about Austin. I've lived here 30 years. Apple even offered me a job a few years ago, I said no just like Travis CO is! Ha.
Anyway, I think this has more to do with Apple than Austin. Anything Apple does now is high profile. and they play hard ball for sure. I think Apple really would rather expand in Austin, they are already here doing much of what the expansion will take over. and so many companies supplying services and chips for Apple are here.
The local govt is screwing up by publicly accepting the agreements (boasting and PR) and then others saying 'Whoa Partner' to the terms. Apple prefers Austin but they didn't make 100 billion cash by overpaying for anything.

apolloa
Apr 27, 2012, 04:20 PM
Why? Shops offer discounts, people accept lower offers on their house. If a city wants a certain kind of company or even a specific company bad enough they have the freedom to offer 'discounts'.

I don't really consider when a "city" plays with tax payers money to be in the same ball park as a shop offering a few pennies off an item!

lilo777
Apr 27, 2012, 04:44 PM
Apple need this discount because they want to pay Tim Cook another $100M. Who cares about all those teachers, poor children etc. Apple have a business to do.

hobo.hopkins
Apr 27, 2012, 04:57 PM
Apple need this discount because they want to pay Tim Cook another $100M. Who cares about all those teachers, poor children etc. Apple have a business to do.

This is rather patently a straw man fallacy. Not to mention a false dilemma. The state of Texas isn't required to do one or the other; furthermore the act of doing one doesn't preclude them from doing the other.

I think this thread is full of too many people speaking ideologically, rather than rationally. It is unwise to assert that any and all tax breaks for specific companies is improper and unethical. If Texas elects to offer tax breaks for Apple's continued expansion and still manages to make more in indirect taxation I fail to see a problem.

If, however, the tax breaks outweigh the influx of other forms of taxations, I can see people's points. Until that point this agreement does not negatively impact the taxpayer in any way.

lilo777
Apr 27, 2012, 05:06 PM
This is rather patently a straw man fallacy. Not to mention a false dilemma. The state of Texas isn't required to do one or the other; furthermore the act of doing one doesn't preclude them from doing the other.

I think this thread is full of too many people speaking ideologically, rather than rationally. It is unwise to assert that any and all tax breaks for specific companies is improper and unethical. If Texas elects to offer tax breaks for Apple's continued expansion and still manages to make more in indirect taxation I fail to see a problem.

If, however, the tax breaks outweigh the influx of other forms of taxations, I can see people's points. Until that point this agreement does not negatively impact the taxpayer in any way.

It's reallymuch simpler than that. We know very well that American companies accumulared huge cash reserves whereas American states, counties etc. run huge deficits. For us as a society this does not make any sense and the situation should be fixed. Only ideologically stubborn people would argue with that. Those who believe that capitalism (or whatever "ism") will fixit for us.

ixodes
Apr 27, 2012, 05:09 PM
Time for Apple to suck it up and pay.

I just hope the fees don't put them out of business :)

thekev
Apr 27, 2012, 05:26 PM
Austin/Travis county is notorious for reneging on deals. What do you expect from a bunch of hard core liberal/progressive commies? If you're rich or your company is doing well, come to Austin so they can stick it to you. That's what liberals/socialists are all about. Stick it to the man. Class warfare under the guise of being "fair". Never mind if you provide an area with thousands of jobs, if you made the mistake of having a company in a liberal area they are going to soak you for as much as they can because they think it's fair. If Apple moved 5-10 miles north to Williamson Co/Round Rock (conservative area)whatever deal they made would be the deal they got. Austin is insane. Far too many dope smokers. Can't wait to leave this godless, self-indulgent cesspool.

I'm really tired of silly rhetoric like this. They are not creating jobs out of the goodness of their hearts. Companies hire as an investment. It is not a favor to the local populace. The mentality that you should be grateful is beyond silly. It should be viewed as more of a symbiotic relationship. Companies would not create such jobs if they did not expect a return on their investments.

soundguyami
Apr 27, 2012, 05:28 PM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

A. Apple could pick up and move overseas more than it has.

B. Are you kidding me?? The city and county still gets sales taxes from employees buying fuel, food, and from their payroll...which for a company that size is quite a bit.

Texas is a right to work state...Apple is anti union..they have little interest of relocating to a union state.

lilo777
Apr 27, 2012, 05:30 PM
A. Apple could pick up and move overseas more than it has.

B. Are you kidding me?? The city and county still gets sales taxes from employees buying fuel, food, and from their payroll...which for a company that size is quite a bit.

Texas is a right to work state...Apple is anti union..they have little interest of relocating to a union state.

Apple was founded and is based in a union state and as far as I know they have no desire to relocate to aright to work (without pay) state for those are known to attract only second class talent.

Rocketman
Apr 27, 2012, 05:34 PM
I'm really tired of silly rhetoric like this. They are not creating jobs out of the goodness of their hearts. Companies hire as an investment. It is not a favor to the local populace. The mentality that you should be grateful is beyond silly.Choice: Be grateful and get jobs. Be ungrateful and not get jobs. Seven cities are in line to get the deal, six of which are in another country.

The government frequently says, lay down and pay a fine or, go to court and roll the dice.

The former paragraph is far more constitutional than the latter.

Rocketman

Proposed policy modification: "So long as this government has a tax and spend policy and continues to run deficits causing annual monetary and buying power destruction, to the pain of its own citizens and us, we elect to bias our business activities overseas. Starting today our domestic US operations will be owned overseas in tax friendly regions and we will operate them accordingly."

The government will then have a choice of its own. Deficit and roll the dice.

chrmjenkins
Apr 27, 2012, 05:56 PM
So that's the barometer of a state's health eh? I'd like to hear who is in better shape than Texas. You better not say california

California is in poor shape as a state (referendum process locks down revenue streams), but they send out more funds than they receive back.

lilo777
Apr 27, 2012, 06:17 PM
Choice: Be grateful and get jobs. Be ungrateful and not get jobs. Seven cities are in line to get the deal, six of which are in another country.

The government frequently says, lay down and pay a fine or, go to court and roll the dice.

The former paragraph is far more constitutional than the latter.

Rocketman

Proposed policy modification: "So long as this government has a tax and spend policy and continues to run deficits causing annual monetary and buying power destruction, to the pain of its own citizens and us, we elect to bias our business activities overseas. Starting today our domestic US operations will be owned overseas in tax friendly regions and we will operate them accordingly."

The government will then have a choice of its own. Deficit and roll the dice.

There is something fundamentally wrong with many americans - especially the republicans. They love their constitution but hate the government failing to realize that the two are inseparable. The main goal of the constitution is to define how the government gets elected and how it operates. Americans first elect the government and then treat it as a hunta. Corporations are not humans. They can't hold government a hostage. Those perverted thoughts of yours belong to spcific individuals, usually republicans, who in perverted way think they are "great americans".

Rocketman
Apr 27, 2012, 06:25 PM
There is something fundamentally wrong with many americans - especially the republicans. They love their constitution but hate the government failing to realize that the two are inseparable. The main goal of the constitution is to define how the government gets elected and how it operates. Americans first elect the government and then treat it as a hunta. Corporations are not humans. They can't hold government a hostage. Those perverted thoughts of yours belong to spcific individuals, usually republicans, who in perverted way think they are "great americans".Interesting anarchist argument. And personal attack.

My take on my words is keep your government on a short leash, and give it feedback when it is doing something objectionable. We do live in a Republic after all. We have to communicate with our representatives to get results and voting alone is too crude.

Corporations could use a serious legal and priority downgrade as compared to natural persons.

Rocketman

thekev
Apr 27, 2012, 06:48 PM
Choice: Be grateful and get jobs. Be ungrateful and not get jobs. Seven cities are in line to get the deal, six of which are in another country.

The government frequently says, lay down and pay a fine or, go to court and roll the dice.

The former paragraph is far more constitutional than the latter.

Rocketman

Proposed policy modification: "So long as this government has a tax and spend policy and continues to run deficits causing annual monetary and buying power destruction, to the pain of its own citizens and us, we elect to bias our business activities overseas. Starting today our domestic US operations will be owned overseas in tax friendly regions and we will operate them accordingly."

The government will then have a choice of its own. Deficit and roll the dice.

Usually you make better posts than this, even if I don't always agree with them. Buying power has been headed in a poor direction for a long time, and many things have contributed to this including the wars and bad banking policies over the past two decades. They aren't the sole problem, but the scope of their impact makes it more difficult to interpret the rest of the data.

At some point we will have to drastically cut things like defense budgets, cut subsidies, cut services, and maintain taxes. It won't be pretty. Anyway the problems we're facing didn't start within the last few years.

burne
Apr 27, 2012, 06:50 PM
Government is not a business. Those "discounts" are paid by other taxpayers.

If that is the case you voted a moron for a mayor. Tax breaks should be a discount for business, not a loss leader for local goverment.

xStatiCa
Apr 27, 2012, 06:51 PM
Really? Sound a little jealous to me? :)
Na... I work for a fortune 500 company... I don't deal with the financial side though. It just sounds wrong.

ChrisTX
Apr 27, 2012, 06:51 PM
Texas is in a better economic position than much of the US right now. Maybe they don't need to bend over for Apple?

Austin is in the best shape economically out of all of the cities in the country right now but they're not dumb enough to pass on 3200 jobs being added to the area.

Rocketman
Apr 27, 2012, 06:57 PM
Usually you make better posts than this, even if I don't always agree with them. Buying power has been headed in a poor direction for a long time, and many things have contributed to this including the wars and bad banking policies over the past two decades. Evidence it is largely this administration's policies:

http://www.currencywarsbook.com/2012/03/rickards-testimony-before-senate-banking-committees-subcommittee-on-economic-policy/

Also:

http://www.newsmax.com/BradleyBlakeman/U-Seconomy-velocity-money/2012/03/02/id/431249

http://historysquared.com/2012/04/16/normalcy-bias-credit-risk-in-etns-money-velocity-changes-like-the-wind/

http://youcreatemoney.com/16-money-velocity-slows/

https://mises.org/daily/918

"What matters right now is the fact that money is growing at an alarming rate, which sets in motion an exchange of nothing for something and, hence, economic impoverishment and consequent boom-bust cycles. Furthermore, since velocity is not an independent entity, it as such causes nothing and hence cannot offset effects from money supply growth."

:D

As I pointed out in another thread, in light of these facts, for Cook to essentially double the capabilities of iPad3 (and soon iPhone5 and MacPro and Powerbook), for the same price with a declining currency purchasing power in major countries, he is doing some serious supply chain magic and it can't last much longer. Buy now.

Rocketman

Fairfax
Apr 27, 2012, 07:03 PM
Looks like we have some conservatives here who are in favor in corporate welfare who also probably complain about social welfare.

:apple:

hetrigger
Apr 27, 2012, 07:19 PM
There is something fundamentally wrong with many americans - especially the republicans. They love their constitution but hate the government failing to realize that the two are inseparable. The main goal of the constitution is to define how the government gets elected and how it operates. Americans first elect the government and then treat it as a hunta. Corporations are not humans. They can't hold government a hostage. Those perverted thoughts of yours belong to spcific individuals, usually republicans, who in perverted way think they are "great americans".

So, what you are saying is, the Government hates competition from the evil Corporations (criminals)! You are right, the constitution and government are inseparable. But, the preamble and section 8 states:

"We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."

Section. 8. "The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;"

I put these two quotes up for a reason. Section 8, to remind you, is for the federal side of taxes not generally for the "local" side. "Local" governments that want to bring jobs and companies can provide "incentives" through tax relief can do this under their own constitution. But, to demonize any company for trying to get a better deal is wrong. We built this country on blood, sweat and tears of our ancestors. And remember, it was the government that took advantage of the Native Americans way before your accusation of corporations.

The "perversions" that you mention are among ALL party lines. I love my government, but I hate the politicians! I have served in the military for over 20 years and I am proud to do so. As with any writings (good and bad) we do take it and read it in different interpretations.

Have a great day!

Small White Car
Apr 27, 2012, 07:37 PM
That's not what he said. Let them set the tax rates but require that those be equal for all companies.

But that does absolutely nothing to keep states from fighting with other by lowering the tax rates. Since that was the specific problem he was addressing, I find it hard to believe that's what he meant.

No, it is not one big mixing bowl. Not where the provision of government services are concerned. They are paid for out of tax collections. The "economic development" benefits are amorphous, at best. Construction doesn't even have to go to local firms. The jobs can be low-paying and go to people who don't live in the city and county. For certain these inflows don't make up for the tax loss. It's cost-shifting. Companies extort these give-backs out of local governments because they can.

So it sounds like, to you, Austin should just let Apple go somewhere else and the city just shouldn't care? Do I have that right? The benefits of them being there are not worth Austin worrying about?

IJ Reilly
Apr 27, 2012, 07:54 PM
If that is the case you voted a moron for a mayor. Tax breaks should be a discount for business, not a loss leader for local goverment.

You as in who? I have no idea what you are talking about. Probably you don't either.

marksman
Apr 27, 2012, 07:55 PM
They don't need any tax breaks ... And why should they get any ... What a joke ... They need to keep this sort of stuff quiet or they'll be loosing sales ... And quite frankly its what used to be called corruption

I don't know if some of you live in the 1920s or what but companties getting tax breaks for locating sizable businesses in an area is standard these days. Municipalities want businesses for a number of reasons and benefit from then greatly outside of short term tax revenue. Nobody is forcing anyone to give tax breaks but large businesses are in demand and cities compete for them. To not take advantage of that would be dumb and fiscally irresponsible.

IJ Reilly
Apr 27, 2012, 07:57 PM
So it sounds like, to you, Austin should just let Apple go somewhere else and the city just shouldn't care? Do I have that right? The benefits of them being there are not worth Austin worrying about?

Not sounds like, is. Local governments set tax rates to pay for services. If someone gets preferential treatment on taxes, then someone else has to make up the difference. Pretty straight forward.

marksman
Apr 27, 2012, 08:01 PM
3,600 people paying income tax and sales tax and homeowner taxes and car taxes provides lots of revenue.

It's up to Texas and Arizona to fight over that revenue.

What do you suggest? If you're on that city council you'd say "yeah, sure. Go send all that money to Arizona. We don't need it"? (Not to mention that your unemployment rate is worse since there are 3,600 fewer jobs than there otherwise would have been.)

That's not a move that will get you reelected.




Then give us a solution. What should that city council do?

FYI Texas does not have income tax but the rest stands.

----------

Given the current situation, where they apparently do have to fight with Arizona over tax subsidies, is what is indefensible and no, I don't have a short term solution. The real solution would be to ban tax breaks, subsidies and corporate welfare nation wide for publicly traded companies.

That is dumb. Many a city have prospered due to relationships and deals with corporate partners. In some cases there are issues that would prevent some cities from ever seeing new large businesses moving there without incentives. Your take on this is short sighted and naive. Nobody is being forced to do anything. No municipality should enter into an agreement unless they feel it is beneficial to them long term.

tschull
Apr 27, 2012, 08:19 PM
Warren Buffet pays less taxes than his secretary.

Sorry to pick on you, but this comment, in my opinion, illustrates why the American public elects idiots to political offices: the electorate gets sloppy with simple facts. While I don't have either of their tax returns in front of me, I am fairly confident Warren Buffet pays far more taxes than his secretary. What Mr. Buffet stated in the media was that his tax rate was lower than his secretary's.

tschull
Apr 27, 2012, 08:31 PM
Not sounds like, is. Local governments set tax rates to pay for services. If someone gets preferential treatment on taxes, then someone else has to make up the difference. Pretty straight forward.

It is not a zero-sum game. If the income to the local government generated by a business exceeds the cost of the tax breaks given to the business, then the local government realizes a net increase in their revenue, regardless of what other businesses are being taxed. In this case, the long-term economic gain to the local economy is likely to be substantial.

sportsfan
Apr 27, 2012, 08:34 PM
This sounds like standard negotiations to me. Both sides what a deal that is favorable to them, but the customer (Apple) can go else-where to build their campus, so they are threatening to use a different supplier (of land).

----------



Because they are saying "We will create thousands of jobs in your city". "After the tax breaks go away, you'll get lots of money from us."

Actually, after the tax breaks go away...Apple will threaten to move again unless new breaks are put in. All companies do it and it's terrible.
Tax breaks should be banned. Let companies build where they want at the market rate.

Small White Car
Apr 27, 2012, 08:54 PM
Not sounds like, is. Local governments set tax rates to pay for services. If someone gets preferential treatment on taxes, then someone else has to make up the difference. Pretty straight forward.

So why do governments all over do this?

You say there's no reason for it, so why do they do it?

LethalWolfe
Apr 27, 2012, 09:02 PM
So why do governments all over do this?

You say there's no reason for it, so why do they do it?
Because you pretty much have to as long as municipalities are willing to under cut one another. You just hope that you don't go one incentive too far and screw yourself (like Michigan did w/their film making incentive from a couple years ago).

To steal a phrase, the only thing worse than doing business with them is not doing business with them. ;)


Lethal

Rocketman
Apr 27, 2012, 09:06 PM
You know what I noticed about this thread? It really is all politics.

Bwinski
Apr 27, 2012, 09:45 PM
It should be everyone's wish from deep in their souls that Apple tells the people in and around Austin - JAM IT IN YOUR AS** . Apple should move out of Austin - COMPLETLY .....

Austin is a rat pit. The weather sucks, the people suck, the local government is terrible, the racism is blatant and outrageous, bigotry in every fabric of daily life tears families art at an enormously high rate, and most had rather cut you ear to ear with a beer bottle than look at you.

AND, worst of all, it's TEXAS. They truly believe that the only way to " correct" their direction for their constituents is turn back the calendars for their 'followers'. It's time to throw those folks off a building and move on.

Apple should just say NO... NO THANKS. WE'RE LEAVING.

koobcamuk
Apr 27, 2012, 10:04 PM
I don't think Apple should be getting a tax break, average Joe should have tax breaks. Apple has quite a lot of cash, some of which could be spent on improving the country.

Rocketman
Apr 27, 2012, 10:24 PM
Austin is a rat pit. The weather sucks, the people suck, the local government is terrible, the racism is blatant and outrageous, bigotry in every fabric of daily life tears families art at an enormously high rate, and most had rather cut you ear to ear with a beer bottle than look at you.I was going to post that but I am from CA and except the people, government, torn families, cut you, everything is different here.

Apple is trying to reduce risk by physically spreading. Resistance is not only not futile but is surprisingly intense and evidence of why business cannot thrive in this country.

Rocketman

xenocog
Apr 27, 2012, 11:40 PM
Wow. They will go to Phoenix. Too bad for Texas.

C'mon to Phoenix: Sunny skys, no hurricanes, no earthquakes, no volcanos, inexpensive property, extraordinary geology and biota, great universities, Intel expanding here also, Phoenix is closer to Cupertino than TX is, Phoenix a major transportation hub, home to sports, the world's largest municipal park and a plethora of regional parks. Also (despite what some media might imply) one of America's friendliest population centers!

IJ Reilly
Apr 27, 2012, 11:50 PM
It is not a zero-sum game. If the income to the local government generated by a business exceeds the cost of the tax breaks given to the business, then the local government realizes a net increase in their revenue, regardless of what other businesses are being taxed. In this case, the long-term economic gain to the local economy is likely to be substantial.

It doesn't.

Spacely
Apr 27, 2012, 11:51 PM
For all Austin's reputation as a progressive haven, the city government is incredibly pro-business, and has been kowtowing to developers and corporations for decades. The city is getting overbuilt and quality of life is deteriorating for average citizens because for the Powers That Be, it's all about attracting big hotels, big corporations, big national retailers, big real estate developments. In addition to its largesse toward Apple, the city just gave a massive handout to a convention hotel that had already made it clear it was coming here regardless. Who cares if longtime homeowners have to sell and move away because their property taxes are through the roof? Somebody from out of state will see Austin on one of the many Top 10 lists it has made, move here and pay $600K for that house that was $150K 10 years ago and not even care that the taxes are now $8000/year.

So as one of the many citizens who can barely afford the rising cost of living, I'm glad to see Travis County actually, belatedly, start to pay close attention to what they're getting in return for corporate welfare for Apple.

Of course, as the proud owner of 100 shares of Apple stock, a tiny little part of me is going "Yeah, let those teachers and police officers pay higher property taxes, to make up for the taxes Apple won't be paying! I want my stock to go up another 1%!"

BTW, there has been much discussion about how serious a rival Phoenix really was/is:

http://www.usatoday.com/USCP/PNI/Business/2012-03-23-PNI0323biz-applePNIBrd_ST_U.htm

IJ Reilly
Apr 27, 2012, 11:52 PM
So why do governments all over do this?

You say there's no reason for it, so why do they do it?

Please read back. I certainly have explained why they do it.

X Cruz 187
Apr 28, 2012, 12:29 AM
3,600 people paying income tax and sales tax and homeowner taxes and car taxes provides lots of revenue.

It's up to Texas and Arizona to fight over that revenue.

What do you suggest? If you're on that city council you'd say "yeah, sure. Go send all that money to Arizona. We don't need it"? (Not to mention that your unemployment rate is worse since there are 3,600 fewer jobs than there otherwise would have been.)

That's not a move that will get you reelected.
Then give us a solution. What should that city council do?


Texas doesn't pay state income Tax 0%, property tax is only around 1% once a year and auto is like $75 less than 1% a year! So I think Austin will be ok, Texas has one of the best unemployment %'s in the country.

onigami
Apr 28, 2012, 04:25 AM
3,600 people paying income tax and sales tax and homeowner taxes and car taxes provides lots of revenue.

For starters, Texas doesn't have income taxes, and all other taxes are incredibly low. An influx of 3600 (odds are, many of these new employees are from outside Travis County) might have a significant impact on local services and infrastructure, and the county has a right to be concerned about that and expect fair payment to use those services and infrastructure. Secondly, it's not like the unemployment rate is hurting: Texas has an unemployment rate at a healthy 7%, and Travis County has an even better 6%. While improving the economy is always important, job creation is not at the forefront here. Travis County can afford to haggle with Apple, and Apple can afford to take a $30 million hit. Furthermore, even if Apple's fortunes were to suddenly change (a certainly plausible scenario), that only gives Travis County a reason to haggle, so as to avoid losing money outright.

To give an example of what happens when you simply cave to every corporation's demand, look at what happened with San Francisco: They gave startups in the late 1990s a bunch of tax incentives with a 6-year expiration. By the time that expiration came around, all those companies had disappeared for various reasons (buyouts or bankruptcy), with the city not gaining a cent from them. Around the same time, a bunch of corporations forced out the 1.5% payroll tax, causing further losses in revenue and declines in quality of service for public transit and education. Now Edwin Lee, Willie Brown's Shih Tzu, is repeating the same mistake his master did by basically giving up taxing the current generation of startups, with a recent instance of caving to Twitter's demand of refusing to pay a measly $875,000 in taxes shortly after being given nearly 1000x that by the Saudi royal family. Twitter threatened to move to Brisbane, a very inaccessible and useless town to the immediate south of the city, if Lee didn't cooperate. (Notably, Wal-Mart has their internet operations there as well, and it hasn't particularly helped Brisbane)

Finally, let's not forget what Mitt Romney said: Corporations are people too. Thus, they should expect to pay taxes, rather than take every damn opportunity to avoid them.

onigami
Apr 28, 2012, 04:56 AM
Apple is trying to reduce risk by physically spreading. Resistance is not only not futile but is surprisingly intense and evidence of why business cannot thrive in this country.

Rocketman

Don't make me laugh. Businesses cannot thrive because they need to not pay taxes? If that is the case, then they are not running businesses, but criminal rackets. Businesses do not exist in some separate bubble, above the call of mean ol' big government and dem dirty libruls. They exist in the real world, and while they can create jobs, there is a cost to being a business: They use the same roads and the same services as anyone else. Who owns those roads? The state and local governments. Who runs those services? Local governments. As a consequence, a municipal government has a right to be worried when, for example, 3000+ more cars start clogging the highways during rush hour (given this is Texas, carpooling and/or shuttle would laughed off stage) without some form of reparation, especially one that can be used to perhaps alleviate said highway clogging. Now unless Apple is willing to force their employees to live on-site, build roads specifically for company use, and create other infrastructure (hospitals, fire department, power grid, etc.) to suit the needs of their employees, they are going to use those highways, and those services. Travis County is only asking for what is close enough to fair with some compromise.

But wait, you say. Why don't they use income, sales, or property taxes to get what they want through these new employees? Well, barring aside the fact that Texas has no income tax and very low taxes otherwise, what you are suggesting is that employees take on the additional burden of what their employers should be paying (since, more often than not, those forms of taxes are regressive and tend to rise). The words greedy, imbalanced, selfish, and sociopathic are not strong enough words to describe what you are suggesting. Immoral may be an appropriate term, but most of your type (not saying you specifically) seem to assign that to petty kulturkampf issues. Remember, there is a cost to everything. Plenty of successful and thriving businesses have paid it in the past. If you can't pay that cost, you should not be doing business.

Glideslope
Apr 28, 2012, 05:59 AM
Na... I work for a fortune 500 company... I don't deal with the financial side though. It just sounds wrong.


GoDaddy.com? ;)

d0vr
Apr 28, 2012, 11:16 AM
Of course...and I totally agree. But I do think, in general, businesses run America too much and get the better end of the stick on a vast majority of business incentives.

I'm not saying we need widespread reform or that businesses get totally shafted...but it just seems the towns/states concede so much.

That's just part of living in a consumerist society, and that's a discussion not fit for macrumors!

imageWIS
Apr 28, 2012, 11:34 AM
Forget about that it's Apple for a second. Why shouldn't American corporations that are doing well pay the same taxes as every other company? Isn't the American thing to help out the American economy during its time of need?

AppleDroid
Apr 28, 2012, 12:01 PM
Puppies.

NitroZip
Apr 28, 2012, 01:09 PM
I find it funny that some people think Apple should get tax breaks, but other big corporations should not. I think the fanboys are showing.

AppBot
Apr 28, 2012, 02:38 PM
Apple is the top earning tech company in the USA with record breaking revenue, mounds of profits, and is only looking up,up,up with the new iPad, next iPhone, and all the Macs they can sell!

So, Apple doesn't need tax breaks.

Apple should listen to the 99% of the rest of the country, pay their fair share, and stop treating the good people of Austin, Texas like their underpaid suicidal FoxConn sweatshop workers.

Occupy Apple! - The Buffett Rule should apply to corporations too.

RVdave
Apr 28, 2012, 02:57 PM
Everyone on this forum recently prepared their tax forms, and it's safe to say that everyone, regardless of income, tried their best to pay as little as possible. Why should Apple do any less?

potatis
Apr 28, 2012, 03:15 PM
looks like the North Korean nuclear site.

skye12
Apr 28, 2012, 03:22 PM
Go to Phoenix. I live in Austin and see NO reason to give a corporation
with 100 BILLION in the bank tax breaks.

Corporations just play cities against each other to blackmail them into these tax breaks.

AppleScruff1
Apr 28, 2012, 03:22 PM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

This. Apple should just buy the city.

kdarling
Apr 28, 2012, 03:25 PM
Everyone on this forum recently prepared their tax forms, and it's safe to say that everyone, regardless of income, tried their best to pay as little as possible. Why should Apple do any less?

For one thing, we didn't ask for special tax breaks to be created just for ourselves :)

RVdave
Apr 28, 2012, 03:54 PM
For one thing, we didn't ask for special tax breaks to be created just for ourselves :)

Of course you did. You asked for breaks for childcare, college tuition, home ownership, the tax collector's appraisal of your house, etc., etc., etc. You just went through an agent (your congressperson, etc.) instead of negotiating directly. I've been involved with new plant construction, and once cities get wind of expansion plans they begin knocking on your door with all sorts of offers why their town should get the plant, and the jobs that go with it. Some offer a good pool of potential employees or great weather, or low housing costs. Others offer tax incentives and in some cases will even share the construction costs. Any company that wouldn't consider the best deal would undoubtedly have to answer some difficult questions from their shareholders.

tschull
Apr 28, 2012, 04:24 PM
Careful who you call ignorant. Local governments set tax rates to pay for local services, such as police, fire, schools, water, sewer, roads, etc. If they allow some taxpayers to pay less than their share, then by definition, the rest of the locality's taxpayers have to make up the difference. The argument that the jobs created offset the shortfall is null, since computing their tax value is speculative, at best, and as far as I can tell, nobody even tries to make this calculation. It's a subsidy, plain and simple. Companies threaten local governments with moving or locating elsewhere, and get a gift of the taxpayer's money.

I have read several of you posts and you have a hard time getting around this concept that the county's tax revenue base is not fixed, it can grow or shrink, depending on the amount of improved property, or sales tax.

Estimating the gain to Travis county's tax base is not speculative. There will be an increase of approximately $304 million in improved property. Travis county's property tax rate for the city of Austin is 0.4811/$1000 (http://www.co.travis.tx.us/tax_assessor/rates/default.asp). That's about $1.47M/yr. The center will employ approximately 3600 people. If the majority of the employees are call center representatives their average salary will be something near $30K (http://www1.salary.com/Call-Center-Representative-I-Inbound-Salary.html). That's about $108M/yr coming into the county from Apple. There is no income tax, but the local sales tax is 8.25%. If we estimate that one-third of peoples salaries is spent on goods and services, i.e. the local economy, then approximately $8.9M/yr in sales tax will be collected, although I have no idea what part of that will go to the county. These two factors alone suggest that Apple's presence will add somewhere in the neighborhood of $10M/yr in tax revenue to the state and county.

According to the article:
"After the county approved its incentives offer to Apple in principle April 17, the total state and local government incentives package to the company was estimated at $35 million to $36 million over 10 to 15 years.

Of that amount, $21 million would come from the state's Texas Enterprise Fund, $8.6 million would come from the City of Austin, and between $5.4 million and $6.4 million would come from Travis County."

The language "come from" does imply "rebates" or direct payments; more likely it is taxes the state and local governments will forego collecting. It is not paid out from the budget. So they are passing on $36M they would normally collect to get a revenue of $100-150M over 10-15 years. Clearly the state and county are coming out ahead, not to mention the 3600 people that get jobs.

Again, this is not a zero-sum game. There are no other call centers in Austin, to my knowledge. They are not taking business away from a competitor. This is pure commercial growth for the region. I cannot understand your truculence on this subject.

lilo777
Apr 28, 2012, 05:48 PM
Those who still think that corporations in general and Apple in particular need any tax breaks should read this article: How Apple Sidesteps Billions in Global Taxes (http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html? pagewanted=1&_r=1&hp)
According to this article Apple pays the lowest tax rate among peer companies. They are by far the greediest ones.

numlock
Apr 28, 2012, 06:05 PM
Those who still think that corporations in general and Apple in particular need any tax breaks should read this article: How Apple Sidesteps Billions in Global Taxes (http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html? pagewanted=1&_r=1&hp)
According to this article Apple pays the lowest tax rate among peer companies. They are by far the greediest ones.

who cares?

their employees pay sales and income tax and obviously the tax men collect more than 0 so they come out ahead

louden
Apr 28, 2012, 07:42 PM
Those who still think that corporations in general and Apple in particular need any tax breaks should read this article: How Apple Sidesteps Billions in Global Taxes (http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html? pagewanted=1&_r=1&hp)
According to this article Apple pays the lowest tax rate among peer companies. They are by far the greediest ones.

The trouble isn't that they're gaming the system, they're doing what a company should do. Just like Warren Buffet, they're trying to minimize their taxes.

The problem is, the system is so gameable.

Naaaaak
Apr 28, 2012, 09:00 PM
The trouble isn't that they're gaming the system, they're doing what a company should do. Just like Warren Buffet, they're trying to minimize their taxes.

The problem is, the system is so gameable.

Speaking of gameable (http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html?_r=1)

I wish I could use such games with my personal taxes. There are pretty much two tax rates in this country: standard rates and better rates you can take advantage of if you employ teams of lawyers and accountants.

Bureaucracy is the problem. Simplify everything to make it easy to understand and impossible to game.

Breckenridge
Apr 28, 2012, 09:10 PM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

If You don't, big corps will move elsewhere including overseas.

Dmunjal
Apr 28, 2012, 10:10 PM
According to this, the Feds would have received an additional $2.4B this year if Apple didn't move their offices to other countries. Even California loses out in tax revenue.

http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html

kdarling
Apr 28, 2012, 11:04 PM
Of course you did. You asked for breaks for childcare, college tuition, home ownership, the tax collector's appraisal of your house, etc., etc., etc. You just went through an agent (your congressperson, etc.) instead of negotiating directly.

Sure, but those tax breaks affected more than just a single person or company.

Any company that wouldn't consider the best deal would undoubtedly have to answer some difficult questions from their shareholders.

Any company? We're talking about Apple.

Cheers!

lilo777
Apr 28, 2012, 11:54 PM
According to this, the Feds would have received an additional $2.4B this year if Apple didn't move their offices to other countries. Even California loses out in tax revenue.

http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html

Apple makes mockery out of the tax system. They have 20 employees in Nevada and claim the majority of their profits there (where the tax rate is low). At the same time the majority of their employees live in California, use California resources (schools, roads etc.) but Apple avoid paying California taxes. Does anyone think that this is fair? Please speak up!

Flyerflyer
Apr 29, 2012, 12:02 AM
I will be remodeling my home soon and demand a government handout along with Apple. I am entitled to taxpayer subsidy because I will be putting local contractors to work and will therefore make the community a better place. Since my remodel will enhance the local economy, the only way to fix underfunded schools, police, highyways, etc. is for the city to immediatly approve the tax incentive plan proposed by my lawyers. Or else I will move.

beachtrader
Apr 29, 2012, 12:13 AM
Estimating the gain to Travis county's tax base is not speculative. There will be an increase of approximately $304 million in improved property. Travis county's property tax rate for the city of Austin is 0.4811/$1000 (http://www.co.travis.tx.us/tax_assessor/rates/default.asp). That's about $1.47M/yr. The center will employ approximately 3600 people. If the majority of the employees are call center representatives their average salary will be something near $30K (http://www1.salary.com/Call-Center-Representative-I-Inbound-Salary.html). That's about $108M/yr coming into the county from Apple. There is no income tax, but the local sales tax is 8.25%. If we estimate that one-third of peoples salaries is spent on goods and services, i.e. the local economy, then approximately $8.9M/yr in sales tax will be collected, although I have no idea what part of that will go to the county. These two factors alone suggest that Apple's presence will add somewhere in the neighborhood of $10M/yr in tax revenue to the state and county.


Incorrect. You are assuming that everyone there will be purchasing new property adding new property tax. 30k a year and they are buying houses? Many people will live in apartments paying no real estate tax and many will move into existing homes displacing others moving out resulting in no new property tax. Plus, you are assuming people will live in the same county--many will live outside of the county they work in and commute.

Moreover, you are also assuming people will spend all their money on taxable goods in the same county--you can't assume that either.

Your assumptions are extremely favorable and high. And when you drop out all the favorable assumptions it becomes much less clear and more murky.

Picka
Apr 29, 2012, 07:01 AM
Incredible that a company that makes so much money every quarter is forcing the state to accommodate it's own tax demands, or else...

No wonder this country is going downhill. Can I negotiate my own tax arrangements with the state, or do I need to be making Billions every quarter in order to be able to pay less tax?

IJ Reilly
Apr 29, 2012, 12:10 PM
I have read several of you posts and you have a hard time getting around this concept that the county's tax revenue base is not fixed, it can grow or shrink, depending on the amount of improved property, or sales tax.

Read all of my posts, it might help. I don't have any conceptual difficulty with this subject. I'm probably the only person in this discussion who actually has local government experience, and I am telling you that the supposed revenue benefits of tax give-backs do not pan out. They are based on too many speculative calculations. The only thing we do know is that property taxes are being rebated as an "incentive" for a business to expand -- something they were very likely going to do anyway, for reasons that have nothing whatsoever to do with property taxes. So all we know for certain that property tax revenues the local government uses to provide services will be reduced (by 50% in this case, for ten years).

You are confusing salaries paid to new hires with local government revenues. One does not mean the other, at least not in any way that you can readily quantify. Coming up with an economic benefit number requires engaging some very speculative theories about how many of those new hires already live or will live in the jurisdiction, how much more disposable income they will spend in the jurisdiction, and how much of that disposable income will be returned to that local government in the form of taxes. You can come up with a number, but it will be based on so many loose variables that it's essentially meaningless for economic purposes. But it does make good political cover, and that as I have already said, is the point of the entire exercise in the end.

Once you realize that this process is not driven by actual economics, then you will become more appropriately skeptical of these sweetheart tax deals. These corporations get special tax treatment not because they necessarily deserve them, but because they can scare local government people into handing them out. And, as is always the case, lunch is not free. Somebody else will be making up the difference, and you should already know who that is.

RVdave
Apr 29, 2012, 12:11 PM
Sure, but those tax breaks affected more than just a single person or company.



Any company? We're talking about Apple.

Cheers!

What unusual comments you make. The purpose of most companies is to make as much money as possible for their owners, their shareholders, and one way they do this is by minimizing their expenses. Since this seems immoral to you, perhaps you should make sure your skirts are clean. Do you have a pension fund, an IRA, any Mutual Funds? If so, you probably own and are benefiting from the growth of Apple stock, which reflects their cash and cost controls. You can solve this problem by investing in other companies. Have a prosperious future.

jonnysods
Apr 30, 2012, 09:15 AM
Why give tax breaks to the most profitable corporations in the world? The local authorities have to provide infrastructure, etc., and get no revenue?

It's the jobs that are the big deal. 3200 with such a high unemployment rate in America = pure gold for Texas. And they will get their money back when those 3200 people start spending money!

Rocketman
Apr 30, 2012, 10:12 AM
Why give corporations deductions?

Here are some of the more common deductions:

Cost of paying labor
Cost of providing benefits to labor
Cost of credit
Cost of buying materials
Cost of professional services
Cost of non-professional service
Depreciation for goods that wear out to encourage more rapid replacements
Costs of taxes actually paid to other layers of government, state, county, local

Now which of those do you want to eliminate last? I want to eliminate that first.

BTW the Ryan plan lowers rates for everyone and eliminates "most deductions", except for 5, and results in a LARGE tax increase for the "rich".

The "rich" are fine with that because the marginal rate is the primary basis business decisions are made on. Simplified tax treatments substantially reduce reporting costs and eliminate mostly tax motivated decisions, making the business more efficient overall.

I was in the financial industry the last time this happened in the mid-80's and it was really interesting to watch all the wacky things fall out of favor, like cattle ranch credits and a hundred other similar schemes, and see money flow into traditional investments. That oft ignored fact was the actual source of the duration and scale of the recovery IMHO.

Econ 101: Investment preceeds/causes income and growth.

Rocketman

daleremote
Apr 30, 2012, 10:29 AM
Texas is in a better economic position than much of the US right now. Maybe they don't need to bend over for Apple?

...and Travis County is a better economic position than much of Texas.

a.jfred
Apr 30, 2012, 12:45 PM
I do have an honest question though - if an employee leaves their current company to go work for Apple, doesn't the now vacancy of their job mean another person is hired in their place? That is, after they have moved to Apple, won't their former job be filled by someone else? The net effect, it would seem, is still increasing jobs. This would mean a fair bit of increased revenue to the state, even if it is bit by bit.

Not necessarily - in some cases, the company may decide to cut hours or staff altogether. Where I work, all my direct reports are part-time. When I first got here, I had 105 hours to work with. Now I have 65. Every time someone left, it was decided (higher up) that we didn't really need all those hours. My 40-hour person was replaced with a 20-hour person. My 35-hour person was replaced with another 20-hour person. One wasn't replaced at all. Instead, I'm the one (because I'm exempt) who's left to fill the void in the hours (which is apparenty every time I go on vacation, and there's a nice 40+ hour hole in the schedule).

So that "3200 jobs" for Apple may end up costing a few positions in the long run.

a.jfred
Apr 30, 2012, 12:58 PM
Texas doesn't pay state income Tax 0%, property tax is only around 1% once a year and auto is like $75 less than 1% a year! So I think Austin will be ok, Texas has one of the best unemployment %'s in the country.

Property tax is ONLY around 1%? You better tell that to Travis County then, cus I WAY overpaid for my 2011 property taxes (just under $1600 for $75k)

lilo777
Apr 30, 2012, 01:23 PM
Texas doesn't pay state income Tax 0%, property tax is only around 1% once a year and auto is like $75 less than 1% a year! So I think Austin will be ok, Texas has one of the best unemployment %'s in the country.

You can check current unemployment rates here (http://www.bls.gov/web/laus/lauhsthl.htm). Texas with their 7% is doing OK but it still trails a lot of other states including high tax rate state of Massachusetts (6.5%) which means that Texas actually is worse off than many states - so so unemployment rate combined with low taxes translates into sucky life for many.

LethalWolfe
Apr 30, 2012, 01:47 PM
Not necessarily - in some cases, the company may decide to cut hours or staff altogether. Where I work, all my direct reports are part-time. When I first got here, I had 105 hours to work with. Now I have 65. Every time someone left, it was decided (higher up) that we didn't really need all those hours. My 40-hour person was replaced with a 20-hour person. My 35-hour person was replaced with another 20-hour person. One wasn't replaced at all. Instead, I'm the one (because I'm exempt) who's left to fill the void in the hours (which is apparenty every time I go on vacation, and there's a nice 40+ hour hole in the schedule).

So that "3200 jobs" for Apple may end up costing a few positions in the long run.
I've run into the same thing recently. Full time staff person leaves and are 'replaced' by a part-timer or no one at all.


Lethal

Spiritgreywolf
Apr 30, 2012, 03:06 PM
...At the same time the majority of their employees live in California, use California resources (schools, roads etc.) but Apple avoid paying California taxes. Does anyone think that this is fair? Please speak up!

:confused: What are you saying? Those same Californians pay California state income taxes which is one of the highest in the known universe, most of whom have homes and therefore pay property taxes as well. They also pay sales taxes on things they buy (also extremely high), and Apple itself pays for the water, lights, sewage, etc., of everything they run in that state. Your statement is patently FALSE. The PEOPLE that work and live in CA pay their fair share of taxes.

Please state how the 40 people in Nevada who do not pay California taxes affects California in any way?

Oh - wait a second - are you saying that APPLE should pay BILLIONS more to California so the local government there can sponge off people who actually WORK? Ahhh, I see... "Wealth Redistribution to the Masses" is what you really want, right? Then just come out and say it!

And before you even THINK of coming at me saying, "oh, he's just another Republicrat or something that thinks the poor should be beaten" - just lay off. I have 3 jobs and wound up having to pay Uncle Sam more than $10,000 in Alternative Minimum Tax being one of the ones whose income puts him in the 35%+ tax bracket. Just salaries alone and no investments. So as far as I am concerned the government gets enough of MY money.

Maybe when the GOV starts being more fiscally responsible will I start caring about the BILLIONS they lose from companies. Just because they'll try and rape the large companies more doesn't mean they won't keep pounding me any less...

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...I'm the one (because I'm exempt) who's left to fill the void in the hours (which is apparenty every time I go on vacation, and there's a nice 40+ hour hole in the schedule)...

I feel for ya brother - do like I did and be a consultant and work for yourself. I got out of the corporate programmer cubical and took my talents out there to get paid for.

Bottom line - you should get paid for every single hour you work, and tell anyone who tries to get you do more than that and settle for what the company feels is right "because, you know - the economy is bad and we all need to tighten our belts" should be told to pound sand.

At some point, one of three things will probably happen:

1 - The entire economy will simply collapse from the disparity of those who have and those who don't.

2 - The economy will eventually correct itself when the people who actually DO THE WORK get the MONEY FOR DOING THE WORK and corrections from over-inflated C-level salaries will come back down to earth (unlikely)

3 - The disparity will grow so large that the people who do not have, will start putting the heads of those who do have, on pikes.

...Let's hope it starts with the very next CEO that joins a company and says "The first thing we must do is cut jobs!" and part of their bonus package is tied to doing that and it's in the millions of dollars range.

tschull
Apr 30, 2012, 03:39 PM
Incorrect. You are assuming that everyone there will be purchasing new property adding new property tax. 30k a year and they are buying houses? Many people will live in apartments paying no real estate tax and many will move into existing homes displacing others moving out resulting in no new property tax. Plus, you are assuming people will live in the same county--many will live outside of the county they work in and commute.

Moreover, you are also assuming people will spend all their money on taxable goods in the same county--you can't assume that either.

Your assumptions are extremely favorable and high. And when you drop out all the favorable assumptions it becomes much less clear and more murky.

I did not even address the purchase of property by individuals. The $304M was the value of the expanded call center.

The sales tax is collected by the state, so I referred to this revenue as state and local. The tax incentives are being paid by both state and local (Travis County, and city of Austin), so I did not feel it necessary to distinguish where the sales taxes were collected. Most of the money spent on goods and services by call center employees will be in the state of Texas.

IJ Reilly
Apr 30, 2012, 04:42 PM
I did not even address the purchase of property by individuals. The $304M was the value of the expanded call center.

The sales tax is collected by the state, so I referred to this revenue as state and local. The tax incentives are being paid by both state and local (Travis County, and city of Austin), so I did not feel it necessary to distinguish where the sales taxes were collected. Most of the money spent on goods and services by call center employees will be in the state of Texas.

So many flaws in your reasoning, starting with the fact that the property tax loss (50% for ten years) is local but the tax gains are to the state.

tschull
Apr 30, 2012, 08:05 PM
So many flaws in your reasoning, starting with the fact that the property tax loss (50% for ten years) is local but the tax gains are to the state.

Oh. My. God. This is really getting tiresome. Firstly, the state does not collect local property taxes. Secondly, even if they did, there are no "tax gains" to the state if the assessed value of the thing being taxed decreases in value. Thirdly, I was talking about sales tax distribution between local and state governments, not property tax. That's it, I'm done. We will have to agree to disagree about this. Good evening to you, sir.

IJ Reilly
Apr 30, 2012, 11:23 PM
Oh. My. God. This is really getting tiresome. Firstly, the state does not collect local property taxes. Secondly, even if they did, there are no "tax gains" to the state if the assessed value of the thing being taxed decreases in value. Thirdly, I was talking about sales tax distribution between local and state governments, not property tax. That's it, I'm done. We will have to agree to disagree about this. Good evening to you, sir.

Exactly. I think you are finally getting it. The city and county give up half of their property tax and get nothing in return. So there is nothing to disagree about, unless you simply want to be disagreeable.

Medic278
May 1, 2012, 12:29 AM
These tax incentives are insane, coportations pay next to nothing while the little guy get hits with all sorts of taxes.