By Khalida Sarwari
Seventy-one percent of Cupertino voters would support imposing a controversial employee tax on Apple and other businesses in the city to help pay for needed transit and housing improvements, according to a survey the city released today.
Almost 400 respondents were asked if they would vote to replace the city’s traditional business license tax with one that taxes companies based on their number of employees. The Cupertino City Council is considering placing such a question on the November ballot.
“I can see it considered in the future, but I would have a lot more requirements with regard to considering it for the fall ballot,” Mayor Darcy Paul said. “I don’t think we can responsibly put it on the ballot at this point.”
The county deadline for placing a measure on the November ballot would be Aug.10, but because the City Council’s July 17 and Aug. 7 meetings have been canceled, a resolution calling for an election then would have to be adopted at its July 3 meeting or a special session. Voter approval is required to restructure the city’s business license tax model.
While the survey reflects the public’s approval of the plan, not everyone is on board with it.
As someone who has to contend with a nearly 90-minute commute to and from work most days, Apple project manager Arjun Pisharodi said he understands the urgent need to alleviate the traffic congestion that plagues the region. But slapping additional taxes on companies will drive some of them away, he added.
“High-tech companies like Apple are the lifeblood of California,” he said. “They provide so much income, employ thousands of citizens and residents, and bring people from around the world to our state.”
Any tax model the city considers shouldn’t be a disincentive for companies, he said. “It shouldn’t come at a cost for businesses to be sort of turned away from Silicon Valley.”
The question, he said, is whether cities can “come up with the right balance of addressing transportation problems while at the same time not turning off businesses from keeping their headquarters or offices in the area.”
Gary Jones, a retired accountant who’s lived in Cupertino for 42 years, said the city is too small and economically dependent on Apple to be considering such risky moves.
“I don’t believe there should be a special tax at all in this regard and the reason is that these companies and their employees are already paying taxes and asking them to pay more is really a statement that the existing government agencies aren’t spending the tax revenue they’re getting correctly,” he said. “The risk Cupertino runs is that Apple says, ‘OK, we’ll move our corporate headquarters somewhere else.’ ”
Alarmed by traffic and other issues spurred by massive expansion projects, Cupertino officials have turned to the prospect of levying higher taxes on employers such as Apple as a way to raise cash for new transportation initiatives.
As it stands, companies that occupy more space pay proportionally less in business license fees than smaller businesses, according to the city. But under an employee-based business tax model such as those used by cities such as Sunnyvale, San Jose and Redwood City, employers pay a flat base fee that progressively increases as the employee count rises, according to a Cupertino city staff report.
The city of Mountain View, where Google is headquartered, also is exploring new taxes based on employer headcounts that could be spent on transit and other improvements. Under Mountain View’s proposal, businesses would pay a progressive flat rate amount and progressive per employee rate, with the goal of generating $10 million in revenue.
If Cupertino were to propose a similar rate structure, it would generate roughly $8 million because the city has fewer medium to large businesses. To raise $10 million, Cupertino would have to enact a progressive flat rate starting at $260 and a progressive employee rate up to $400 per at large companies.
The proposed Mountain View tax could cost Google $5.4 million a year. It’s not yet clear how much Cupertino’s proposal would cost Apple or other large employers.
The City Council is expected to discuss next steps at its meeting on Tuesday.