Apple today announced a comprehensive $2.5 billion plan to help address the housing availability and affordability crisis in California. As costs skyrocket for renters and potential homebuyers — and as the availability of affordable housing fails to keep pace with the region’s growth — community members like teachers, firefighters, first responders and service workers are increasingly having to make the difficult choice to leave behind the community they have long called home. Nearly 30,000 people left San Francisco between April and June of this year and homeownership in the Bay Area is at a seven-year low.
2.5 billion dollar sure does sound like a big number.
But wait a second – rewind to the middle of last year:
For years, Apple has held billions of dollars of cash overseas and insisted it won’t bring it home until the US gives it a better deal on the taxes it would have to pay to repatriate the funds. As of 2017, that cash pile had grown to an astonishing $252 billion. Now that lawmakers have passed a $1.5 trillion tax cut that primarily benefits corporations and the wealthy, Apple sees its chance to go forward with bringing that cash home before anyone changes their mind. According to Apple’s announcement, it’ll pay a one time tax of $38 billion.
[…]If Apple had paid the previous tax rate of 35 percent, its bill would have come out to around $88 billion. Now, that money can go into making the company even larger and providing more cash to hold overseas until Uncle Sam cries uncle again.
Apple got a massive tax cut of 50 billion dollars just last year, so this 2.5 billion dollar represents 5 percent of said tax cut.
Such generosity.
So true. Ultra-rich tax-dodgers who think they’re helping us out with a bit of philanthropy should be ashamed.
Paradroid,
When the government essentially gave apple that money (in the form of tax reductions), does it really make any sense to even call it philanthropy?
What bugs me even more than how much apple gives to philanthropy though is the fact that my small business doesn’t get any tax relief because I never dodged taxes in the first place. Rather than giving super wealthy companies like apple tax relief -they don’t need it- we need to close the loopholes that enable them to use tax havens. Why is our government bending over backwards to allow wealthy companies to pay less than we do? No need to answer, it’s a rhetorical question.
And Apple will almost certaintly use THIS act of “philanthropy” to futher reduce their tax next time, resulting in a larger break.
They’re also likely going to use this as leverage/quid-pro-quo to get more non-tax concessions from the state.
Spending money that is a pittance to Apple, used to make more money for them.
Were the money simply extracted as tax in the first place, though, then there’d be more available to use and it’d be available for allocation as the people’s representatives (not a private corporation) decide.
I suppose we should at least give them props for engaging in /some/ corporate philanthropy, however transparently self-interested it is. It certainly wouldn’t have happened if Steve Jobs were still alive, since he was a Scrooge of epic proportions.
They’re going to keep avoiding taxes until they’re forced to stop. Given the US government has already openly threatened France for attempting to close the tax loopholes that allow them to export their profits to tax havens, I wouldn’t hold my breath on that one.
Entirely virtue signalling.
Homeless advocates note the problem is NOT first time homebuyers qualifying for mortgages.
You have a portion of people who had a reversal of fortune and lost their house. They are easy to help, but with a sufficiently paying job, but instead of Apple hiring them, say as Janitors or in their cafeterias, or other places, they outsource those to contract companies. They could build a dorm or bunkhouse on campus, but don’t really want even those homeless around.
The other two are worse. First are the mentally ill who can’t function unsupervised – to do things like pay rent, go shopping, or even take their medication on time. We need effective mental health treatment at the street level, but Apple’s donation will do nothing to help.
The final set are the IV drug users – they get clean needles then throw them on the ground. They care about nothing except the next fix. They can’t be helped if they remain on the street and even in something other than a supervised setting where they can get and stay clean, then have a job waiting.
Apple has a beautiful and large campus. So does Google. Why don’t they let the homeless set up camp there and provide them food, clean water, and facilities? Maybe because they really know what they would be in for.
Because companies are established for earning money and paying dividends to shareholders, not taking care of the poor and the sick. That’s why we have states for. And that is why we have taxes for.
I wouldn’t expect Apple to build bunkbeds for the homeless. But I would expect them (and their shareholders) pay significantly more tax. I am a freelancer translator, and I effectively pay 40-45% of my earnings as taxes. How much do Arthur Levinson or Tim Cook?
hdjhfds,
Exactly. I don’t expect them to shelter the homeless either, but damn it they should NOT get tax breaks, which inevitably forces the rest of us to pay even more and loose social programs that do help the poor. I hope you enjoy that money apple (and the rest of you in the billionaire freeloaders club), I don’t mind covering your share of taxes to contribute to your megayacht fund. /sarcasm.
Or, they could have not done both things, keeping money outside US and/or not financing the housing program.
phti,
They do what they do because the incentives are perverse and because no one is holding them accountable. Of course apple is going to take every advantage it can even if it screws over the rest of us, that’s what corporations do. The frustration is really with a corrupt system that allows them to get away with it. Big money speaks loudest in washington and for the most part politicians act as corporate stooges for the wealthy corporations that put them in office. Independent parties with fewer corporate connections have very little viability in the face of our two party duopoly and I fear that even if they were to somehow make it to office, they too would be corrupted by easy corporate money.
Of course pointing this out is easy, actually finding a way to fix it, that’s the conundrum.
Exactly. Don’t blame Apple, blame the system that allows Apple to do it (together with countless other corporations – sometimes from the articles and comments here it looks like Apple is the only one who does it).
Let me be the devils advocate here. I think however they allocate the company’s cash is up to them, and also appropriate. Okay I am biased, since I indirectly hold Apple stock thru my retirement account.
There are multiple “stake holders”, where each of them benefits from the company having surplus cash.
The Customers: benefit by having Apple not skimp on quality of its components and production facilities. They also get to have excellent service.
The Local Community: not only they get direct, and indirect jobs, they also get grants like this one. Also not having to worry about bankruptcy of a large local business is a net positive.
The Employees: get to have generous compensation packages, and a good mark on their resumes. However I do not agree with their secrecy, and not being able to share what they are working on.
The Public: not only they get benefits thru direct an indirect taxes, but they get large boosts to their retirement funds. Many people might not realize this, however if you are California public service worker, your pension just got a large windfall from tech stocks. So much so that, they are selling their position to lock int he gains:
https://www.barrons.com/articles/calpers-sells-the-fang-stocks-and-apple-in-q1-1495016155
sukru,
Yeah, no surprise there. Wall street never turns down extra cash.
I disagree here. Apple *could* spend that money on higher quality parts and service, but it chooses to outsource to cheap chinese factories to increase it’s profits while expecting consumers to pay a premium for the brand (which they aren’t wrong about). As it stands quality has been going downhill. They’ve stopped investing in the future of MacOS. Apple is getting a reputation for products that perform poorly due to overheating and break frequently under normal use with repairs that are temporary at best since the engineering is sub-par.
Ok, I can’t comment too much on employee compensation since I’m not privy to it, but I am reminded of the non-compete pact where apple and others were found guilty of suppressing wages a few years ago:
https://venturebeat.com/2014/05/23/4-tech-companies-are-paying-a-325m-fine-for-their-illegal-non-compete-pact/
Apple had loads of money to spend on employee compensation, but chose to collude with others to lower salaries instead of competing.
Call me a cynic, but I’m inclined to think apple is going to use most of it’s tax forgiveness to make it’s shareholders even wealthier. If apple wanted to spend more money on employees or better products, they were already sitting on more than enough money to do it long ago.
Maybe I should try to get out of paying my own taxes with this logic. After all, the fewer taxes I have to pay, the more money I have to spend, which can be taxed downstream. Therefor, eliminating my taxes increases tax revenue, haha. Every single time this sort of thing plays out in reality, we, the public, loose and the national debt creeps higher. 🙁
That is true. People who have market based retirement funds benefit from stock growth along with all the other shareholders. However if you look at the distribution of stock ownership, most of it is owned by wealthy classes. For the middle and lower classes, most of their assets are tied up in their house and many of us cannot afford a house or don’t own one outright (because we’re indebted to the banks). Multi-millionaires for whom a house is cheap can afford to have most of their money in the market, and therefor get a very disproportional gain from stock market growth.
If stocks double, upper class wealth nearly doubles as well. Whereas for those in the lower classes, if stocks double, their wealth might go up by a few percent at best. The lower classes are less likely to have an employer retirement plan too.
So while there is some truth to your point, giving corporate tax breaks generally comes at the expense of eliminating social programs and safety nets, which mostly hurts the poor. Meanwhile the increase in corporate wealth mostly helps the wealthy.
Not for nothing, but take a look at household incomes in the past 50 years:
https://www.advisorperspectives.com/dshort/updates/2018/10/16/u-s-household-incomes-a-51-year-perspective
The top 5% got a 100% raise over those 50 years. And although the data isn’t presented in this link, the gains are much higher if you take the top 1% or 0.1%.
The median got a 4% raise over 50 years (adjusted for inflation). The lower classes got a 0% raise. If you were to factor in the fact that more family members are working than in the past, the picture becomes worse for individual workers.
Now take a look at federal tax rates during the same period:
https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx
In the 60s, the federal tax rate for the top bracket was over 90%. Now the top bracket is 40% for normal income. But many executives only pay a 15% capital gains tax.
I agree that lowering/forgiving corporate taxes is good for the wealthy, but let me ask you, honestly: do you still think that lowering/forgiving corporate taxes is good for the public at large? I mean, I hear that argument quite a bit, but it always feels insincere and/or naive in light of the historical data that shows that all it does is increase the wealth gap, which shouldn’t be a surprise.
And Google, Microsoft and Amazon do what? Oh nothing at all while getting the same tax cuts as Apple.
Just funny how Apple always gets called out while others don’t.