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Apple Argued That Buildings at Its Headquarters Were Worth $200, Not $1B, To Reduce Its Tax Bill: Report (sfchronicle.com)
Apple argued that buildings it owned around Cupertino, where it is headquartered, were only worth $200 instead of the $1 billion tax assessors deemed in 2015, according to appeals reviewed by the San Francisco Chronicle. From a report: The report characterized the dispute as part of an aggressive strategy by Apple to lower its tax bills. According to the Chronicle, Apple has 489 open appeals in tax disputes over property assessed at $8.5 billion in Santa Clara County, Calif., dating back to 2004. Those appeals include the $1 billion building assessed by tax officials, as well as another $384 million property that Apple also claims is worth $200. Apple is now valued at $1 trillion. It is also the county's biggest taxpayer, paying $56 million in the 2017-2018 tax year.
Apple is clearly making very poor use of the land this lowering it's value to catastrophic levels. I say San Francisco used Eminent domain to take the land and put it to good use (perhaps for public housing). The city will, of course, compensate Apple for the full, fair market value of $200. Heck, I say pay them twice that, an almost unheard of $400 dollars, to cover the expanse of obtaining a new headquarters. I mean, when you put it like that it's a win win
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If an individual lies on taxes, they go to jail.
If a corporation lies on taxes, they get rewarded.
I'm a good cook. I'm a fantastic eater. - Steven Brust
It would be funny to have the local municipality come in and take the property though eminent domain using Apple's valuation. I am sure the county or state could use the extra office space.
No, I'm suggesting the possibility of things like collusion exists. Kickbacks are more the sort of thing you get when dealing with an independent third party (a government official pays the private contractor a little bonus).
Historically, there has been a lot of elections fraud; that doesn't mean every election is stolen, even if it looks like it might have been, but it sure as hell means you don't trust the board of elections, voting machine manufacturers, political parties, or anyone else to act in good faith. The same is true when a state wants to tax somebody on a property they value at a really high number and there is a dispute over whether it's actually a fair market assessment: show me why that's fair if you want me to believe it.
It's not one-way, either. Do you know what my tax assessment is? $1,000 on land, $2,000 on my house. The city is artificially lowering cost-of-living in my area by dishonestly assessing our property. Because of certain state laws, I'm actually able to go back and force the city to not charge me property tax for another few decades if they try to raise this, too--which is good, because plenty of my neighbors are too poor to afford sudden water bill and property tax hikes, and they have a defense against that sort of thing if the city tries to run them out.
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Commercial buildings are depreciated over 39 years. That is, the building's construction cost is a business expense, and thus tax deductible (you don't pay tax on the money you spent on expenses). But because it's a purchase that's used for so long, you're not allowed to deduct the whole thing in a single year. Instead, you take the building's construction cost, and divide it (depreciate it) over 39 years, and use that as your annual tax deduction.
If Apple says the building is only worth $200, then their tax deduction for building depreciation over the next 39 years can only be a maximum of $5.13 per year. So either they pay the property tax on a $1 billion building (which at Prop 13's 1% cap and utilities of about 1% works out to about $20 million/yr in taxes), or they lose an annual tax deduction of ($1 billion) / (39 years) = $25.6 million (which at the 35% corporate tax rate would be $8.96 million/yr).
I suspect what's going on is some accountant did this math and decided it would be cheaper to give up building depreciation in exchange for a lower tax assessment. But now their gig has been discovered and they're at risk of both losing the building depreciation tax deduction, while having it assessed at its full value for property taxes. If that's not what they're doing, and they're audaciously depreciating the building by $25.6 million on this year's taxes while simultaneously claiming it's only worth $200 for property tax assessment, then this is simple. They've legally admitted to the IRS that the building is worth $1 billion. Claiming to the assessor that it's only worth $200 constitutes fraud and possibly perjury.
They are the single most "regressive" tax we have
No, sales taxes are far more regressive.
Property tax: poor person lives in cheap house, pays little in property taxes (directly or via rent). Rich person lives in expensive mansion, pays lots in property taxes.
Sales tax: poor person buys a lawnmower, pays sales tax. Rich person hires a lawn service, directly pays $0 in sales tax. The sales tax for the service's much more expensive lawnmower is spread over all of their customers, resulting in less sales tax per customer.
The poor and middle class tend to buy goods, which are subject to sales tax. The wealthy tend to buy services, which are not subject to sales taxes. Sales tax for the goods that are bought by those services is spread over more people, resulting in an overall lower sales tax rate.