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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.
I know a guy who got a dog and called it a company mascot and had his company pay for all the pet supplies. People will try anything, it doesn't make it right.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
and then they'll complain that the schools aren't producing the highly educated people they need to fill jobs, so they need more H1B visas. This same crap has been going on in Silicon Valley for decades.
I'll take them off their hands for $250.
apply a similar steep discounted valuation, to any apple product, to arrive at its true worth as a product.
rest is hype and manipulation of herd behavior.
apple product user = herd animal with low agency
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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Let people set their own valuations, but the valuation is also a public tender for sale at that price.
That is all.
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
They are the single most "regressive" tax we have, to say nothing of the fact that they're the granddaddy of the logic behind civil asset forfeiture.
I get that the schools and other local services need revenue, but there are better and more moral taxes that can be applied. With modern GIS software, it is perfectly feasible for the state tax agency to build a system that will be able to map taxes owed on income and sales to the right tax authorities so neither the private citizen nor the local government have to do it. They could just impose an extra 3% sales tax and an extra 3-5% income tax and call it a day after abolishing property taxes at the state level.
Tax on the poor? Sure, but the poor pay property taxes too. You think rental owners don't pass that onto their tenants? The renting poor pay a share of property taxes too and have to do so even in bad times. Switching that to sales and income taxes would at least let the poor to reduce that equivalent tax payment when things get really tough (as you can't tax non-existent income and they can stop spending on non-essentials)
If you read the article, Apple didn't say that its HQ was worth $200. From SF Chronicle article:
Some claims reflect extreme differences in estimated values. In one appeal filed in 2015, Apple said that a cluster of properties in and around Apple Park
in Cupertino that the assessor valued at $1 billion was worth just $200. In another, property that the assessor valued at $384 million was, in Appleâ(TM)s view, worth $200, according to an appeal application
What are these properties? I don't know. I'd have to look at the appeal. It could be that the dispute is not over the HQ.
Well, there's spam egg sausage and spam, that's not got much spam in it.
What you can and can't get away with.
Everything else is just talk.
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,
If that's the case, I'd be willing to buy it from them at double the value they're claiming it to be worth. That should make them happy as they'll make double what it's worth to them.
Doing it on this grand a scale is breathtaking. Look at this way - if you're otherwise paying your fair ( NOT legally obligated, but FAIR) share of taxes and if you claim your 5,000 sq ft house is worth $1.2M when it's really worth $1.21M, you get a pass in my eyes.
If you're the richest company in the world and are claiming an entire office is worth $200, and you don't see a problem with that, I'm not sure I can do anything to convince you otherwise.
Given a corporate tax of 21% I'm led to believe Apple took in about $280 million in profit last year from the $56 million in taxes. Oh wait they made closer to $10 billion. Maybe they should pay their damn taxes or get the hell out of the US. It's appalling we let corporations get away with this, even more we seem to encourage it. Given Apples ample reserve cash there is absolutely no excuse for this, this should be enough for people to wake up and boycott their products, as if the consumer gouging on excessively marked up products in the first place wasn't enough.
Arguing that your property is worth less than what the government is estimating, for the purpose of trying to lower your property taxes, is standard procedure everywhere. Apple doing it doesn't make this tech news.
Arguing that a building appraised at $1m is really only worth $750-800k, ok. Fair enough. Arguing a set of properties appraised at $1b is only really worth $200? That's tax fraud. A couple percent off is fine, but not 99.99998%
The only thing necessary for evil to triumph is for it to be pitted against a slightly greater evil
Microsoft in Redmond now runs their own fleet of buses that go all over the greater seattle area for their workers. With built in WiFi even if IIRC so you can work on the bus during your commute and have it counted towards your hours or whatever.
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.
Back around 2000, many companies (Sun, Google) had their own shuttle services that went between the different corporate buildings and Caltrain stations. They were needed to allow employees to get between buildings for meetings and many didn't want to drive along freeways each day.
Google now runs luxury coach buses through San Francisco.
There was a big hoo-hah about how these buses were using bus-stops but not actually making any payments to the cities, so there was a deal made that involved Google making a $7 million donation for free childrens rides on public buses:
http://time.com/10315/google-b...
https://www.wired.com/2015/11/...
Vintage computer adverts: http://www.vintageadbrowser.com/computers-and-software-ads
Actually, it isn't entirely insane, assuming this is talking about the Infinite Loop campus. Apple does not own the land under the building. It is owned by Sobrato, the development company on the corner. Apple merely has a 100-year lease on it. So if Apple decided to sell the buildings, absent some agreement by the landowner to allow the lease to be transferred, they would not be able to do so. Arguably, then, the buildings have zero value beyond what the landowner is willing to give them for them.
And even if the landowner agreed to a lease transfer, the buildings would still only have value if somebody else wants them as-is. The problem is, IL1's lobby area had serious mold problems fifteen years ago, particularly on the upper floors. I can't imagine it has gotten any better since then. If Apple ever left, there's a nonzero chance that the next company would decide to tear those buildings down rather than fix them.
It could well be that the expected amount of money that they could get for transferring the lease would not significantly exceed the amount of money they would have to spend bulldozing the old campus to make it ready for whatever company would take it over.
Mind you, I do think that $200 is a gross underestimate, but if the city valued it at a billion dollars, that's a laughable overestimate. There's no way you'd get anywhere close to that for a bunch of forty-year-old buildings, no matter how much history they might have.
And given that the original 100-year lease is almost halfway up, and at the end of that 100 years, the buildings potentially become a giant teardown liability unless the lessee is willing to move them somewhere else, the value of those buildings is at least arguably going to go *negative* at some point.
So really, the only reasonable way to value the property is to determine how much Apple would have to pay to move the employees that are currently in the Loop to other, rented office space, multiplied over the expected remaining life of the building — maybe ten years on the high side. If we assume that they stopped doubling and tripling up in IL offices after Apple Park opened, that's probably only a couple of thousand people. And assume that any new space would be high-density, open plan office space at 175 square feet per employee. Assuming about $4 per square foot per month times ten years, that's about $168 million. At $8 per square foot for demolition times 850,000 square feet, the buildings themselves are a $6.8 million liability, so its value is really closer to $160 million. Seems like a much more plausible number than a billion, which would basically require assuming that Apple will continue using those buildings as-is for the remainder of the hundred-year lease.
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(rephrased slightly from my comment on the article)
A simple legislative solution to address some egregious property tax assessment appeals would be to mandate that when submitting a proposed valuation, the taxing body has the right to immediately purchase the property for some TBD multiplier of your submitted valuation. I suspect that multiplier should be in the 3-5x range.
Obviously there'd need to be reasonable allowances for time to move out, but the cost of moving should be covered by the multiplier.
If Apple wants to contend that a chunk of property is only worth $200, great! I'm sure the city can find $1000 to properly compensate them for that property and the cost of vacating it. Perhaps the city can find something more beneficial to do with that property that might provide more tax revenue.
fencepost
just a little off
This is about a property evaluation 2015, three years ago. I find it interesting that the Chronicle article this is based on, and all of the articles parroting the Chronicle, conveniently leave out the result. When reporting on "Apple appealed the county's assessment three years ago", wouldn't it make sense to tell us how the appeal turned out?
I see that the current tax assessment for the Apple headquarters building is $398,600,000. It may be that Apple's value is closer to correct than the number the county initially tried to get them for.
As far as I know, no tax authority anywhere includes the chattels stored or used in a building when assessing that buildings value for municipal tax purposes. The idea being to make an estimate of the buildings likely value if sold on the open real estate market. The tax rate that then gets applied depends on the function (aka zoning) of that building. The tax rates a municipality comes up with depends on numerous factors, but one of the largest is how much of a burden on the municipality that property represents. e.g. Farms and empty lots are typically given the lowest rates because they use the least amount of municipal services, while high density housing gets taxed higher. The municipality needs to make sure that they have sufficient income to cover the garbage, fire, infrastructure, schooling and so on for the given property. For industrial and manufacturing zones, a prudent municipality will also have an earmarked contingency fund to do environmental remediation in the event that the company goes under and abandons a contaminated site.
In Apples case, they have a huge campus and a pretty new multi-million dollar building that they were publicly bragging about when it went up. As far as I know, the only way that building could be valued so cheaply was if the building was so heavily specialized that any hypothetical purchaser would only be buying it for the land, intending to demolish the existing building and put up there own. Since the Infinite Loop building is just a very pretty office building, I can't see Apple getting away with claiming it is virtually worthless. Even the value of the building aside, tax rates are also based on the zoning of the land it sits on and its size. Trying to argue the land it sits on it virtually worthless would be even harder to pull off.
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I think the solution used by your home town is ultimately a bad thing for the citizens. First is that this is clearly yet another case of companies privatizing profits while socializing costs. Second; in theory, a number of private companies collectively providing a service is good for the people because it encourages competition. Yet time after time where a commodity service or product is being provided by a small number of closely cooperating companies, we end up seeing collusion and price fixing. It's simply easier to ensure high profits through price fixing than through efficient cost management.
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If we go by your assertion that the valuation is based on the impact of the property to the city with farm land having the least value, what is your valuation on a building under construction? I suppose that if Apple appealed it in 2015, it was for 2014 taxes. In 2014, the building was only 1 year after ground was broke and 3 years before Apple officially moved in.
Well, there's spam egg sausage and spam, that's not got much spam in it.
I'm basing this on the fact that buildings depreciate over 40 years for a reason. That's the expected life of the building. The buildings in question are now forty years old. So from a value perspective, these buildings are bulldozer fodder. They're not worth anything per square foot at that age. Anybody who buys them will be buying them solely for the right to lease the land for ~55 years. Mind you, if that lease is way below market value (and it may be), then the lease might have significant value, but either way, that value isn't in the building, but rather in the land use rights.
Check out my sci-fi/humor trilogy at PatriotsBooks.
I feel good about paying taxes, yes. because I know it helps everyone. I don't make up untruths to save money.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
The solution is obvious, the government pays apple $400 for the building and says look you are doubling your money. If anyone complains arrest them for tax fraud.
I was curious of online property tax for the new Apple campus in Cupertino, I found APN for that location 316-07-049 SCCtax webpage returns "No bills found for property 31607049 in fiscal year 2019." I did find this from https://www.sccassessor.org/in...
Current Information
Document No: 21115138 Document Type: GRANT DEED
Transfer Date: 3/18/2011 Tax Default Date: N/A
VALUE INFORMATION (Assessed Information as of 6/30/2018)
Real Property
Land: $439,402,436
Improvements: $398,600,000
Total: $838,002,436
Business
Fixtures: $0
Structure: $0
Personal Property: $0
Total: $0
Exemptions
Homeowner:$0
Other: $0
Total: $0
Net Assessed Value
Total: $838,002,436
mfwright@batnet.com
It is also the county's biggest taxpayer, paying $56 million in the 2017-2018 tax year.
Let's see. Revenue of $229 billion for 2017 $.056 billion/ $229.23 billion = 0.02446% tax rate. Most individuals pay between 20-50% of their income (depending on the country). This is even more loony than the $200 campus. Can I buy your campus for $300 Apple -- you can make a 50% profit!
-- Political fascism requires a Fuhrer.
I'd eminent domain that shit for $200 and build a homeless shelter there.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?