Cupertino Mayor Barry Chang is not pleased with Apple, the most valuable corporation in the world and the city's largest and most economically flush resident. In an interview with The Guardian posted today, Chang assailed Apple for evading taxes and hiding profits in offshore accounts, saying, "Apple is not willing to pay a dime." He says the company's practices are leaving Cupertino — the home of both Apple's current headquarters and the new 2.8 million-square-foot "Spaceship" campus — overcrowded and decrepit.
"They’re making profit, and they should share the responsibility for our city, but they won’t," Chang said. "They abuse us." Apple pays a tax rate of about 2.3 percent thanks to loopholes in the system, The Guardian reports, and paid the city of Cupertino $9.2 million from 2012 to 2013, despite housing around $181 billion overseas. Chang says the company should pay far more, and he tried to force Apple to give $100 million to Cupertino for infrastructure projects. The motion was struck down by the city council.
Apple holds $181 billion overseas, and would owe $59.2 billion if not for loopholes
"I’m not going to back down," Chang added. "Raising taxes is not popular, but I’m not afraid. We are the center of technology, and our public transit system is old and embarrassing. And the politicians have no backbone. They get scared." Apple says it now pays Cupertino tens of millions of dollars in additional sales and property taxes, some attributable to the construction of its new campus, and will generate billions for local businesses once the new building is completed.
Apple CEO Tim Cook has also said in the past his company is abiding by the law, and that's true. The current US tax system allows for such practices as the "double Irish." The move lets corporations set up headquarters in low-tax countries like Ireland and funnel profits to subsidiaries in tax havens like the Cayman Islands or Bermuda. If adjusted to hold Apple accountable for money held overseas, the iPhone maker would owe around $59.2 billion in taxes, according to non-profit research group Citizens for Tax Justice.
In an interview with 60 Minutes last December, Cook said criticism of Apple's tax practices is "total political crap." He said the US tax code should be reformed to allow companies to bring profits home without paying what Apple considers an exorbitant 35 to 40 percent corporate tax rate. We're starting to see some changes on that front, with reports that Ireland is moving to close its tax loopholes enjoyed by many of the world's biggest tech, energy, and pharmaceutical companies. Yet without changes to the US tax system, corporations will still find a new Ireland to move their money through, and Apple is no exception.
Chang now refutes portions of the report
In an interesting twist, Chang has since come out and refuted portions of The Guardian's account, saying his quote, "They abuse us," was in reference to local residents and not Apple. Chang also said the report mistakenly said he was escorted off Apple's campus in 2013 when he tried to approach the company about traffic congestion. Chang says he willingly left. "I was shocked and dismayed to see a recent article quoting me with words I never used and describing situations that never happened," Chang said in a statement.
According to the statement, Chang's gripes with Apple stem from his desire to have the company contribute to solving Cupertino's traffic problem. He added that "other situations reported in the article absolutely have no bearing on anything that I may have said or anything that has happened in this community. The reporter clearly misunderstood. My concerns and the concerns of this city council are well documented."
Update at 8:08PM ET on Thursday, May 5th: Adding statements from Chang, issued by the city of Cupertino, refuting The Guardian's report. Also added clarification from Apple on tax amounts paid to Cupertino since the start of construction on its new headquarters.