More on Tax Breaks for Apple

The headline on page 1 of the Austin American Statesman today, January 17, 2019, is "More tax incentives for Apple?".

Still, county officials said they don’t consider it particularly noteworthy that the cumulative value of incentives for Apple could top their estimate if the company merely does what it has said it’s going to do, because a higher figure would correspond to more tax revenue for the county. 

“It is an increasing amount of revenue for the county no matter what the upperend" value of the incentive ultimately totals, said Cynthia Long, a Williamson County commissioner. 

Under the contract with the county, Apple is required to invest $400 million in the campus — not $1 billion — and hire 4,000 workers, in exchange for annual rebates totaling 65 percent of its county property taxes. Williamson County will keep 35 percent of the county property taxes paid by Apple, so the county’s revenue will rise along with the property value despite the rebate. 

Apple — one of the most valuable companies in the world with a recent market capitalization topping $730 billion — also has been pledged a total of $25 million for the project from the state-run Texas Enterprise Fund.

Based on that scenario, the cumulative value of the financial incentives to Apple would top $33 million if the projects ramps up to $1 billion at an identical pace. The portion of Apple’s tax payment that the county would get to keep works out to a cumulative total of slightly more than $18 million on that basis, compared with about $7.2 million under the county’s assumption of a smaller Apple investment.

Long noted that the site of the new Apple campus has had an agriculture exemption and previously generated little tax revenue. 

“I looked at this as kind of a 30 -year view of Apple moving into Williamson County,” she said. The development should generate millions of new tax dollars for the county even after the 15-year incentive deal ends, she said, as well as an improved quality of life for residents through the addition of good-paying jobs in proximity to a major employer.

But Greg LeRoy, a Washington, D.C.-based critic of taxpayer-funded corporate incentives, said Williamson County likely could have gotten those benefits for free, because academic research indicates incentives “almost never determine where a company relocates.” 

He also said the county’s estimate of its tax break for Apple fits a pattern of local governments nationwide downplaying how much they stand to give away when they make such agreements. “Politicians want to maximize the perceived benefits and minimize the perceived costs,” said LeRoy, executive director of a nonprofit group called Good Jobs First that tracks incentive deals. 

Nothing was said about politicians picking winners and losers. Also, nothing was said by County representatives as to why they thought giving Apple tax breaks was a "make or break" part of the deal to get Apple to relocate. Clearly the tax breaks were not integral to Apple's decision to relocate to this location compared to many other factors, such as proximity to its existing operations and access to a skilled workforce and affordable housing for that workforce.

The bottom line is that these tax breaks flow directly to Apple's bottom and thus increases their net profit.