Cupertino backs off `head tax' for now after Apple objects

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Cupertino, California, is holding off on plans for a "head tax" on businesses after facing opposition from local employers including tech giant Apple Inc.

The City Council voted this week to defer a tax measure planned for November until 2020, saying it would use that time to continue dialogue with businesses on a plan that would help pay for transportation improvements on its clogged highways and roads.

The Silicon Valley city is the second in recent months to back down from a corporate tax after facing opposition from its biggest employer. In May, Seattle repealed a head tax intended to pay for housing and homeless programs after Amazon opposed it.

But other cities, including Cupertino’s neighbor Mountain View, are pressing on with their tax plans. Mountain View, home to Google, has a November ballot measure that would charge a head tax on employers to raise money for transportation projects.

In San Francisco, homeless advocates qualified a measure for November to increase a tax on businesses' gross receipts to pay for housing and homeless programs.

Cupertino’s action Tuesday came a day after Apple sent the city a letter seeking the delay and promising to work with officials on a transportation plan.

“For Cupertino and Apple to thrive we need to partner on both short term and long term solutions that will move our residents and employees more efficiently and effectively,” Apple vice president Kristina Raspe wrote.

She said the company was proud to call Cupertino home for 40 years and recently invested $70 million in a new headquarters.

Apple, the largest employer in the city with 24,000 workers, would have paid $9.4 million of the $10 million collected annually under one option for the proposed tax, according to a city staff report.

Cupertino had modeled its plan after the Mountain View measure. It would have converted Cupertino’s existing business license tax from one based on square-footage to employee count with a sliding scale where larger companies paid more. Smaller companies would have paid a base rate of $50 while larger ones up to $425 per employee.

At the Tuesday meeting, Councilwoman Savita Vaidhyanathan said she was encouraged by the letter and her recent meetings with Apple executives. She said she sensed a greater urgency by the company in working on a plan.

“Apple’s letter gives me hope they’re really hearing our collective concerns,” she said.

City staff had recommended the delay, citing the concerns of Apple and other business organizations that said the process was rushed and sought more time to work with the city. Polling by the city for the proposed measure had also shown varying levels of support, raising concerns whether it would pass in November.

Deputy City Manager Jacqui Guzman said businesses and voters surveyed indicated they would be more likely to support a plan that identifies specific projects that would be funded. She said city staff would take the two-year delay to work with businesses on a spending plan and look for alternative funding sources.

The council could then reconsider the measure in November 2019 and take it to voters in 2020, Guzman said.

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