I don't like this idea. Corporations should pay taxes and whatever, and not be treated specially just because they're the largest entity in the town.

A huge number of towns in America are basically run by one or two corporations. Cupertino is not unique in the slightest, aside from the fact that Apple is just a larger company.

But it really doesn't matter if you "only" have a $1 Billion market cap company headquartered in your small 30,000 town, or a $600 Billion behemoth like Apple. Its all basically the same: all your taxes are basically going to come from only one source.

------------

In either cases, you can run the town independently of the corporation. True: a lot of the corporation's workers will be your citizens, but keep the issues separate and keep things fair... and you ought to get what you need done.

There is a solution how you can get both.

The German city of Wolfsburg, and the state of Niedersachsen have done it with VW.

The solution: You just buy a large amount of shares of the companies that are started in your city. Municipalities get a far larger share of the profits directly, politicians have an incentive to ensure companies are profitable, and companies can’t avoid paying for the infrastructure they use.

That's an excellent point——can you imagine if the government of Cupertino bought AAPL shares in the 1980s? They sure wouldn't be complaining about tax revenues today!

This is an awful idea. Governments do not have the expertise to participate as an psuedo-activist investor. On top of that, what happens when the city's crown jewel goes bankrupt and those shares go to zero? Diversification is key. There's a reason why there were so many pension changes post-Enron. It's not good for individuals to be so heavily concentrated into a single company and it sure is not good for cities.

> Governments do not have the expertise to participate as an psuedo-activist investor.

Don't have an American bias when people share their cultures from around the world.

There are a lot of governments, and all of our experience with the American government basically means jack diddly with respect to the German government.

With that said, I do share your concerns, but I'm not going to make claims about a government I never visited and never worked with in my life that's roughly 10 time-zones away.

There's no American bias on this. If the world's activist investors employ extremely highly paid and numerous staff and maybe get things 50/50, what type of staff will a government employ that can do better?

Not all governments act like the typical government you know.

The German government, for example, owns several large banking groups, which act like any normal banking group – but their dividends directly go into the tax budget. (And they have to give loans at lower interest rates to the governments).

Normal bankers, in normal environment, and they’d probably never notice it was government owned.

If all big companies in a city go down, the city will suffer anyway – investing in the large companies in your city can’t make things worse.

The German government has done it for several decades, with great success – you should take a look at their model.

My understanding is that Wolfsburg was built in order to house Volkswagen workers. There is a massive difference in planning a city around a specific need versus a well-established city investing in companies. While I still do not agree with governments investing in companies, I will say that it makes more sense if you are planning an entire city around it.

In all other cases, cities investing in companies are either going to take on a VC role which I'd very much argue that they are not capable of performing well (and introduces so much room for corruption) or will be investing in mature companies and likely without the balance sheet to make a dent as far as voting power goes. I don't see how either leads to anything productive.

This municipal capture you describe sounds brilliant.

And it means the municipal government provides funding for smaller companies, which gives those an advantage, and they don’t even take large risks either. It’s a win-win-win-win situation.

No, the idea that the city should have to provide roads, utilities, etc to a huge, rich corporation and get nothing back for their trouble is terrible.

Of course that would be absurd and unfair. That's why property taxes exist, to pay for local infrastructure. Apple pays a lot of property taxes in Cupertino.

Property taxes are based on the value of (and in some cases the type of use of) local property, that's reasonable because the costs incurred by the local government to build and maintain infrastructure is related to their use of land.

His argument seems to be that because Apple makes a lot of money they should also pay more taxes, luckily for him that's the way the system works! Apple also pays corporation tax on their income.

Unfortunately for him that tax is federal and not local so he doesn't get any more than any other local government does in federal contributions.

Creating the world's most successful company in your backyard, attracting high-value talent from all over the world, making Cupertino a household name...is "giving nothing back"?

How do any of those things improve the lives of non-Apple citizens living in Cupertino?

Some of the people coming to Cupertino to work for Apple will buy houses in Cupertino, send their kids to school in Cupertino, spend the money they make in Cupertino, etc... Not to mention all of the extra jobs that need to be filled taking care of the buildings and the spoiled engineers, the hotel rooms for visiting emissaries and WWDC attendees, the construction jobs building those new houses and schools...

Edit: I don't want to sound like I'm saying "the town should be grateful for these scraps and nothing more", these are benefits to the town on top of the taxes that it pays.

That's a fair question. A massively successful technology company can locate itself just about anywhere it wants to. In fact, there are plenty of places that will offer very compelling incentives to a company like Apple to move into their locality. Why would they do that if it's of no benefit to the people? I guess you could argue that corrupt politicians will offer those incentives to secure bribes, etc., but here you have the mayor of Cupertino complaining.

The other industry that comes to the town off the back of it. The extra demand for goods and services.

According to the article, Apple pays for 18% of the city budget. Is that nothing?