California’s Hidden Corporate Tax Cuts
If cities are going to use tax breaks and subsidies to compete for investment, they owe ordinary taxpayers a full accounting.
Cupertino cut them a deal.
Photographer: David Paul Morris/Bloomberg via Getty Images
A recent Bloomberg report unveiled how Apple and other retailers have dozens of long-standing agreements with California cities that divert sales tax revenue back to the companies. The cities made these deals, officials say, to lure the firms or make sure they stayed put.
Cities and their taxpayers have a lot to gain by attracting and retaining businesses. Granted, they’d be better off collectively if they agreed not to compete with each other using tax breaks and subsidies, but until that happens, these preferences can serve the interests of individual cities. The question is whether they work as they should — that is, case by case, are they well-designed to make those cities better off?