City of Cupertino shelves 'head' tax vote to 2020, potential impacts to Apple, others

CUPERTINO, Calif. (KGO) -- Voters in Cupertino will have until the year 2020 to decide whether they want to change the way the city taxes Apple and other businesses.

Council members spent hours in a special meeting on Tuesday, taking another look at the so-called 'head' tax, or per-person tax.

Since 1992, Cupertino businesses have been taxed by square footage. However, if the proposed measure is passed in 2020, the city could tax businesses based on the size of their staff.

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Restructuring could generate between $8-million to $10-million a year for the city. However, many tell ABC7 News the money isn't worth the potential mess.

"Everyone is impacted by whatever happens to Apple," Bitter + Sweet cafe owner, Daniel Vu said. He only has five employees.

While the controversial tax measure aims to protect medium and small businesses like Vu's, he said impacts to Apple could end up costing him the cafe.

"Apple is 90-percent of my business," Vu explained. "Anything that happens to Apple happens pretty much directly to me."

Like many, Vu fears the tech giant could take its headquarters elsewhere. With the proposed tax model, the company's contribution alone would be between $7-million and $9-million in tax money, at $425 per person. The company employs 24,000 people.

"If we make our city less competitive, people can just go across the border to other cities that don't have the head tax and they would be more than happy to have a big company join their ranks," Cupertino Chamber of Commerce president, Andrew Walters said.

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He was one of 16 people who went in front of council members on Tuesday, opposed to putting the measure on November's ballot.

Although the city said it intends to use the general revenue to cut traffic congestion, it's the lack of a specific spending plan that has many concerned.

"If that's the problem we're trying to solve, we need to first need to have a project," Walters told ABC7 News. "Once we get the project, then let's find a way to fund it."

Apple's government liaison, Mike Foulkes spoke during Tuesday's public comment period. He suggested Apple and the city work together to come up with long-term and creative solutions to traffic issues.

Councilman Barry Chang questioned Foulkes on whether Apple's traffic team was ready to work with the city. Foulkes quickly offered to meet next week to start the conversation.

"We stand ready to work with the city on transportation issues; it's an issue that affects all of us," Foulkes said.

Council's 4-0 decision on Tuesday makes Mountain View the only city in Silicon Valley proceeding with the so-called 'head' tax this year.

Cupertino City Council will take the next two years to focus on a specific spending plan and to continue community outreach.

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