The state of California is looking to break the tax partnership between Apple and its home city.
With the California Department of Tax and Fee Administration making changes between Cupertino and Apple, all of the company’s online sales are put in Cupertino and elicit a 7.25% sales tax. As part of the agreement, the city will return a third of the local 1% to Apple. Cupertino gets a massive boost in sales tax revenue with this setup.
Matt Morley, assistant city manager said that the CDTFA tax officials said that the city owes $56.5 million from April 2021 to June 2023. In addition, the officials said that Apple will have to reimburse the state $20 million, which will be reallocated to other areas. If the CDTFA is to be followed, non-essential services will be cut or reduced, and Cupertino will experience a 73% sales tax revenue drop.