Council to consider business ‘head tax’ proposal tonight
The Cupertino City Council wants proof that the city could raise $10 million a year with employee taxes for Apple and other businesses.
At its June 5 meeting, the council heard a proposal that could go before voters Nov. 6. The proposal will be discussed at tonight’s council meeting.
Support for city staff to detail plans for the tax that could pay for transportation projects came as Councilman Barry Chang said traffic in the region is “heading toward a catastrophe.”
“This will be a disaster,” Chang said, if nothing is done.
Councilman Steven Scharf supported moving forward with the employee tax review but acknowledged that $10 million may make a minor difference when light rail costs $40 million a mile.
“It doesn’t seem like it buys us very much,” Scharf said.
Having the city staff return at tonight’s council meeting with more information about the employee tax also won support from Councilwoman Savita Vaidhyanathan during the June 5 study session.
The proposal would replace the city’s traditional business license tax with a measure that taxes companies based on the number of employees. Sunnyvale, San Jose and Redwood City have an employee-based business tax model with a flat base fee that progressively increases as the employee count rises, according to a Cupertino city staff report.
Current yearly business taxes in Cupertino call for a sole proprietor with a oneroom office to pay about $160, an average-size restaurant of 2,000 square feet pays around $220 commercial space and a Safeway grocery store $1,700, a city staff report said.
Businesses with large square footage now pay proportionally less in license fees compared to smaller businesses, according to the study.
Andrew Walters, president of the Cupertino Chamber of Commerce, told the council June 5 that people getting to work is a top issue. But he noted the cost of transportation work and asked what the city’s traffic goal is.
Scharf cited the business tax in the city of Portland, Oregon, that is based on a percentage of employee salaries.
That is fairer, he said, and it may be time for such a tax on companies at which the average salary is around $100,000.
Vice Mayor Rod Sinks, who has recused himself on council matters involving Apple because his wife works for the corporation, did so June 5.
Mayor Darcy Paul noted the majority council support for moving forward with a review of the tax but added that fixing transit is incredibly expensive.
The council is expected to vote July 3 on whether to put the new tax before voters in November.