Apple's Arizona sapphire plant clears another regulatory hurdle

Posted:
in General Discussion edited January 2014
The last of eight local government approvals required to designate the site of Apple's planned sapphire production plant as a foreign trade zone was obtained on Monday, clearing the way for Apple to finalize its purchase of the now-empty Phoenix-area factory.

Touch ID
Apple's Touch ID sensor utilizes a protective sapphire cover.


The Gilbert Unified School District voted unanimously to allow the foreign trade zone at a nearby airport to be extended to cover the proposed Apple site, according to The Republic. The vote came one week after a previous, reportedly contentious, meeting of the school board that had cast doubt on the project when two of the five board members indicated their opposition to the plan.

By virtue of the foreign trade zone designation, the facility Apple intends to purchase will be subject to reduced property tax assessments which could shave as much as 70 percent off of the company's annual property tax bill. Because of the potential implications, each taxing authority that receives revenue from the land must sign off on the deal, a list that includes Maricopa County, Mesa Community College, Maricopa Community Colleges, Central Arizona Project, Maricopa Integrated Health System, East Valley Institute of Technology and the City of Mesa, in addition to the Gilbert school board.

An Apple spokesman is said to have told the board after last week's meeting that several other states are vying for the deal and that Apple would move the project elsewhere if the trade zone designation was not approved.

Apple announced plans to acquire the former First Solar facility in the Phoenix suburb of Mesa, Ariz., earlier in November. Apple will pay for the factory's build out, while partner GT Advanced Technologies will operate it as a sapphire production plant --?with significant portions of its yield dedicated exclusively to Apple -- and reimburse the $578 million capital expenditure cost over five years.
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Comments

  • Reply 1 of 24
    Foreign Trade Zone? Nice tax evasion.
  • Reply 2 of 24
    My company built all of the crates for First Solar to move out of that facility. Small world.
  • Reply 3 of 24
    seanr wrote: »
    Foreign Trade Zone? Nice tax evasion.

    No, it's just smart business. Now dry up and blow away.
  • Reply 4 of 24
    seanr wrote: »
    Foreign Trade Zone? Nice tax evasion.

    Oh that’s ridiculous. Do you even know the meaning of “Tax Evasion”? I’m thinking maybe you don’t. Evasion is ILLEGAL. This isn’t.

    There is nothing wrong or criminal in seeking reasonable means to reduce tax liability.

    Most local jurisdictions do have JURISDICTION over how to apply and collect local property taxes, including the power to negotiate with potential commercial buyers to attract and encourage local economic development. It’s common practice to negotiate reduced land tax as a carrot to get companies to move in.

    Negotiating a lower land tax is not anything remotely akin to “tax evasion”.

    Designating a “foreign trade zone” is not that out of the ordinary either, and is pretty common for airports AND surrounding areas. A lot of commerce (and tax revenue) is derived from fleshing out these zones, and it’s better to have more activity at a lower revenue rate than none at all.

    This is a win for that community. As Apple said, there were others communities offering similar terms, so it was a buyer’s market...
  • Reply 5 of 24
    Quote:

    Originally Posted by AppleInsider View Post



    ....each taxing authority that receives revenue from the land must sign off on the deal, a list that includes Maricopa County, Mesa Community College, Maricopa Community Colleges, Central Arizona Project, Maricopa Integrated Health System, East Valley Institute of Technology and the City of Mesa, in addition to the Gilbert school board.

    And we wonder why jobs have fled this country.....

  • Reply 6 of 24
    zoetmbzoetmb Posts: 2,423member
    Quote:
    Originally Posted by tribalogical View Post





    Oh that’s ridiculous. Do you even know the meaning of “Tax Evasion”? I’m thinking maybe you don’t. Evasion is ILLEGAL. This isn’t.



    There is nothing wrong or criminal in seeking reasonable means to reduce tax liability.



    Most local jurisdictions do have JURISDICTION over how to apply and collect local property taxes, including the power to negotiate with potential commercial buyers to attract and encourage local economic development. It’s common practice to negotiate reduced land tax as a carrot to get companies to move in.



    Negotiating a lower land tax is not anything remotely akin to “tax evasion”.



    Designating a “foreign trade zone” is not that out of the ordinary either, and is pretty common for airports AND surrounding areas. A lot of commerce (and tax revenue) is derived from fleshing out these zones, and it’s better to have more activity at a lower revenue rate than none at all.



    This is a win for that community. As Apple said, there were others communities offering similar terms, so it was a buyer’s market...

    Good business for Apple?  Yes.    Legal?  Yes.    Ethical?  No.   It's real estate taxes that pay for schools in most communities.   By substantially reducing what they pay, Apple hurts the future education of the kids in that community.   Apple isn't a startup - they make plenty of profit.   There's no reason why Apple can't pay its full share of local taxes.    The fact that other locales were willing to offer similar tax benefits is besides the point.    

     

    Furthermore, why should Apple get a property tax break, but the Mom & Pop shop on Main Street doesn't? 

     

    Just as WalMart paying poverty wages causes their workers to rely heavily on government benefits, when companies get their taxes cut it means that either local services suffer or that other local taxes go up.    Why should my taxes go up or services suffer because Apple wants to open a facility?     

     

    Will the additional taxes generated by the employees at this facility make up for the loss in taxes from Apple?  I doubt it.  

     

    Would you be claiming it's a win for that community if it were Samsung opening a facility there under the same circumstances?  I doubt that also.  

  • Reply 7 of 24
    zoetmb wrote: »
    Good business for Apple?  Yes.    Legal?  Yes.    Ethical?  No.   It's real estate taxes that pay for schools in most communities.   By substantially reducing what they pay, Apple hurts the future education of the kids in that community.   Apple isn't a startup - they make plenty of profit.   There's no reason why Apple can't pay its full share of local taxes.    The fact that other locales were willing to offer similar tax benefits is besides the point.    

    Furthermore, why should Apple get a property tax break, but the Mom & Pop shop on Main Street doesn't? 

    Just as WalMart paying poverty wages causes their workers to rely heavily on government benefits, when companies get their taxes cut it means that either local services suffer or that other local taxes go up.    Why should my taxes go up or services suffer because Apple wants to open a facility?     

    Will the additional taxes generated by the employees at this facility make up for the loss in taxes from Apple?  I doubt it.  

    Would you be claiming it's a win for that community if it were Samsung opening a facility there under the same circumstances?  I doubt that also.  

    Amen.
  • Reply 8 of 24
    Originally Posted by seanr View Post

    Foreign Trade Zone? Nice tax evasion.

     

    I hope you paid 109% income tax last year.

  • Reply 9 of 24
    Dude, Apple is still going to pay taxes on the facility. Which is taking in zero $$$ right now, so ... seems like a plus to me.
  • Reply 10 of 24

    I sincerely hope that all of you who do not like our tax laws (regardless of who is being taxes) are also voting for your beliefs instead of simply whining that corporations are getting all the tax breaks (and I don't think "break" is a legal term anyhow).  If you want the major corporations to be taxed more heavily then you should vote for the socialists...Oh I forgot...you already did.  But before doing so you might consider that the economic base for the country that you live in is based on business...not stealing from the rich and giving to the poor.

     

    Not a perfect system.  Sometimes state lawmakers get overly zealous in approving tax incentives to bring in business.  But it is still the best system ever invented.  

  • Reply 11 of 24
    akqiesakqies Posts: 768member
    zoetmb wrote: »
    Good business for Apple?  Yes.    Legal?  Yes.    Ethical?  No.   It's real estate taxes that pay for schools in most communities.   By substantially reducing what they pay, Apple hurts the future education of the kids in that community.   Apple isn't a startup - they make plenty of profit.   There's no reason why Apple can't pay its full share of local taxes.    The fact that other locales were willing to offer similar tax benefits is besides the point.    

    Furthermore, why should Apple get a property tax break, but the Mom & Pop shop on Main Street doesn't? 

    Just as WalMart paying poverty wages causes their workers to rely heavily on government benefits, when companies get their taxes cut it means that either local services suffer or that other local taxes go up.    Why should my taxes go up or services suffer because Apple wants to open a facility?     

    Will the additional taxes generated by the employees at this facility make up for the loss in taxes from Apple?  I doubt it.  

    Would you be claiming it's a win for that community if it were Samsung opening a facility there under the same circumstances?  I doubt that also.  

    Having money doesn't mean they should waste it. I understand where you're coming from but Apple it's also not ethical for Apple to hurt their investors by pointlessly paying more than the law provides. Every action by a corporation should be the goal of generating more profit.

    Consider the alternatives. Since they don't have to build in AZ what does AZ get if Apple decides to use a different state, or worse, not build in the US at all? They get nothing. This is still a gain for AZ and until such time as AZ has so much money or so little land to dish out that they can say no to a company that will be pouring billions into their economy over the years it's simply not a good business move for them to ignore this windfall.
  • Reply 12 of 24
    zoetmbzoetmb Posts: 2,423member
    Quote:

    Originally Posted by akqies View Post





    Having money doesn't mean they should waste it. I understand where you're coming from but Apple it's also not ethical for Apple to hurt their investors by pointlessly paying more than the law provides. Every action by a corporation should be the goal of generating more profit.



    Consider the alternatives. Since they don't have to build in AZ what does AZ get if Apple decides to use a different state, or worse, not build in the US at all? They get nothing. This is still a gain for AZ and until such time as AZ has so much money or so little land to dish out that they can say no to a company that will be pouring billions into their economy over the years it's simply not a good business move for them to ignore this windfall.

     

    Every company puts money into the local economy.  Does that mean that no companies should pay real-estate taxes?    And if that's a server farm that Apple is building there, they may be employing fewer than 10 employees.   So it might not be a windfall.     

     

    I happen to be an Apple shareholder, but I still want them to act ethically.    I happen to disagree with the notion that every action by a corporation should be the goal of generating more profit.  I used to think that this was actually built into U.S. law - that a CEO had a fiduciary duty only to the shareholders, but it turns out there's no such law.   It's just b-school mantra and a rationale for treating everyone but the shareholders like trash.    I also happen to think it's one of the big defects of capitalism.   IMO, a corporation has a shared responsibility:  to the employees, to the purchasers of its products, to the shareholders and to the community in which it resides.    

  • Reply 13 of 24
    apple ][apple ][ Posts: 8,437member
    Quote:
    Originally Posted by zoetmb View Post

     

    Ethical?  No. 


     

    You don't get to decide what's ethical or not for other people or for companies. Not everybody has the same morals or ethics as yourself.

  • Reply 14 of 24
    zoetmbzoetmb Posts: 2,423member
    Quote:

    Originally Posted by Apple ][ View Post

     

     

    You don't get to decide what's ethical or not for other people or for companies. Not everybody has the same morals or ethics as yourself.


    It's called "an opinion".   Perhaps you've heard of these.   There's many on these Boards, almost in every single post. 

  • Reply 15 of 24
    akqiesakqies Posts: 768member
    zoetmb wrote: »
    Every company puts money into the local economy.  Does that mean that no companies should pay real-estate taxes?    And if that's a server farm that Apple is building there, they may be employing fewer than 10 employees.   So it might not be a windfall.     

    I happen to be an Apple shareholder, but I still want them to act ethically.    I happen to disagree with the notion that every action by a corporation should be the goal of generating more profit.  I used to think that this was actually built into U.S. law - that a CEO had a fiduciary duty only to the shareholders, but it turns out there's no such law.   It's just b-school mantra and a rationale for treating everyone but the shareholders like trash.    I also happen to think it's one of the big defects of capitalism.   IMO, a corporation has a shared responsibility:  to the employees, to the purchasers of its products, to the shareholders and to the community in which it resides.    

    We're talking about either zero or a lot more than zero. There are still city, county and state taxes and fees that need to be paid, as well as innumerable costs for everything that revolves around its location, like water, power, transportation for supplies, constructions, etc. that would likely not happen at all in that city, country and/or state if it this was happening in another state, or worse, outside the country, which goes far beyond the consideration of how many employees will be on site.

    You say you're an Apple stockholder but why? For gits and shingles or because you expect the stock value to grow over time? What if Tim Cook came out and said they will purposely seek to never make a profit? Would you not be upset when the stock price tanked? I would be. I only invest in companies that I think have a chance of growing the stock value. Does this mean they need to unethical? Of course not, but it means they need to think long term. Do you think it's unethical for a global company to have facilitates outside the US? I don't, but since I am an American and Apple is an American company I really like when they set up in the US. If that means they get allowances to bring business to certain places then so be it. They are no different than whales at a casino that are being comped for everything so long as they stay at that casino. Playing the nickel slots and complaining that you don't get a free suite is just as ridiculous.
  • Reply 16 of 24
    apple ][apple ][ Posts: 8,437member
    Quote:

    Originally Posted by zoetmb View Post

     

    It's called "an opinion".   Perhaps you've heard of these.   There's many on these Boards, almost in every single post. 


     

    It sounded like you were making a statement, but if it's merely an opinion, then I have no problem with that.

     

    And yep, you are right, there are opinions all over the place here, I can't disagree with that.

  • Reply 17 of 24
    This is getting old with two schools of thought about corporate America. Sorry, but as an alum if I were still working there I'd be very vocal to those that make the decisions how utterly asinine it is that they continue to pay squat in taxes, relative to their profit lines.

    Sorry, but Corporate America covers jacks*** of US taxes.

    Boeing's attempt at $8.5 Billion in tax subsidies [yes paying out zero taxes by the State of Washington until 2040 is a tax subsidy].

    These legal status of manipulating their books should be ended. This economy wasn't grown on corporate tax breaks. It was grown over 50 years on high taxes shared by everyone to pay down the WWII debts.

    Extended Credit is just a deferment that will cost everyone through the rear in the long-term.

    Sensible compromises for balanced taxes have yet to be offered by businesses.
  • Reply 18 of 24

    zoemtb states that it is a "defect of capitalism".  I disagree.  Rather than a defect of capitalism I believe it to be a defect of morals/ethics.  A problem that is rampant in the USA today.  

     

    Just in case you did not read the book, Andrew Carnegie stated (How To Be Rich) that a good entrepreneur (think capitalist.  think free-enterpriser) will succeed far better in the long term if he pays his employees well, provides q quality good/service to the consumers, and makes a profit so that it can continue to exist.

     

    And, he totally right that the corporation has a responsibility to all stakeholders, not just one group.  

  • Reply 19 of 24

    Speaking of taxes, corporations, tax subsidies, incentives and all that:  Does anyone happen to know if Apple is getting any tax incentives from the State of California?  And, if not, why on earth do they stay there?  I've always understood that California taxation is pretty high?

  • Reply 20 of 24
    "we'll take our plant somewhere else if you don't give us tax breaks."

    "we'll not repatriate our profits if you don't give us tax breaks."

    Despite all the long term infrastructure, from education of its employees to the military patrolling the skies and seas which carry its products, the company has used to make its billions, Apple refuses to give anything back.

    Pathological.
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