Apple Sells iPads to LAUSD — Something Does Not Compute
I’m writing this on my MacBook Pro, and I really appreciate that irony and privilege. But it doesn’t change what I’m about to say.
When the Los Angeles Unified School District’s School Board decided at its mid-June 2013 meeting to purchase iPads for every child in the district, I was aghast. It wasn’t only the price, which was above retail (ABOVE retail?? What happened to educational discounts?).
Those iPads should’ve been FREE to LAUSD. In fact, every school child in California should’ve gotten a FREE iPad, or better yet, an actual laptop computer. Here’s why.
Listen: I understand the digital divide and that for some children living in poverty, a school-provided device may be the only access to a computer they’ll have.
An iPad is a consumption device. In order to be useful for more than playing games, using apps, or watching videos, you need a keyboard. Which LAUSD soon discovered and authorized additional purchases for, adding an extra, unplanned-for $38 million to the tab.
Babies and cats can use iPads. Simply using them does not make you technologically skilled. It makes you a consumer, albeit one who can use apps. Impress me by coding an app, game, or program. Build something. (Is that even a goal? Or were school administrators simply excited to buy cool toys? If teaching kids to program — build things — is the goal, maybe cheaper classic boxes run on open source code are a better way to go. Read about this remarkable 7th grade project in Maryland for an example.)
Sixty eight million dollars is a lot of money for hardware. (Some LAUSD parents have started a petition saying that the money comes from a bond fund earmarked specifically for facilities improvements instead, and are calling for an investigation into the deal. SIGN THAT PETITION NOW.) You know what else $68,000,000 could buy if that money were fungible? One thousand teachers to alleviate crowded classrooms that are currently bursting at the seams with 40 and 50 students to a teacher.
Consider also: Apple Computers in Cupertino, CA, has benefited for over 35 years from artificially low commercial property tax valuation under Proposition 13. Passed in 1978, the law held down the value of real estate purchased prior to that date so that taxes paid on both individual residences and Apple’s corporate real estate ARE ON LAND ASSESSED WELL BELOW CURRENT MARKET VALUE. Apple was incorporated in 1977. Some of the land it owns is valued as if it’s still 1978.
What do I mean by well below current market valuation? Does thirty-three cents per square foot for prime real estate in one of the wealthiest areas of the country sound outrageously low to you?
According to Californians for Tax Reform, some individuals and families pay more in property tax on their homes than Intel does on their entire 36 acre office complex on prime Silicon Valley real estate:
Intel sits on 36 acres of centrally-located land taxed at 2 cents/square foot, or $980/acre. IBM pays $202/acre on 200 acres of land. By way of comparison, open land recently bought by Google generates $1.35 in tax per square foot, or $58,000/acre in tax—60 times what Intel pays.
Not only that, but changes in land leasing — one corporation renting office on land owned by another who purchased before 1978 — does not reassess the tax rate when a new renter signs a lease. Who pockets that pure profit? The land owning corporation since they charge at today’s fair market value, and all those profits go into private pockets and NOT to the public sector of California, which is where they would be going if Prop 13 did not exist. The same holds true for when the property changes hands: complicated legal maneuvers ensure that even when property does change hands through a sale, it’s never treated as such and there’s no trigger for the commercial real estate to be assessed at current market value. (Read the Californians for Tax Reform’s entire eye-opening report.)
Here’s a graph that shows what Apple pays in property tax per square foot on a range of properties it owns:
Focus on tax rates for land owned (blue bars). That’s right, Apple Computers pays as little as $0.30 (thirty cents) per square foot in state property tax on the commercial real estate it owns. Look at the tallest blue bars on the graph. The highest it pays is $2.18 per square foot. Google recently bought 7 acres of property in Silicon Valley for which it paid $135 per square foot in taxes (one hundred thirty-five dollars), to give you a sense of what assessed values are in the heart of the nation’s high tech hub.
Californians, to give you some perspective: if you own a house in Silicon Valley (Palo Alto, let’s say) on a plot of land that is 5,000 square feet, and you recently paid $2,500,000 for the house and land (therefore not enjoying advantageous Prop 13 tax rates), at a contemporary tax rate of 1.0%, you pay $5.00 per square foot, or SEVENTEEN TIMES what Apple, a multibillion-dollar corporation pays per square foot on its lowest commercial property tax rate.
But this isn’t only a 1%er problem. Let’s say you live in a much more modest house elsewhere in the state of California. You bought it recently for $400,000 (sadly, this counts as “modest” in our state) and it sits on a 3,500 square foot lot. At a contemporary tax rate of 1.0%, you pay $1.14 per square foot, or almost FOUR TIMES what Apple Computers pays in real estate property tax on its lowest-assessed land.
Why are you, California homeowner, subsidizing Apple Computer’s profits?
Why is it okay for corporations around the state to hide behind the skirts of mythical little old ladies Prop 13 was originally written to protect when these corporations are enjoying record profits and their executives have the temerity to complain that public school graduates are ill-qualified for jobs at their companies? Could they be ill-prepared because corporations have been starving the public school system of commercial real estate tax it was due and needed to run properly for decades?
May I remind you that in addition to not paying California state commercial property taxes at fair market value for the past 35 years, Apple was recently hauled in front of Congress for not paying much in federal taxes either? They don’t seem to be paying any taxes at all, a situation much like lunch with a wealthy friend who “forgets” to bring his wallet when it comes time to split the check leaving YOU to pick up the tab. In this case, having a tiny office in Nevada allows Apple to skirt California state business taxes:
With a handful of employees in a small office here in Reno, Apple has done something central to its corporate strategy: it has avoided millions of dollars in taxes in California and 20 other states. Apple’s headquarters are in Cupertino, Calif. By putting an office in Reno, just 200 miles away, to collect and invest the company’s profits, Apple sidesteps state income taxes on some of those gains. California’s corporate tax rate is 8.84 percent. Nevada’s? Zero.
So far, Apple has been able to skate by on its good looks and charm. It flattered Generations X and Y as well as Millennials that we’re “geniuses,” that we “think different” or we have “the power to be our best.”
Maybe so. But at what price? California’s public education system and public universities were once the envy of the nation, if not the world. Now, we’re 49th in per pupil funding even after passing Proposition 30 in November of 2012.
For all the billions of dollars that Apple has not paid to California and hoarded for itself and its shareholders, that company owes every single K-12 child in this state, all 6.3 million of them, a FREE iPad. Now do you see why I’m shocked and disgusted that Los Angeles Unified School District — or any school district or public university — would pay a single red cent to Apple?
Why should a company that derides the students produced by the public education system that’s underfunded through its own shirking of tax burden then be awarded a guaranteed revenue stream from ongoing sales of ever-new updated versions of iPads to school districts? That’s like paying money to be insulted and injured. Most sensible people try to avoid this.
A FREE iPad for every child in the state of California would cost Apple $4.3 billion dollars at the cost per iPad they charged LAUSD. But you know what? That’s probably close to what they should’ve paid in state property tax all along, plus a penalty for being late on payments.
So yeah, deadbeat Apple, provide FREE iPads to all of California’s school kids. Or pay commercial property tax rates on current fair market value like the rest of us. Your choice. You’ve had a free lunch at the expense of the public sector, the state’s public schools and universities, for too long.