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Apple still got 'generous' tax breaks, without clear job creation plans

Krystal Hu
Reporter
Texas Gov. Greg Abbott speaks about Apple's new campus announcement in Austin, Texas, Thursday, Dec, 13, 2018. (Ricardo Brazziell/Austin American-Statesman via AP)

Apple’s search for its new campus is pretty low-key compared to another tech giant, Amazon. But even without the public bidding war, Apple received good tax breaks and money from the local governments.

Since the tech giant announced its $1 billion investment in Austin, Texas on Thursday, more details about incentives from the state and local county have emerged. The state of Texas has offered Apple as much as $25 million grants from the Texas Enterprise Fund. Apple also is seeking a 15-year property tax abatement of 65% from Williamson County, where the new campus will be located, according to the contract between Apple and the county.

The numbers don’t seem as giant as what Amazon received from New York and Virginia. But Greg LeRoy, executive director of the subsidy-tracking think tank Good Jobs First, said the 65% abatement is still a generous offer. And little is known about what types of jobs Apple will create and how much it will pay workers.

“There is no personal income tax in Texas. So the overall tax system is more dependent than most other states on property taxes,” LeRoy told Yahoo Finance. The county hasn’t responded to queries on the valuation of the subsidy, but it’s likely to be worth tens of millions of dollars depending on the property value.

Will there be high-paying jobs?

Apple’s contract with Williamson County, which includes a plan to employ as many as 15,000 workers, doesn’t detail the quality of the jobs that will be created, including wages and benefit packages. Meanwhile, Amazon’s agreements with its HQ2 cities clearly states it aims to create 25,000 jobs with an average salary of over $150,000.

Apple can qualify for the tax abatement as long as it fulfills 70% of its job creation promise, but the breakdown on the nature of the jobs is scarce. “Jobs created at the new campus will include a broad range of functions including engineering, R&D, operations, finance, sales and customer support,” it said in a statement on Thursday. No manufacturing position has been mentioned.

“It could avoid the default by investing $50 million creating 70% of the jobs and paying minimum wage. That would be a terrible deal,” said LeRoy.

The Williamson County’s Commissioner Court will vote on the Apple incentive package on Tuesday. Steve Adler, the mayor of Austin, said he has spoken to the Williamson County leadership and they are confident the package will pass.

Austin was also on the shortlist for Amazon HQ2 earlier this year. Adler said Amazon showed little interest in addressing challenges like affordability and mobility in talks with Austin, while Apple is helping solve those issues by expanding in an underdeveloped part of the town.

“Apple's always had a real track record here,” said Adler. With 6,200 existing employees, the city already has the second largest Apple campus. “Certainly, there was less fanfare associated with this search.”

Krystal Hu covers technology and trade for Yahoo Finance. Follow her on Twitter.

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