Santa Clara County and, for that matter California, is missing out on millions of dollars that are right under its nose. The average hard-working resident in Silicon Valley pays his or her taxes and doesn’t think twice about it. But that’s certainly not the case for many Santa Clara County-based corporations. Those companies like Apple and Google, just to name the most highly recognized, are taking advantage of perfectly legal “loopholes” that allow them to stash hundreds of billions of dollars in untaxed cash in offshore havens.
For example, Apple has multiple shell subsidiaries providing a Caribbean tax haven in the British Virgin Islands as well as other similar arrangements that are too numerous to list whereby big chucks of Apple’s corporate profits end up being untaxed through a variety of perfectly legal schemes. Apple’s lawyers and lobbyists are even clever enough to park some of their US profits in tax-free Nevada tax havens under such obscure corporate entities as Braeburn (a type of apple) while minimizing the taxes paid in states such as California. It’s an understatement to say it’s not fair, but it’s also just not right.
While California has finally achieved a small budget surplus, we have grossly underfunded our schools, our roads, our resident’s low wages, while continuing to incur lots of debt and other unmet obligations. And while Washington political gridlock and highly paid lobbyists might make it hard to change things on a national level, it’s time to shake things up here in the Golden State where these companies are located.
Silicon Valley, in Santa Clara County, is where the intellectual property is created and where these companies are controlled. Accountability must start locally in our state such that the residents of Santa Clara County who have paid over generations for roads, schools and other services these companies now use can also capture a return on their investment in public infrastructure that facilitates the prosperity of the private sector.
At the same time, companies would like to not pay taxes on their offshore holdings. That is understandable. It is possible to have a rare win-win here. California should consider amending its tax code (legislatively or by the initiative process) to allow the offshore tax haven profits to be brought back tax free, in exchange for fair wage California-based jobs and investment in our residents. This could be done with a new jobs credit or by thinking outside the box as to how we can reform the State’s “enterprise zone” credit systems – albeit with much more control – and with more of an entrepreneurial approach (e.g., credits might be transferable).
At the same time California tax code could pass a tax on a company’s cumulative California profits funneled to US states such as Nevada. This approach would give California both the avoided California taxes and the avoided federal taxes. No company would want this and might – just might — do the right thing and focus on creating new fair wage jobs in California in Santa Clara County
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