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An Apple server farm could soon be coming to recession-stricken North Carolina. In return, North Carolina hopes to hand Apple tax breaks which could total $300M USD over the next 30 years.  (Source: Wahaha wu)
NC officials hope to lure Apple server farm to the state

As one of the most financially successful companies in this recession economy, Apple makes a popular target for taxation.  However, recession stricken North Carolina plans to go the opposite route, hoping to lure a huge Apple server farm into the state in exchange for a massive tax break that could total as much as $300M USD over its lifetime.

Both Apple and state officials declined comment, but a state lawmaker speaking on conditions of anonymity revealed that the state is in talks with Apple over a facility to be built in either Catawba or Cleveland County, an investment that could total as much as $1B USD by the time construction completes. 

In lieu of the proposed deal, NC's House Finance Committee approved changes to the way in which corporate income taxes are calculated.  The state plans to give breaks to companies who only make a small share of their total nationwide sales in the state, but have a large portion of their payroll and property in the state.  The proposed cuts do come with some strict conditions; the companies must be located in one of North Carolina's poorest counties, provide health insurance, meet a wage standard, and forego other state grants or tax breaks.

Rep. Paul Luebke, D-Durham praised the measure, stating, "The bill ensures it's going to go to an area of high unemployment. This reflects concerns many of us have had about economic development policy, that priority should be given to the neediest counties."

A memo by legislative fiscal staffers reveals that the initial tax breaks could total $46M USD for a company investing $1B USD.  The memo declines to mention the specific company that the state is reportedly in talks with.  The memo does say that only one company has the potential to qualify for the breaks.

If the bill is approved, Apple may join a growing tech corridor stretching from Raleigh to Greensboro.  In 2007 Google Inc. began building a $600M USD server farm outside Lenoir in the western North Carolina foothills.  The center opened this year.

Google will receive $260M USD in tax breaks over the next 30 years, in one of the state's largest deals yet.  Apple's deal could be even fatter, though.  The memo indicated that the company being considered could save $300M USD in tax cuts over the next 30 years.  The estimated breaks would comprise of $3 million from 2011 to 2018, and then $12.5 million each year after that.

The Apple site initially hopes to employ only 100 workers, but state officials believe it could grow into many more jobs.  The state, which has a 10.8 percent unemployment rate, is desperate for jobs.  Four non-urban counties in North Carolina have unemployment rates greater than 16 percent.

The bill has passed the Senate and awaits a full House vote on Tuesday.  Rep. Jennifer Weiss, D-Wake, said of the bill, "Given our economic situation in this state, with the rising unemployment, this really is critical."

The new Apple server farm would likely be used to serve among other things Apple's App Store and Mac-tied email accounts.  Ironically North Carolina moved earlier this year to tax digital downloads, a business Apple, with its iTunes and App Store, is deeply vested in.

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RE: Feds should step in
By BansheeX on 5/25/2009 1:44:05 PM , Rating: 3
Damn straight. States compete for tax revenue, as it should be. You don't get revenue from an absurdly high income tax if no one sticks around to pay it.

However, I am totally against company-specific subsidies, or socially engineering the tax code. One legal behavior should not be taxed at a different percent than another legal behavior. It makes no freaking sense. NC could generate just as much revenue from luring all kinds of businesses than just making some kind of special exception for Apple. This is why you want a flat tax, it's entirely possible that there is something going on under the table and we just don't know it. We DO NOT want that to be a contributor to success. You eliminate that suspicion with a flat tax.

RE: Feds should step in
By Targon on 5/26/2009 8:06:12 AM , Rating: 2
The easy solution is that people pay taxes to the town, the town then pays to the county, the county then pays to the state, and the state then pays the federal government. In this way, local services get paid first, and the need for federal funds to pay for this program and that program goes down.

People would be happier knowing that the vast majority of their tax money goes to pay for local services first, with only ten percent of what they are paying going to the county, ten percent of the county revenue going to the state, and ten percent of the state revenue going to the federal government. Since the federal government really should only be dealing with the military, programs like NASA, and R&D of various things, the number of federal programs could be reduced to the point where it would not need the money it is currently getting.

The problem with the current system is that because all of our tax money goes to the federal and state governments, local programs need to rely on state and federal programs to be properly funded. There is also the problem that government employees get paid higher for the same work in many places as people in the private sector, plus they get more paid vacation days than those in the private sector.

RE: Feds should step in
By FITCamaro on 5/26/2009 9:36:35 AM , Rating: 2
Actually many civil service jobs pay less than in the private sector.

RE: Feds should step in
By Suntan on 5/26/2009 3:48:41 PM , Rating: 1
Sorry, no. Disagree completely.

The only thing that makes the federal government look like a well oiled and highly efficient machine is looking at a State government in process. The only thing that makes a State government look the same is watching a local/community government in action…

No way would I allow my local government to have first dibs on *all* my tax dollars. My city does *not* need yet another pointless round-about put in. (Show of hands as to how many other people have to deal with what used to be parallel streets inexplicably pulled together and thrown through a roundabout only to have stop signs then posted on every outlet?)

My local government wastes enough money as it is. I’d rather my Federal government get a chance to waste its fair share of it…


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