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.