Tax breaks as “economic development” tools is a smoke and mirrors expression for making the rich richer, and the poor poorer.
If there is one thing that needs to be changed nationally, it’s the outlawing of all tax breaks for business by any state or local agency for the purpose of relocation assistance. In other words, the only tax breaks offered should be ones that keep the playing field level.
A textbook example of why this needs to happen is the current situation with Apple. North Carolina is changing its laws to give the computer and iPod maker $46 million over the next ten years to attract a server farm that will employ only 100 people.
In the meantime, Apple is far from struggling, with a cool $25.01 billion cash on hand. This isn’t about having the infrastructure, the people, the quality of life- this is just flat out extortion, taking money from a state suffering from high unemployment, and giving it to a wealthy corporation. Sort of like paying the good-looking popular guy to take the ugly girl to the prom. This has become standard operating procedure in North Carolina, according to the article, since the lawmakers did it last year to woo Google, a company with a mere $17.78 Billion in cash.
RALEIGH, N.C.—North Carolina lawmakers are pushing to give Apple Inc. a multi-million dollar tax break should the company bring an East Coast computer server farm to the state—an estimated $1 billion investment, according to a state official with knowledge of the recruitment efforts…
While it has been known that North Carolina lawmakers were working on changing tax rules to benefit one company, the name of the outfit has been kept secret. The state official said Catawba and Cleveland counties are potential sites.
The tax changes would affect the way corporate income taxes are calculated by giving breaks to companies with a relatively small share of U.S. sales in North Carolina but which have large shares of their nationwide property and payroll in the state.
The House Finance Committee on Thursday altered the proposed tax change so companies could qualify only if they locate in one of North Carolina’s poorest counties, provide health insurance, meet a wage standard, and forgo other state grants or tax breaks.
“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,” committee chairman Rep. Paul Luebke, D-Durham, said Friday.
The tax breaks could be worth about $46 million in the next decade, assuming the company reaches its $1 billion investment target within nine years of starting, according to a memo by legislative fiscal staffers that does not identify the company. The memo said no current company meets the criteria to receive the tax break and the Commerce Department knows of just one with the potential to qualify.
“It’s very specific to this project,” Luebke said of the tax breaks.
The conditions adopted Thursday, if approved by both legislative chambers and the governor, would push the project from the state’s urbanized corridor connecting Raleigh to Greensboro and Charlotte. In 2007, Google Inc. committed to spending $600 million for a server farm near Lenoir in the western North Carolina foothills. It opened last year.
State and local governments offered Google an incentive package worth up to $260 million over 30 years, one of the largest incentives packages in state history, to land the data complex. If the Apple project also remained active for 30 years, its server farm could save more than $300 million on its corporate taxes, based on legislative staffers’ estimates that the tax break would mean a savings of $3 million from 2011 to 2018, and then $12.5 million each year after that.
Google, Microsoft and other technology giants have responded to booming Internet use by building server farms: huge, climate-controlled computer warehouses that can store enormous amounts of information and process vast flows of data. They are heavy users of power and water and are usually spread over large spaces.
Though the Apple site is initially expected to employ fewer than 100 full-time workers, legislators said the potential prize was so juicy it justified changing the state’s corporate tax formula to benefit a single company. North Carolina’s unemployment rate remained at 10.8 percent in April, marking a third-straight month it was in the double-digits, the state Employment Security Commission reported Friday. Four non-urban counties have unemployment rates of more than 16 percent.
“Given our economic situation in this state, with the rising unemployment, this really is critical,” said Rep. Jennifer Weiss, D-Wake, before the committee approved the bill and its changes.
The bill, which passed the Senate earlier this month, is scheduled for a vote by the full House on Tuesday.
While the right wing cries a river over the “socialization” of the banking industry, the bailout of AIG and other insurance firms, the takeovers of GM and Chrysler, there is very little screaming going on about corporate welfare. This is because the very same politicians depend on corporate donors to raise huge amounts of money to fund their monumental campaign expenses.
Until we fix campaign finance, it’s unlikely we’ll stop corporate welfare.
Steve Jobs and Apple are doing what’s best for the company, but far from what’s best for the American people. When Apple began production of the Macintosh, Steve was proudly showing off his state-of-the-art manufacturing plant in Fremont, California (the same place that GM and Toyota were later to join forces to make the Toyota Corolla and the Geo Prizm).
Now Apple mostly subcontracts companies in China to build computers—and some Macs are “final assembly in USA.” As far as can be told, the last US Apple plants were closed in 2004.
Although it’s unlikely that I’ll be able to change this policy of buying jobs with your tax dollars, it’s my plan, if elected to do everything possible, to lobby, embarrass and educate anyone who will listen about the need to end this major screwing of the taxpaying public.
The guiding principle should be, the greatest good for the greatest number.
This North Carolina deal is good for Apple and a screwing of every American worker who used to work in manufacturing in this country. In fact, there should be laws forbidding tax breaks to any company that eliminates American manufacturing jobs for offshore labor. It’s also screwing every taxpayer in North Carolina- who expected services from government for their taxes paid, not to subsidize another corporate jet for Steve Jobs.
What do you think of tax incentives for relocation? Note that Mead abandoned Courthouse Square as its 20-year tax abatement ran out, and Iams/P&G is leaving Vandalia with an empty building while still enjoying a tax abatement that hasn’t run its course. GM shut down Truck and Bus, despite our investment in its new paint line via tax abatements- and now refuses to let anyone else build vehicles in it.