“The Arizona Legislature wants to help Apple Inc. by extending renewable energy tax credits and exemptions to cover the 1.3-million-square-foot data center it plans to open in the Phoenix suburb of Mesa,” Ryan Van Velzer reports for The Associated Press. “”
“The House approved a bill Tuesday that expands a $5 million sales tax credit passed last year to include international operations centers that make a capital investment of $1.25 billion, such as the facility Apple plans to build next year,” Van Velzer reports. “The House swiftly debated the bill and passed it 57-3 after amending it to match the Senate version. That will allow a speedy trip to the governor’s desk when the Senate acts. Two Republicans and one Democrat voted against the bill. To qualify for the sales tax credit, Cupertino, California-based Apple would have to invest at least $100 million in new renewable energy facilities and use some portion of that energy to power its data center.”
“The bill by Sen. Bob Worsley, R-Mesa, also exempts Apple’s facility from sales taxes on electricity or natural gas, resulting in a $1.3 million loss of revenue for the state’s general fund for the budget year starting July 1, 2016, according to the Legislature’s budget analysts,” Van Velzer reports. “Worsley said the bill helps Arizona get its foot in the door with Apple and could lead to bigger projects in the future.”
“Opponents said the bill was specialty legislation,” Van Velzer reports. “‘I just don’t believe in picking winners and losers,’ said Rep. Michelle Ugenti, R-Scottsdale, echoing a refrain often heard from Republicans opposed to business incentives. ‘I just don’t think it’s a good economic tool.'”
Read more in the full article here.
MacDailyNews Take: Congratulations to Arizona for providing the incentives to create those new Apple Inc. jobs and the myriad benefits they’ll bring to Mesa and Arizona.
Related articles:
The secret life of Apple’s Arizona tax breaks – February 18, 2015
Arizona OKs tax break for Apple sapphire glass plant – November 20, 2013
Apple paid $6 billion in U.S. federal income taxes, 1/40th of all corporate income taxes collected by U.S. government in 2012 – January 5, 2013
Reno City Council unanimously approves 79% tax break for Apple data center – June 28, 2012
Apple confirms Reno, Nevada as the site of its next U.S. data center pending tax break deals – June 26, 2012
Travis County approves tax incentives for Apple’s Austin campus expansion – May 2, 2012
Apple gets 15-year property tax exemption for $250 million data center in Prineville, Oregon – April 20, 2012
Apple confirms plans for Prineville, Oregon data center; deal signed after state senate passed tax legislation – February 22, 2012
Apple lobbies Obama for tax holiday, wants to bring overseas bounty home – August 24, 2011
U.S Senate Democrat Schumer allies with Apple, other multinationals on repatriation tax talks – June 21, 2011
Governor signs tax break, Apple confirms it will build NC data center, investing at least $1 billion – June 3, 2009
North Carolina Senate approves tax law change for Apple Inc. in 40-8 vote – June 2, 2009
North Carolina lawmakers OK tax incentives for Apple Inc. – May 27, 2009
I’m sure many in Arizona are happy that the biggest company in the world is setting up shop there. The state is betting that Apple will pull in others. This is just like a new restaurant offering first customers freebies and discounts, so that they would dine there and attract others. It may well work, but the question is, at what price? Is the tax break given to Apple (which is essentially loss of tax revenue) going to be made up by the few dozen (perhaps hundred) jobs (and all the spending those jobs incur)? Will Apple’s presence in the state really pull in others (without the state having to offer similar overly generous tax breaks to them)? How are other big business going to feel about this special tax break? After all, there are many shops already in the state of Arizona, many of them quite large (larger than future Apple operation), and they never got any tax breaks.
We’ll have to wait and see what the ultimate consequences are going to be, but for the current crop of legislators, this will most certainly be a net-positive. And that is what this is all about — short-term political gain.
Az an Arizonan, I’m glad to see Apple come to Mesa with jobs after the debacle caused by GT Advanced.
That is the most stupid logic I have heard. If I had a shop in an area, and a big company came in and got free service, but jobs were created, money abounded from that, then I would benefit from the higher population and more money. I wouldn’t mind the tax that I was already paying if I got more sales because someone else came in that drew the customers! You might say that the other companies benefitting from the increased money flow from the new tax free company – the old stores would be the one leaching off of the new, and they probably wouldn’t mind at all!
“…also exempts Apple’s facility from sales taxes on electricity or natural gas, resulting in a $1.3 million loss of revenue…”
I like the way that is worded. No one is currently buying the gas now, and if Apple doesn’t set up shop there no one else will be, either, but if Apple doesn’t pay the sales tax it will be a loss.
Seriously, does anything think Apple really NEEDED a $1.3 million tax break before they would commit to open this facility? Was that really a make-or-break part of the deal?
That’s what, like a minute of their quarterly profit?
This is like when billionaire NFL team owners expect (and usually receive) tax breaks before they move a team into an area. It’s just the rich getting richer, at the expense of people like us, regular tax payers.
Because who do you think makes up the difference when big companies are exempted from little things like property, sales or utility taxes? We do.
I love Apple. But government giveaways to the richest corporations in the world are bad policy, whether the business is Exxon or Apple or anyone else…
Please understand that corporations don’t pay taxes, their customers do. Taxes are a cost of doing business just like raw materials, labor, physical plant, machinery, power, maintenance, transportation, legal, R & D, royalties, and countless other costs and expenses. Who pays for all of these? You do, if you buy their products. The price of a product is the cost to market plus markup for profit.
So, if you want to “stick it” to the corporations, you are only “sticking it” to your self. If you want corporations to pay higher taxes, (or higher raw material or labor costs) you have to be willing to pay more for their product. To not understand basic Econ 101 is to be duped by political demagogues. Unfortunately, this is all too common.
Keep drinking the Kool-Aid.
Corporations pay taxes on their profits, after other expenses are taken into account. The taxes they pay reduces the amount of profit returned to their owners (shareholders). This is the same as every other business in the country.
My point was, did a measly $1 million tax break REALLY convince Apple to invest in Arizona? Please…
Thank doG Apple lowered their prices because they get tax breaks.
“Corporations pay taxes on their profits, after other expenses are taken into account.”
It doesn’t matter when expenses are taken, they are still expenses.
“The taxes they pay reduces the amount of profit returned to their owners (shareholders).”
Any expense they pay reduces the profit returned, that’s the point. If they didn’t take every opportunity to reduce costs, their fiduciary responsibility to their stock holders would be breached. They may also need to raise prices to maintain a viable business.
Would you take a measly $100 off of your tax liability if you could?
On the community side, it is a demonstrable fact that they benefit from attracting businesses. Revenue isn’t lost by giving tax breaks. If the business isn’t there, it won’t pay any taxes at all.
There are many factors in deciding to locate a business. Taxation is one of them. Given the other factors, the size of the tax break, large or small, may make the difference.
Corporate taxes in an efficient market are not always passed down directly to the consumer, just as your local shop may offer loss-leader products to blow out inventory.
In a competitive market, one just can’t assume that every company has the power to pass on all their costs directly to the consumer. When one company innovates, let’s say by using a more efficient machine in production, then that company can either apply its unit cost savings into higher profit or into lower pricing. What do you think happens to the competition when a price war starts?
The competitor company that DOES NOT innovate has no choice but to improve quality or efficiency in order to stay in business, regardless of what the tax rate is. In the short term, the laggards of an industry end up eating the costs of their own inefficiencies because nobody is going to buy an overpriced product. Until they can compete on price, the laggard companies often end giving customers a bargain just to stay in the game.
Let me state that another way: as long as the tax rate is fairly applied, then only the most efficient company gets the luxury of passing down _all_ its costs to the consumer. Every other company will have lesser profits and will typically have no choice but to woo customers by dropping prices.
Every publicly traded company in a competitive market at one time or another has declared near-zero profits. That’s why as markets mature, the number of competitors is whittled down over time into a duopoly. Then the gains in efficiency are abandoned as the last two giants simply attempt to manage a 40-60% market share and pour profits into lobbying for tax exemptions that can then be used to fill the pockets of the executives. Sad, but that’s how capitalism works. Taxes are not evil, unless they are unfairly applied in a way that distorts the market to benefit inefficient or malevolent companies.
None of that negates the fact that corporations do not pay taxes, their customers do.
“You keep using that word. I do not think it means what you think it means.”
What word?
Too bad George Benckenstein is NOT a trustworthy source.
No companies will NOT flock to Arizona because Apple puts in a taxpayer-subsidized data center with a handful of employees.
That’s because the same legislature giving stuff away to Apple is also far too interested in spending taxpayer money to build walls on the border and making sure everyone can carry any weapon they want at any time (there’s a bill in the Lege right now that would legalize sawed-off shotguns and silencers), privatizing the prisons and protecting the religious freedom of bigots to do any actual governing of the state.
We have a Governor who’s looking at the wreck that Brownback has turned Kansas into and thinks it’s a good idea to do to Arizona, because he’s a tool of the same plutocrats. They’re the first to howl ‘states rights’ when the federal government tells them to do anything (with the federal tax dollars that get showered on the state, we get about $1.80 from the federal government for every $1 we send to washington, and they have the gall to call liberals ‘moochers’) and the first to assert they’re the boss when any city gets uppity and decides to try and pass laws and regulations that the state lege doesn’t like.
In short, they’re a bunch of republican tools (The Arizona legislature has been in the control of the GOP for about 47 years…if their policies worked we’d be a paradise now)
This is just more of the only welfare a modern Republican likes: Corporate Welfare.
I’m an Tucsonian and a lot of what you say about Arizona politics is true. I call Tucson the ‘City of Lost Opportunities” because of its backward-ass leadership. Believe me, I know. But your point about corporate welfare isn’t true as it is equally loved by both Republicans and Democrats.
Same thing for middle class welfare. How many of you homeowners out there would give up your mortgage interest deduction? If you think we should be focusing our energies helping the poor instead of the middle class and wealthy then, well, maybe we should think about doing that. Any takers?
(Do I hear crickets …?)
is this considered soft corruption or is this blatant corruption?
If you started up a small company that employed exactly the same number of people, earning exactly the same salaries as this new Apple data center does, but your name was not Apple, then you wouldn’t be able to get an appointment with your senator, let alone have him shovel corporate welfare in your face.
Apple doesn’t need the money. This is the BS that is ruining the USA and distorting the market. America used to be the land of equal opportunity, and now companies like Apple show how when they grow rich, they get special treatment that no small business ever could. This is absolutely WRONG.
Cook: I expected better from you.