“For the second time in a decade, Apple looks to be focused on North Carolina,” Lauren K. Ohnesorge reports for Triangle Business Journal. “Officials in the Catawba County town already transformed by Apple’s tax dollars call it a ‘phenomenal company,’ and predict that, should it pick Research Triangle Park for its East Coast corporate campus, this region, too, will soon sing its praises.”
“They say a decade ago in Maiden, trouble was brewing. ‘The town was losing jobs, the cost of services was expanding, the tax base was dwindling,’ recalls the then-just hired Todd Herms, who still manages the town today,” Ohnesorge reports. “Initially, [Apple’s] project was 50 direct jobs and 150 additional support jobs – a sum Scott Millar, president of the Catawba County Economic Development Commission, says they’ve ‘greatly exceeded.’ Today, Apple’s stealthy campus contains a half dozen buildings, powered by three different solar farms scattered across Catawba County.”
“Apple has become Catawba County’s top taxpayer, with an assessed value of $1.1 billion, nearly 42 percent higher than the No. 2 firm: Duke Energy Carolinas. Last year, Apple paid $6.2 million in county taxes,” Ohnesorge reports. “‘As a result of Apple’s being there that every citizen in Maiden has been impacted in a positive manner and they may not even realize that,’ Millar says.”
MacDailyNews Take: Yup.
The benefits of having a large corporation in your country or state go far, far beyond corporate taxes or even a total lack thereof. Those employees, who would not exist in your state otherwise, pay taxes – income, energy, property, etc., etc., etc. – and buy everything from food to furniture to vehicles in the local economy (each one of those purchases very likely taxed as well). Those who whine about corporate taxes [and/or tax incentives] cannot see the forest for the trees. — MacDailyNews, July 9, 2013
“Officials have actually lowered taxes. At the same time, investments in services have gone up,” Ohnesorge reports. “Local coffers, boosted by Apple tax bills, have funded park expansions, street paving projects and even a new fire station. The town has even started providing free public Wi-Fi. ‘Our budget basically doubled,’ says [town manager Todd Herms].”
Read more in the full article here.
MacDailyNews Take: Good luck, Raleigh-Durham!
SEE ALSO:
Apple close to deal to build major new campus in North Carolina’s Research Triangle pending tax breaks – May 17, 2018
Apple quietly explores Northern Virginia for 20,000-employee campus – May 16, 2018
Apple to build new U.S. campus, pay record $38 billion repatriation tax – January 18, 2018
Apple gives employees $2,500 bonuses after President Trump signed the GOP’s Tax Cuts and Jobs Act – January 17, 2018
Looks like Apple is bringing nearly all of its $250 billion foreign cash back home to America – January 17, 2018
Apple plans to add $350 billion to U.S. economy and create over 20,000 new jobs over next 5 years, pay $38 billion in repatriated taxes, the largest ever made – January 17, 2018
North Carolina lawmakers OK tax incentives for Apple Inc. – May 27, 2009
North Carolina lawmakers push to give Apple massive tax break for $1 billion server farm investment – May 23, 2009
The MDN Take states that the “…benefits of having a large corporation in your country or state go far, far beyond corporate taxes or even a total lack thereof.” I have at least two objections to that blanket assertion.
First, that statement is associated with this article about Apple, which states that Apple is paying a substantial amount of corporate taxes in Maiden, N.C. I have a strong feeling that Maiden might not be quite as pleased without that $6.2M. If you really cared about the facts, then you might even be bothered to investigate the actual tax incentives/agreement between Apple and N.C.
I wish that people would own up to the fact that someone has to pay the taxes to cover the government services. When I was much younger, corporate taxes were a proportionately larger share of government tax revenue. But the corporate share has dwindled over the years, replaced by greater reliance on individual taxation along with a mishmash of fees and tolls and other add-ons. It is worth noting, however, that individual income has not grown commensurate to this increased tax burden. In addition, both political parties have generally been willing to spend well in excess of tax revenues at the national level for the past few decades, leading to a massive debt and a large annual deficit that is pushing that debt ever higher.
Second, all large corporations are not created equal. The operations of some large corporations come with significant amounts of ground, water, and air pollution. In this case, Apple has a data facility that it chose to power using renewable resources. Is it any wonder that Maiden approves of the results?!
Furthermore, many past corporate sweetheart deals involving tax abatements and other incentives have ended up poorly for the states and counties. Corporations failed to create the promised jobs. Corporations increased the burden on local services without helping to pay for the expansion or operation of those services – utilities, roads, garbage, etc. And corporations left after the incentives were played out without fulfilling their end of the bargain.
Reasonable, steady, predictable – those are concepts that attract businesses for the long term. Reasonable taxation that is equally applied to all businesses (not favoritism to a few), access to a well-educated workforce, good quality of living to attract new workers, good transportation system, etc. If you want to attract businesses, then offer the qualities that they value, don’t try to buy them off. Because the corporate lawyers are always going to win – the corporation will nearly always come out on top if there is a dispute.
MDN, you should be more careful about your blanket statements, which often overtly express partisan political beliefs with little or no real evidence and little or no connection to the immediate article.
No doubt blanket assertions aren’t a good idea.
“If you really cared about the facts, then you might even be bothered to investigate the actual tax incentives/agreement between Apple and N.C.”
But, it seems likely that any incentives would be small potatoes, given that the original data center was for about 50 jobs. Most incentives are tied to job creation. Fifty jobs will get you a free cup of coffee. Far more likely is that Apple sought a rural site with access to inexpensive electricity, or land to build a solar farm, and all the other infrastructure you mention. An article that mentions the tax benefits to the community, is likely to mention any original tax incentives. No mention, implies there likely wasn’t much, maybe an upgraded roadway, or something similar.
Speaking of bad past corporate deals, NC is very familiar with those. Winston-Salem gave Dell Computers about $234M in tax incentives for about 2000+ jobs. Dell opened their factory, and closed it a few years later. I’m not sure what clawback provisions W-S had in their contract, but still, that deal turned out to be a huge disappointment.
Do big companies help or hurt the communities where they locate? Yes, but it depends.
Some are like this data center, expensive buildings with even more expensive servers and related hardware, that generates a ton of property tax revenue. The plant has expensive fire suppression and security systems, so it doesn’t demand many government services. There are too few employees to put any stress on local housing stocks, schools, roads, or other public services. Even with reasonable tax incentives, it is a huge asset for the community.
Others are like too many that places like the Bay Area, Seattle, and Austin have seen. They are basically just office buildings, so they don’t generate high property or sales taxes. They do require public infrastructure and services, however.
They also hire lots of workers, but because these areas already have full employment, the new hires mostly come from elsewhere. To attract them, the companies pay them enough to outbid local residents looking for increasingly scarce housing. The thousands of new workers and their further thousands of dependents clog the roads, the schools, parks, housing, etc. Existing residents are forced out of the neighborhoods where they have lived their entire lives. Homelessness skyrockets. Even apart from tax breaks, local governments have to spend more providing additional services than they are getting in increased revenue. They must lraise tax rates, making housing even more expensive.
As the local cost of living goes up, the big companies must offer ever higher pay for new workers, driving the inflation even faster. It is not a supportable spiral.
Actually NC gave HUGE tax incentives to Apple to build the $1 Billion dollar facility in Maiden. But it had an end date.
You are correct, it is a gamble for any local or state Gov’t to give the incentive with the prospect that the company may fail or other economic force may change (i.e. look at Seattle)
Most of the time it pays off, sometimes long term benefits dry up before they are realized.
In this case the state did the right thing, they weighed the economic impact, construction workers salary for a Billion dollar facility, plus the taxes on the building materials, etc etc and gave a LARGE short term tax break to Apple that saved Apple millions and generates millions to the state and local economy after that.
Thanks, I’m not sure I’d consider $46M all that huge, in relative terms. And I think most people think a tax break is something the locale paid to the company, when in this case, it’s just taxes foregone. The alternative is to reap whatever prop taxes the locale was getting from the farmland that was there.
“local authorities have discounted property taxes by 50 percent and personal taxes by 85 percent”
Turning low value farm property, Apple paid $36k/acre, when I know back then I could get similar farmland in NC for $6k/acre (yes, I lived in eastern NC), into higher value business property is going to increase tax revenues a huge amount. Datacenters are unusual, because the local services required are small. Most local prop taxes go to education, fire and police, etc. A data center doesn’t have alot of employees, for its size, so, relatively, its impact on education, fire and police is small. That’s why a prop tax break makes economic sense without shifting the burden of education, fire and police to the other taxpayers. As has been seen, local taxes have gone down.
As I mentioned, the NC legislature had to have gone into this deal with eyes wide open, as they got burned badly by the Dell Computer, Winston-Salem tax incentive deal.
Super good analysis in your retort. We don’t know if “many past corporate sweetheart deals involving tax abatements and other incentives have ended up poorly for the states and counties” offset any gains to the tax base needed for upkeep of the commons and the health of the community.
Actually we do know
Have their been failures, yes there have.
But most states learn from past failures when creating new deals.
Also, unless these deals were working (or corruption) why would they do this?
You also have to factor this differently, the state has ZERO revenue today from company x who would like to build something. There will be new tax revenue from the actual building they want to do, Maybe not directly from them, but from everyone remotely associated with the building itself. There will be potential future tax benefit if what they build flourishes. Weighing Zero against something, why wouldn’t they pick the something?
Or, the city could have done nothing at all, lost Apple as economic bright spot, and continued its decline.
While Apple is an economic bright spot to Apple itself, the incentives and tax breaks that NC may have given to Apple may have made the deal an economic black spot. Therefore – since you are speculating – the deal could have produced a net loss to the people of the region and to the state so doing nothing at all could have been better for them.
Which part of “Our budget basically doubled” didn’t you understand?
Name a politician that does not dissemble.
Name a local government budget that is not fully available for public inspection, including by the mandatory outside auditors, “public interest watchdogs,” investigative reporters, and political opponents of the current officials. Cities and counties can’t keep their books private or claim a national security classification. Keeping a financial scandal secret for any appreciable time is simply impossible. If Cawtaba County says it doubled its budget while lowering the tax rate, you can be sure the statement can easily be verified.