> Apple is promising $1 billion in investment across the state, as well as 3,000 new jobs with an average annual salary of $187,000. All told, the state estimates more than $1 billion in economic benefits annually from the project.
Does Apple need that kickback? Probably not. But it's also pretty negligible at only $21.68 million per year when they're providing $1 billion of economic benefit annually. These are all high paying jobs so the state and local governments are going to get a massive amount of new taxes, even net of these rebates.
Calling a rebate a payment is just a deliberate attempt to fan the flames. I'm all for not playing favorites, but articles could at least make an attempt at being accurate.
In this case though, I believe Apple is actually getting cash payments from their JDIG grant given how JDIG is officially described (neither rebate nor discount but literal kickbacks to apple from their employee taxes). 
While those payments are conditional on Apple fulfulling their end by investing, they are just as much a real payment as any bonus based on performance.
The real way to not play favourites is to reduce the tax rate. Then everyone is getting a rebate.
Everything else is just playing favourites.
By reducing the tax rate you have negatively impacted the services those folk may require and given them no direct benefits.
Some folks chant "taxes are theft" and others chant "austerity is theft", both deeply convinced that the other side just can't see the whole picture.
Much easier to give a discount to get something you don't have, then to give a discount to your existing base. Ask your revenue teams in whatever company you're at. No different for state taxes.
This actually looks like a pretty good deal for NC, unlike when Amazon went about it in a distinctly Amazon way and pissed everyone off.
Then all companies, both big and small can take advantage.
Obviously there are loopholes that would need to be closed before such a plan would work... But it's better than lawmakers striking deals with only their friends.
Note that taxes per job, and thus community investment and services per job, will be lower. In that sense, these jobs are less valuable to the people of NC. Think of it this way: They are reducing education funding - future prosperity for the entire state - as a trade-off for a certain number of current jobs.
This particular one is rather innocent as it is indexed to employee pay, ensuring that employment is required for any future tax breaks. Many of the failed packages have not been crafted so well, for instance with flat sums or without performance requirements.
The best thing that could happen would be that states collectively agree to stop playing that game together, but barring a federal ban that seems unlikely that all parties would walk away from that bargaining tool.
The article makes it sound like 50-90% (increases over time) of the state income tax will be paid to Apple.
> These payments are recouped from the income taxes Apple’s new employees would normally pay to the state. Starting in 2023, the state will start issuing payments to Apple worth a little more than half of those employees’ annual tax payments. In 2032, if all goes as planned, that percentage increases to 90%.
I don't think this is great policy. For one example, public education is usually paid for by some combination of property/state/federal taxes. Some percentage of the future NC Apple employees will have kids in public school. Some portion of the state revenue from the future NC Apple employees could be used to pay for that. Instead, citizens will need to make tough decisions about cutting the school budget to keep the rate the same, or increasing the rate to support the increases in student population.
$1 billion according to whom? It sounds like it is according to Apple. Maybe that is an accurate number, but Apple is certainly incentivized to make it seem larger than it is. There are all sorts of ways to artificially inflate that number and some are as simple as adjusting the multiplier beyond what it would be in the real world. You see the same thing happen whenever public money goes to fund a new sports stadium. The company receiving the money puts out a fancy study that shows a huge economic benefit to the city/region and it almost never materializes like the study says. There needs to be an independent (of both Apple and the people in government who agreed to this) study before I am willing to accept that $1b as truth.
I wonder if there’s an opportunity to make incentives performance-based, in the same vein as how Apple executive comp is. For example the incentives could be tied to local business revenues and property taxes. I’m sure there are a lot of ways to game any such metrics, but for a company like Apple that really does not need cash benefits, perhaps there’s some other mechanism to ensure local economic contribution.
>These payments are recouped from the income taxes Apple’s new employees would normally pay to the state.
Are they not paying the money to the state?
If there's anyone who /doesn't/ need a competitive advantage, it's Apple. They are utterly smashing their competition in every regard already.
Property taxes will go to fund schools and state governments, not to mention localized sales tax and cash infusion.
In fact, I would consider high property taxes with zero income tax to be a rather regressive form of taxation that strongly benefits high income earners.
It's not about income tax so much as it is about the government subsidy being granted and whether or not it's the best use of the government's limited financial resources.
Now do California. Clearly high taxation doesn't correlate to stable electrical power.
There's a handful of states without income taxes. They mostly manage just fine. Or about as fine as the states with income taxes. They raise similar revenues in other ways.
All I could find was this, the wikipedia article doesn't mention any deaths however, whereas it appears 70 people died during the Texas crisis this year. I'm aware of the rolling blackouts in the bay area least year as my employer was impacted but it seemed more or less livable due to their rolling nature.
I live in a state without income tax. Its actually quite a shit show: https://www.bizjournals.com/seattle/news/2020/10/22/mark-har...
And poor areas become poorer because the local municipality collects less taxes than the one with more affluent residents.
Ultra-locality of spending isn't efficient, it just maintains the status quo, it makes counties compete between each other for companies or residents and not all can attract the rich people or companies to fund themselves.
Schools should be equally funded regardless of how rich the people who live in the area are. This is the most basic component for an equitable society: a level playing field on education.
That's debatable. Just because they do it doesn't mean it's a good idea.
Whether that is a net positive for the state and it's residents remains to be seen. It can be enough if it's a feather in the cap of a governor who's up for reelection.
I wonder if it violates the prohibition against a bill of attainder or similar laws that benefit/harm a specific party.
This right here needs to be emphasized.
It's easy for everyone to look at this and go "20MM/year for billions of investment? Yeah, that makes sense, right?"
Not right. This is overlooking externalities beyond those in the local area, such as the race-to-the-bottom possibility mentioned in the parent comment.
Doing it federally wouldn't even mean a level playing field. Countries compete on tax rates, too.
This wouldn't prevent states from competing on tax rates, but they couldn't compete on special tax incentived to large businesses.
This discussion seems more about states purposely going around their existing tax rates and structures in order to create sweetheart deals for corporation.
Sure, it might seem that the employees are paying their employer, but the nature of taxes is that you can't equivocate taxes one to one even if they are set up like that. Suppose the government came up with an appropriate tax credits for Apple that replicates/approximates this agreement. The flow is still employees -> state -> Apple. In my opinion, this is much more transparent and simpler to implement than negotiating a bespoke agreement. Personally, I think this is a great job by the state of North Carolina and now would consider moving there as the government seems like they have some aptitude.
Edit: you’re right! Working class is the more correct terminology. It is a labor vs capital conflict in the end.
The working class, really. If you aren’t dependent on your capital as much (in broad terms) as your labor for support, you are in the proletariat no matter how well paid and educated you are, not the petit bourgeoisie.
I think another way to look at it is that North Carolina wants good jobs -- if Apple isn't providing good jobs. that is the kind of jobs that generate a good tax base -- Apple doesn't get anything.
If you're going to offer sweetheart deals to lure companies to your state, I think this is a pretty good way to insure the deals pay for themselves.
States don’t have rights, like any other level of government they jave powers granted by the people.
Further, when it comes to acts affecting interstate commerce, the federal government has been granted preemptive powers, since the adoption of the Constitution, for the exact purpose of levelling the playing field. So even if one makes the terminological error of referring to states powers reserved against the federal government as “rights”, this very much would not violate those “rights”.
But anything to encourage tech companies to build offices and spread good paying jobs across the country seems like it would be a net positive.
So it is illegal -- until the state legislature makes it legal. Then it is legal!
That is how democracy works.
I cannot reply since my original post generated too much controversy. I do not believe I am engaging in flame war behaviors of course.
But: to answer your question, first off, democracy is the process by which groups of people make decisions together that they all abide by. In any situation involving more than one person sometimes it won’t work to have every individual do their own thing; sometimes people have to coordinate. If they need to coordinate, but don’t want to be simply ruled by a despot, then they use democracy. Democracy is especially needed when some group of people is facing an organized enemy. Trying to fight an organized enemy as an uncoordinated mass is foolhardy.
Your more specific question is: should there be any sort of international cooperation to prevent transnational corporations from playing countries off against each other?
Yes! obviously. It would take treaties, negotiations, and so forth, but yes, we should absolutely do something about that.
What if China, having 1.3 billion people, votes that the US should not allow corporations to play off different countries? Is that democracy? They've got way more votes, it would work.
We're drawing arbitrary lines on what group of people should set impose rules on a geographic minority. In the absence of _very_ compelling reasons to move up the decision, it seems eminently more ethical to leave the decision at the lowest plausible level.