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This is over 39 years. $845.8M / 39 = $21.68 million per year. > Apple is promising $1 billion in investment across the state, as well as 3,000 new jobs with a

This is over 39 years. $845.8M / 39 = $21.68 million per year. > 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.

fshbbdssbbgdd 5y ago
Although the “$1 billion in economic benefits” is from an economic model assuming some multiplier effect from Apple’s spending. It’s possible for these types of projections to be wildly optimistic. I wouldn’t put much stock in it without more details, or a review of the model from other economists.
- deleted 5y ago
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LanceH 5y ago
That article is working really hard to say that Apple is getting paid $845M. Are they not getting refunded that amount, or do they get paid that no matter whether they bring the jobs or not? There really is a difference. A refund as a percentage amount indicates some positive increase in taxable income (though not necessarily enough to cover additional expenses). 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.
- londons_explore 5y ago
  > I'm all for not playing favorites 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.
  - smachiz 5y ago
    It's not favorites, it's bringing in net new revenue vs existing revenue. 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.
    - londons_explore 5y ago
      Well in which case you write the tax law as "Tax is 5% for the first 5 years of the company in the state, and 10% after that". 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.
  - Pfhreak 5y ago
    Surely you can see that reducing tax rates is itself playing favorites? The poor pay no taxes and many require the assistance those taxes provide. 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.
- shkkmo 5y ago
  A rebate is literally a payment (as opposed to a discount, which is not.) 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). [0] 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. [0] https://www.nccommerce.com/grants-incentives/competitive-incentives/job-development-investment-grant https://www.nccommerce.com/grants-incentives/competitive-inc...
folkrav 5y ago
Average without median doesn't really tell me much. Not that it's likely (more or less playing devil's advocate), but could just as well be 2999 minimum wage jobs and a single person doing millions.
wolverine876 5y ago
There is plenty of research on such tax breaks; much of it says that they don't pay off (except for the company), though I don't know it well enough to say that's a consensus. 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.
- reilly3000 5y ago
  The fact is every state brings these incentives to the bargaining table with large firms. A region that doesn’t participate won’t likely get a seat at the table. There are state-funded economic development agencies whose role it is to field RFPs from growing firms and complete for the location of their new facilities. 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.
- seanmcdirmid 5y ago
  I thought education was funded via local property taxes in most states? If Apple brings in a bunch of tech workers who then bid up property prices in the areas around Apple offices, wouldn't that increase money for education (since property tax increases as property value does) rather than decrease it?
- chrismcb 5y ago
  I don't know about the research. But the idea is you reduce the tax for the corporation in exchange for more jobs. These high paying jobs in turn generate more jobs. All of these people will pay taxes on various things. The idea is that three taxes will generate more revenue than the last tax from the corporation. It should be a net positive for the state and area, not a trade-off.
choppaface 5y ago
Agree with the math, but since the amount is so “small” then one could also argue it’s fine to just not give Apple incentives. Corporate welfare is always controversial, but now that we’re talking about a company at the very top of the K-shaped recovery, perhaps it’s worth pushing the discussion. 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.
slg 5y ago
> Apple is promising $1 billion in investment across the state $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.
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TYPE_FASTER 5y ago
> 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. 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.

fshbbdssbbgdd 5y ago

Although the “$1 billion in economic benefits” is from an economic model assuming some multiplier effect from Apple’s spending. It’s possible for these types of projections to be wildly optimistic. I wouldn’t put much stock in it without more details, or a review of the model from other economists.

deleted 5y ago
[deleted]

LanceH 5y ago

That article is working really hard to say that Apple is getting paid $845M. Are they not getting refunded that amount, or do they get paid that no matter whether they bring the jobs or not? There really is a difference. A refund as a percentage amount indicates some positive increase in taxable income (though not necessarily enough to cover additional expenses). 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.

londons_explore 5y ago
> I'm all for not playing favorites 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.
- smachiz 5y ago
  It's not favorites, it's bringing in net new revenue vs existing revenue. 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.
  - londons_explore 5y ago
    Well in which case you write the tax law as "Tax is 5% for the first 5 years of the company in the state, and 10% after that". 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.
- Pfhreak 5y ago
  Surely you can see that reducing tax rates is itself playing favorites? The poor pay no taxes and many require the assistance those taxes provide. 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.
shkkmo 5y ago
A rebate is literally a payment (as opposed to a discount, which is not.) 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). [0] 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. [0] https://www.nccommerce.com/grants-incentives/competitive-incentives/job-development-investment-grant https://www.nccommerce.com/grants-incentives/competitive-inc...

folkrav 5y ago

Average without median doesn't really tell me much. Not that it's likely (more or less playing devil's advocate), but could just as well be 2999 minimum wage jobs and a single person doing millions.

wolverine876 5y ago

There is plenty of research on such tax breaks; much of it says that they don't pay off (except for the company), though I don't know it well enough to say that's a consensus. 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.

reilly3000 5y ago
The fact is every state brings these incentives to the bargaining table with large firms. A region that doesn’t participate won’t likely get a seat at the table. There are state-funded economic development agencies whose role it is to field RFPs from growing firms and complete for the location of their new facilities. 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.
seanmcdirmid 5y ago
I thought education was funded via local property taxes in most states? If Apple brings in a bunch of tech workers who then bid up property prices in the areas around Apple offices, wouldn't that increase money for education (since property tax increases as property value does) rather than decrease it?
chrismcb 5y ago
I don't know about the research. But the idea is you reduce the tax for the corporation in exchange for more jobs. These high paying jobs in turn generate more jobs. All of these people will pay taxes on various things. The idea is that three taxes will generate more revenue than the last tax from the corporation. It should be a net positive for the state and area, not a trade-off.

choppaface 5y ago

Agree with the math, but since the amount is so “small” then one could also argue it’s fine to just not give Apple incentives. Corporate welfare is always controversial, but now that we’re talking about a company at the very top of the K-shaped recovery, perhaps it’s worth pushing the discussion. 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.

slg 5y ago

> Apple is promising $1 billion in investment across the state $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.

deleted 5y ago

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deleted 5y ago

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TYPE_FASTER 5y ago

> 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. 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.