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Tax law changed to lure Apple
State was competing with Virginia, documents show
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Published: June 26, 2009
RALEIGH - The General Assembly changed its corporate-tax law to favor Apple Inc. after fears that the technology giant would take its $1 billion data center to Virginia, state documents released yesterday show.
Agency e-mails indicate that the courtship with Apple was under way by last September. Legislators decided late last month to change the way that North Carolina would calculate Apple's corporate tax bill, saving the company about $46 million on its state taxes over the next 10 years.
Though Apple announced early this month that it picked North Carolina for its East Coast data center, it is still weighing locations in Catawba and Cleveland counties and has not announced a final site.
Both counties are about 30 miles west of Charlotte, and each has unemployment rates of more than 15 percent. Documents on Apple's recruitment released by the state Commerce Department were edited to hide clues of locations that Apple is considering.
North Carolina legislators changed the way that the state calculates corporate taxes to benefit Apple because it is expected to have a relatively large share of its nationwide property and payroll in North Carolina, but a small share of U.S. sales in the state. Virginia was among a number of states that similarly structured its corporate-tax calculation, the documents said.
A March 28 e-mail from the deputy secretary of the Commerce Department described why legislators would later change the rules.
"The company informed (Commerce Department recruiter Peggy Anderson) and me they are stepping things up with the State of Virginia and will revisit there on Monday and Tuesday. They have requested a letter from us summarizing why apportionment is not possible in N.C. for their business related to this project," Dale Carroll wrote in an e-mail to others inside the agency, the Revenue Department and the governor's office.
Legislation that changed North Carolina's corporate-tax apportionment formula was unveiled publicly on May 6.
Sen. David Hoyle, D-Gaston, was perhaps the legislature's leading advocate for the tax change to benefit Apple, though the project was projected to create only about 50 full-time jobs. He said yesterday that Apple representatives said that if the company's experience in North Carolina went well, it could later open a call center employing several hundred workers.
"That was not a promise or commitment, but it was dangled out there as possibility that I had to look very seriously at," Hoyle said.
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