Carolina’s Google Tax Breaks Irk Locals

    July 25, 2007
    WebProNews Staff

The North Carolina Institute for Constitutional Law (NCICL) has called the $165 million in tax incentives for Google “unusual” and challenged the deal in court.

Google’s datacenter deal for the city of Lenoir in Caldwell County, NC, violated the state constitution, according to NCICL advocates. The News & Observer reported that the same group also opposed an incentive package for Dell in 2005.

Though their Dell lawsuit was thrown out of court initially, it has made it back to the state’s appellate courts. The Google suit names the search company, North Carolina’s governor and commerce secretary, and others.

Prospective jobs for the region would average $48,000 over the 200 or so people Google expects to hire for the datacenter. Once a furniture making power, North Carolina has been hammered by cheap imports, plant closings, and the subsequent loss of jobs.

Even with a relatively bright light of hope from Google’s proposal, the NCICL lawsuit filed on behalf of three complainants focuses on what the group believes is more important: overly generous tax incentives.

The group detailed these incentives in a June 2007 report, available at the NCICL website:

The project is anticipated to bring 200 jobs and a nearly $600 million investment in exchange for a 100% refund of business personal property taxes and a 80% refund of real property taxes for the next 30 years. The value of the incentive has been estimated as high as $165 million, over 40% of the value of all local incentives given out during the study period.

Of the 14 incentive packages approved in Caldwell County from 2004-2006, Google was far and away the most significant, comprising over 99% of the total awards.

A broader look at the impact of Google’s datacenter and its likely employment would provide a better view of whether or not the state gives up too much with its incentives. New workers will pay taxes on their earnings, property taxes when they buy houses, and sales taxes on their purchases.

That doesn’t even count the potential for business development to complement any expanded demands for commercial businesses. People need to eat lunch and buy gasoline, and someone certainly will try to meet those elevated economic demands in the area surrounding the datacenter.

You have to give to get, and North Carolina’s giving may result in a bigger gain over time. There are plenty of states that would eagerly make a deal with Google under these terms for that reason.