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Nevada board endorses $89M tax cut for Apple data center

post #1 of 26
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The Nevada Board of Economic Development on Wednesday green-lit plans to grant Apple $89 million in tax cuts for a proposed data center and accompanying buildings in downtown Reno and the town of Sparks.

The gesture is considered to be largely for show, reports the Associated Press, as the body does not have the authority to change the deal first reported in June. A law approved in 2011 gave the NBED's executive director the power to broker deals that meet certain predefined requirements.

"If we had not implemented that statute we would not have Apple here," said head of the Governor's Office of Economic Develepment Steve Hill.

Nevada Gov. Brian Sandoval dubbed the Apple deal a "win" for the state as the data center build-out may foster increased interest from other companies looking to expand.

Negotiations first began in February and ended with Apple getting an $89 million tax break which includes an 85 percent reduction in property taxes for 10 to 30 years. Estimates put the Cupertino-based company's effective tax rate to be less than one percent.

In return for the substantial leniency, Apple's project is expected to bring in $343 million while tax revenue will net local and state governments $16 million over the next ten years.

Reno Map


Reno Technology Park construction will create about 580 jobs and inject $103 million into the local economy. Apple's data center will take up 1.5 million square feet of space and will go online later this year.
post #2 of 26
Quote:
Originally Posted by AppleInsider View Post

href="http://www.appleinsider.com/articles/12/06/26/apple_to_invest_1b_in_nevada_data_center_business_facilities.html">Apple's project is expected to bring in $343 million while tax revenue will net local and state governments $16 million over the next ten years.
Reno Technology Park construction will create about 580 jobs and inject $103 million into the local economy. Apple's data center will take up 1.5 million square feet of space and will go online later this year.

Cue all the complainers who will ignore the above facts and complain that Apple gets a tax break. After all, they can afford to pay lots more taxes.... /s
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post #3 of 26
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Originally Posted by jragosta View Post


Cue all the complainers who will ignore the above facts and complain that Apple gets a tax break. After all, they can afford to pay lots more taxes.... /s

 

Yes. Nevada gets a good deal – vs not working a deal at all and getting no economic benefit. $89 million dollar tax credit given to Apple in exchange for receiving $103 million in economic benefit. 15% return sounds like a win to me!

post #4 of 26

I live in the area (Tahoe) and fully support Apple coming to Reno.  Reno is in desperate need of major change.  We need new industries here, new businesses, new types of businesses.  If Apple's data center helps to draw more technology companies to Reno, the long-term benefit will be far greater than any calculation can currently measure.  Reno is a short 1 hour flight from the SF bay area and the Reno airport is a dream.  There is also endless outdoor recreation within spitting distance of the city.  There are 12 ski resorts within an hour's drive.  I hope more technology companies look at Reno.  It has a great deal of potential and a company like Apple coming to town will only raise its profile.

post #5 of 26
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Originally Posted by robbyx View Post

I live in the area (Tahoe) and fully support Apple coming to Reno.  Reno is in desperate need of major change.  We need new industries here, new businesses, new types of businesses.  If Apple's data center helps to draw more technology companies to Reno, the long-term benefit will be far greater than any calculation can currently measure.  Reno is a short 1 hour flight from the SF bay area and the Reno airport is a dream.  There is also endless outdoor recreation within spitting distance of the city.  There are 12 ski resorts within an hour's drive.  I hope more technology companies look at Reno.  It has a great deal of potential and a company like Apple coming to town will only raise its profile.

If you are not already involved with the Reno City administration, you should be. That's the best and most relevant pitch I've read in a long time!

post #6 of 26

I don't like it when corporations get tax breaks. They aren't worth more than the citizens who have chosen to live in the same communities. All tax breaks should be given equally to everybody in the area, including existing businesses. It's especially sad when cities do that for sports teams. That is the biggest waste of money that could ever be. Without fail cities lose.
 

post #7 of 26
Quote:
Originally Posted by Smallwheels View Post

I don't like it when corporations get tax breaks. They aren't worth more than the citizens who have chosen to live in the same communities. All tax breaks should be given equally to everybody in the area, including existing businesses. It's especially sad when cities do that for sports teams. That is the biggest waste of money that could ever be. Without fail cities lose.

 

Totally agree.
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post #8 of 26
Quote:
Originally Posted by Smallwheels View Post

I don't like it when corporations get tax breaks. They aren't worth more than the citizens who have chosen to live in the same communities. All tax breaks should be given equally to everybody in the area, including existing businesses. It's especially sad when cities do that for sports teams. That is the biggest waste of money that could ever be. Without fail cities lose.
 

Totally DISagree. They ARE worth more than the citizens there! How can you disregard the obvious economic benefits to the area with the data facility there? Jobs created for some of the local (tax paying) citizens where there would be NONE otherwise, or jobs for new (tax paying) citizens who move there. And what about the business created by and for those Apple-employed citizens and other citizens in the area? How can you ignore the stimulus this would create for other corporations to so locate in the area?

 

All this is worth FAR more that $89M.

 

Aim your "I don't like it" hair trigger at other more deserving targets. Or just put that gun away.

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post #9 of 26
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Originally Posted by DanielSW View Post

Totally DISagree. They ARE worth more than the citizens there! How can you disregard the obvious economic benefits to the area with the data facility there? Jobs created for some of the local (tax paying) citizens where there would be NONE otherwise, or jobs for new (tax paying) citizens who move there. And what about the business created by and for those Apple-employed citizens and other citizens in the area? How can you ignore the stimulus this would create for other corporations to so locate in the area?

 

All this is worth FAR more that $89M.

 

So companies are worth more then citizens. Cool. Apple has more than enough money to pay for this but that's not the point. The point is that there is no fairness since only Apple gets the tax break but we haven't heard of other companies getting tax breaks as well.

 

Hadt they not gotten their tax break in Nevada, they would have moved somewhere else and eventually spent the equivalent of $89M if nobody would have allowed them the tax breaks (plus minus whatever other places' taxes are).  Everyone would be happy to get an Apple data center built (econony-wise that is) and I'm happy that it's good for Reno but it would have been good for any other place as well.

 

Tax breaks should be illegal also because they suppress competition. Isn't it that we should be all treated the same? It's just not ethical.

post #10 of 26
Quote:
Originally Posted by PotatoLeekSoup View Post

 

Yes. Nevada gets a good deal – vs not working a deal at all and getting no economic benefit. $89 million dollar tax credit given to Apple in exchange for receiving $103 million in economic benefit. 15% return sounds like a win to me!

 

Sounds like a race to the bottom to me.

post #11 of 26
Quote:
Originally Posted by PotatoLeekSoup View Post

Yes. Nevada gets a good deal – vs not working a deal at all and getting no economic benefit. $89 million dollar tax credit given to Apple in exchange for receiving $103 million in economic benefit. 15% return sounds like a win to me!

The math is wrong. Apple's tax 'break' doesn't cost the city a penny. It's revenue that they don't have right now. I don't know the area, but the land which will be used undoubtedly has a much lower value today and is not generating a lot of taxes. In fact, if it's anything like the NC or Austin tax 'breaks', the city will be making more after Apple moves in than before, even after Apple's temporary discount on the tax rate. So Apple pays the city more than the previous land owner PLUS the city gets all the other economic benefits.

It's really amazing how people can see this as a negative. I guess it comes from the assumption that everything belongs to the government and companies should be happy with that.
Quote:
Originally Posted by Smallwheels View Post

I don't like it when corporations get tax breaks. They aren't worth more than the citizens who have chosen to live in the same communities. All tax breaks should be given equally to everybody in the area, including existing businesses. It's especially sad when cities do that for sports teams. That is the biggest waste of money that could ever be. Without fail cities lose.

Please explain how the city loses. It appears to be empty land which is generating little tax revenue.

If the city doesn't reach a deal with Apple, they get:
- Continued collection of minimal tax revenues

If they reach a deal, they get from (http://renomemo.rgj.com/apple-looking-to-open-facility-in-reno/):

- $16 M in tax revenue over 10 years - followed by something like $7 M per year after that
- 580 construction jobs for a year and a half
- 200 contract jobs permanently
- 41 full time jobs at the facility (presumably good paying jobs)
- city and state taxes from all of the above jobs
- added business at support facilities (gas stations, groceries, etc) because of the added employees
- a total of $1,000 M investment over the next 10 years (this data center is only part of it)
- greater residential property taxes from new homes and/or increased demand for existing homes due to the new jobs

Now, you may believe that "all your money are belong to us", but that's not the way it works. Apple is free to put their facility anywhere they wish. The city is free to offer whatever tax 'breaks' it wishes to increase its future revenues. Only a fool would insist that "we're entitled to collect all the normal taxes and refuse to give you an incentive to move here". That would be a great way to ensure that your state and city go downhill fast. Your argument that the city loses is absurd. The city comes out way ahead in this deal.
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post #12 of 26

The issue with tax breaks for any company especially Apple has more to do with their clear avoidance in paying corporate income tax and holding their cash assets offshore, using the Double Irish Dutch maneuver and routing their taxes through a NV subsidiary to avoid paying CA taxes.  So yeah I have an issue with Apple getting $89 million tax break when they should not even need it to begin with.  But please que the Apple apologists anyways.

post #13 of 26
Quote:
Originally Posted by RaptorOO7 View Post

The issue with tax breaks for any company especially Apple has more to do with their clear avoidance in paying corporate income tax and holding their cash assets offshore, using the Double Irish Dutch maneuver and routing their taxes through a NV subsidiary to avoid paying CA taxes.  So yeah I have an issue with Apple getting $89 million tax break when they should not even need it to begin with.  But please que the Apple apologists anyways.

What in the world does your allegations that Apple is committing tax fraud have to do with whether they should receive a property tax abatement?

And it has nothing to do with 'Apple apologists'. It makes sense for cities and states to offer incentives for new job creation - regardless of who the company is.
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post #14 of 26

"All be treated the same?" Sounds like the Russian communist rhetoric of 100 years ago. Notice how all that worked out?

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post #15 of 26
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Originally Posted by Krawall View Post

 

 

Tax breaks should be illegal also because they suppress competition. Isn't it that we should be all treated the same? It's just not ethical.

 

 

I'm not certain that tax breaks supress competition.  Instead, they are a form of subsidy, and they distort the market.

 

Apple should put the data center in the best location for Apple.  The one that is most efficient in every sense of the word.  By offering a subsidy for Reno, the equation changes.  If the subsidy is large, Apple discounts other factors such as cost and availability of skilled labor, cost and availability of electricity, cost and availability of land, etc.

 

IOW, the REAL costs get distorted by the availability of a government subsidy.  If Reno were the best location, then Apple should build there without subsidy.  If not, then Apple should build in the location which is most efficient.

post #16 of 26

Enough with the G/D tax cuts for people and companies that don't need it!  That's part of the reason for the financial mess this country is in!!

post #17 of 26

The relevant quote some of you are missing is: 

It's especially sad when cities do that for sports teams. That is the biggest waste of money that could ever be. Without fail cities lose.

 

It's SPORT TEAMS that hose a city on taxes, not all businesses in general. There was an extensive report I saw in TV about how sports arenas get huge tax breaks or even gov't grants to build. They employ mostly low wage, save for the athletes. The city has to subsidize traffic and crime. And eventually they lose out overall, esp for big league teams that *could* afford to build their own arena, or later on they move out and the city has an empty unusable building.

post #18 of 26
Quote:
Originally Posted by Krawall View Post

Tax breaks should be illegal also because they suppress competition. Isn't it that we should be all treated the same? It's just not ethical.

 

Oh really?  Then I suppose you don't claim any deductions on your personal tax returns, right?  I'm not married.  Are you?  Do you get a break because you chose to get married?  I don't have kids either.  Do you get a break because you chose to have kids?  Do you own a home?  Are you getting a mortgage deduction?  Doesn't seem fair to the people who rent, does it?

post #19 of 26
Quote:
Originally Posted by JerrySwitched26 View Post

 

 

I'm not certain that tax breaks supress competition.  Instead, they are a form of subsidy, and they distort the market.

 

Apple should put the data center in the best location for Apple.  The one that is most efficient in every sense of the word.  By offering a subsidy for Reno, the equation changes.  If the subsidy is large, Apple discounts other factors such as cost and availability of skilled labor, cost and availability of electricity, cost and availability of land, etc.

 

IOW, the REAL costs get distorted by the availability of a government subsidy.  If Reno were the best location, then Apple should build there without subsidy.  If not, then Apple should build in the location which is most efficient.

 

I'm sorry, but business doesn't work this way.  If you're buying a house, do you just pay market value?  No, you make an offer.  If you're leasing commercial space, do you just sign on the dotted line?  No, you negotiate.  If you're interviewing for a job, do you just take what they offer?  Or do you tell them what you need to become part of their team?

 

Apple has every right to seek out a deal that benefits them financially.  After all, they are bringing jobs to the area.  Apple benefits.  Reno benefits.  Reno is a great location for a data center for many reasons.  Land costs are low.  Housing costs are low.  It's a university town.  It's close to the bay area.  There is an abundance of clean, green geothermal energy available.

 

I'll take the "no tax breaks" crowd seriously when each of you stops claiming any deductions on your personal tax returns and pays the full amount you owe.

post #20 of 26
Quote:
Originally Posted by robbyx View Post

 

I'm sorry, but business doesn't work this way.  If you're buying a house, do you just pay market value?  No, you make an offer.  If you're leasing commercial space, do you just sign on the dotted line?  No, you negotiate.  If you're interviewing for a job, do you just take what they offer?  Or do you tell them what you need to become part of their team?

 

Apple has every right to seek out a deal that benefits them financially.  After all, they are bringing jobs to the area.  Apple benefits.  Reno benefits.  Reno is a great location for a data center for many reasons.  Land costs are low.  Housing costs are low.  It's a university town.  It's close to the bay area.  There is an abundance of clean, green geothermal energy available.

 

I'll take the "no tax breaks" crowd seriously when each of you stops claiming any deductions on your personal tax returns and pays the full amount you owe.

Given that your reply in no way relates to my post,  I'm not sure why I am responding.

 

Maybe I need to simplify:  Tax breaks distort the market.  Given that they distort the market, they can work to nearly everybody's disadvantage in a macroeconomic manner.  The economy is worse off because of them, even if the local actors are ahead.

 

No portion of my post denied that local actors try to get the best deal for themselves.

 

No portion of my post denied that Apple has the right to seek tax subsidies.

 

No part of my post denied that both Apple and Reno benefit from the subsidy.

 

No part of my post had anything whatsoever to do with tax deductions allowed to all similarly situated taxpayers.

 

I hope that this aids your understanding of the issue I raised, but I have little confidence.

post #21 of 26
Quote:
Originally Posted by jragosta View Post

Quote:
Originally Posted by troll View Post

...tripe...

What in the world does your allegations that Apple is committing tax fraud have to do with whether they should receive a property tax abatement?

And it has nothing to do with 'Apple apologists'. It makes sense for cities and states to offer incentives for new job creation - regardless of who the company is.

I'm torn on the issue based on Wal-Mart's abuses in the 80's and early 90's. They created minimum wage jobs at the expense of small businesses which destroyed downtown communities across the country. And, they got money from the city to do it!!

The corporate income tax rant of the GP is another matter though. Companies need to try to get every advantage they can. City officials need to try to get every penny they can. As long as the compromise is mutually beneficial then nothing is lost. The problem comes when you have corrupt officials giving sweetheart deals. Calculating the cost/benefit isn't as easy as the summary pretends, but I can say that Reno needs to diversify out of just a tourism based economy. Countries see it the same way, and they will do things to attract business where they can. When the cost/benefit to either side skews too far, one party needs to take action.
post #22 of 26
Quote:
Originally Posted by JerrySwitched26 View Post

Given that your reply in no way relates to my post,  I'm not sure why I am responding.

Maybe I need to simplify:  Tax breaks distort the market.  Given that they distort the market, they can work to nearly everybody's disadvantage in a macroeconomic manner.  The economy is worse off because of them, even if the local actors are ahead.

No portion of my post denied that local actors try to get the best deal for themselves.

No portion of my post denied that Apple has the right to seek tax subsidies.

No part of my post denied that both Apple and Reno benefit from the subsidy.

No part of my post had anything whatsoever to do with tax deductions allowed to all similarly situated taxpayers.

I hope that this aids your understanding of the issue I raised, but I have little confidence.

I have little confidence that you're ever going to raise an intelligent argument, too, but I keep hoping.

Nevada has no obligation to compete 'fairly' with New York or Oregon. We have a Federal system in this country where states are semi-independent and are able to do things to their own advantage. Nevada has obviously determined that offering this incentive and getting all those jobs and tax money is better than NOT offering that incentive and tax money.

In the end, the economy is served by competition - not only between companies, but also between states and cities.
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post #23 of 26
Originally Posted by robbyx View Post
Seriously, 537 posts in a month?  Someone needs a life.

 

I just turned off my extensions and found that I do over a thousand. I wonder if you'll say the same about me.

 

Take note that insulting other users of this forum is against our rules and that ad hominem attacks about the number of posts we each have is quite possibly the most pathetic way to do so, so please remove what I have quoted above from your post.

post #24 of 26
Quote:
Originally Posted by Tallest Skil View Post

 

I just turned off my extensions and found that I do over a thousand. I wonder if you'll say the same about me.

 

Take note that insulting other users of this forum is against our rules and that ad hominem attacks about the number of posts we each have is quite possibly the most pathetic way to do so, so please remove what I have quoted above from your post.

 

Removed.  As a moderator, I would expect that you post a lot.  And frankly, if all someone does is sit in front of a computer and post condescending comments all day, then yes, I do think that person needs to get a life.  It's not my intention to cause turmoil here.  As you can see, I rarely post.  I just read the articles.  But I don't appreciate being talked down to like I'm an ignorant child with zero reading comprehension skills either.  I also happen to live in the area and probably have a better understanding of how these tax breaks will affect Reno than someone who presumably doesn't live here and seems to simply enjoy telling people they are wrong without backing up anything he says.


Edited by robbyx - 8/2/12 at 12:51pm
post #25 of 26

Supply and demand is at work here. Unfortunately the cities that offer these deals are devaluing their citizens and local businesses. There is no doubt that during the construction process there will be a temporary boost in jobs. There will be a few jobs once it is completed.

 

I'm against our current unfair tax system. I'm against income taxes and property taxes. I'm for the FairTax.org plan where companies pay zero taxes. Only sales taxes are collected when things sell and that is all. Only people above the poverty line pay any taxes on the sales of goods.

 

In the current system local and state governments bet that they'll earn more money by giving discounts to large companies to build businesses in their areas. It's an up front bribe. A bribe is payment for special treatment not available to everybody else. It is a slap in the face of the existing citizens. If the government were forced to extend the same benefits to everybody when they make such deals then I would have no problem with it at all.

 

That same deal would be an incentive for people to remain in Reno. It would be an incentive for local businesses to keep their doors open instead of closing them; but the city isn't extending that offer to their citizens. They're giving it to a newcomer. There is no guarantee that Apple or any new company will bring in jobs that will benefit every local business. Will hair dressers get more business because of this data center? Will travel agencies get more business because of this data center? It is very unlikely that they will but they must pay a higher percentage of their money in taxes than Apple will. Both of those businesses took a risk and invested their effort into creating something in Reno. Where are their special tax breaks?

 

Perhaps if Reno did that for ALL small businesses they could draw in many more long term businesses and jobs. Instead they are giving preferential treatment to Apple because they might create a big short term benefit. If the data center burns down or some other catastrophe happens before the sweetheart deal expires, Apple could abandon the property and not rebuild it. Then the city won't get the long term benefit it is expecting.

 

It is deals like this that prove government interference skews the marketplace. It is almost the sole purpose of government these days. There is no real free market when government steps in and changes the rules that benefit a few and not everybody.

post #26 of 26
Quote:
Originally Posted by Smallwheels View Post

Supply and demand is at work here. Unfortunately the cities that offer these deals are devaluing their citizens and local businesses. There is no doubt that during the construction process there will be a temporary boost in jobs. There will be a few jobs once it is completed.

I'm against our current unfair tax system. I'm against income taxes and property taxes. I'm for the FairTax.org plan where companies pay zero taxes. Only sales taxes are collected when things sell and that is all. Only people above the poverty line pay any taxes on the sales of goods.

In the current system local and state governments bet that they'll earn more money by giving discounts to large companies to build businesses in their areas. It's an up front bribe. A bribe is payment for special treatment not available to everybody else. It is a slap in the face of the existing citizens. If the government were forced to extend the same benefits to everybody when they make such deals then I would have no problem with it at all.

That same deal would be an incentive for people to remain in Reno. It would be an incentive for local businesses to keep their doors open instead of closing them; but the city isn't extending that offer to their citizens. They're giving it to a newcomer. There is no guarantee that Apple or any new company will bring in jobs that will benefit every local business. Will hair dressers get more business because of this data center? Will travel agencies get more business because of this data center? It is very unlikely that they will but they must pay a higher percentage of their money in taxes than Apple will. Both of those businesses took a risk and invested their effort into creating something in Reno. Where are their special tax breaks?

Perhaps if Reno did that for ALL small businesses they could draw in many more long term businesses and jobs. Instead they are giving preferential treatment to Apple because they might create a big short term benefit. If the data center burns down or some other catastrophe happens before the sweetheart deal expires, Apple could abandon the property and not rebuild it. Then the city won't get the long term benefit it is expecting.

It is deals like this that prove government interference skews the marketplace. It is almost the sole purpose of government these days. There is no real free market when government steps in and changes the rules that benefit a few and not everybody.

Fine. Go start your own country and you can do whatever you wish.

You seem to have this strange concept that you can bring a billion dollars of investment into an area and hire hundreds of employees without benefiting local businesses. Please explain how that works. Do the workers magically teleport to Cupertino for lunch? They don't buy groceries? Their cars don't need maintenance? They don't need haircuts? They don't buy and build houses?

I suspect that the typical small business would be ecstatic to see Apple investing a billion dollars in Nevada. After all, it doesn't cost them a penny (since Apple will actually be paying more tax than the state is receiving now, so the small business owners' taxes won't go up) but they'll be doing a lot more business and their property will become more valuable. Other than some rabid hatred of Apple or some irrational hatred of our current political system, what possible reason is there to oppose this plan?

As it is, this plan benefits Apple, Nevada, the city of Reno, small businesses in the Reno area, businesses around the world that use Apple products, and residents of Reno.
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