An interesting development is unfolding in the Dell incentives story. Dell has already agreed to pay back the grant money they received from the state and local governments, but tax credits are a different matter.
Tax credits are tax obligations that Dell was exempted from paying during its tenure in N.C. The state believes that Dell should now pay those taxes because it didn’t live up to its end of the agreement – primarily the creation of a pre-set number of jobs.
Here is the bill that established the Dell tax credits. It appears that perhaps the most salient passage of the bill is this:
“§ 105-129.62. Eligibility.
(a) Determination by Secretary of Commerce. – A taxpayer is eligible for the
credit allowed under this Article with respect to a facility in this State only if the
Secretary of Commerce makes a written determination that the taxpayer has or is
expected to have an increased employment level at the facility of at least 1,200 within
five years after the time that the facility is first used as a computer manufacturing and
distribution facility and that the taxpayer, either directly or indirectly through a related
entity or strategic partner, has invested or is expected to invest at least one hundred
million dollars ($100,000,000) in private funds to construct a computer manufacturing
and distribution facility over a five-year period. For the purposes of this Article, costs of
construction may include costs of acquiring and improving land for the facility, costs for
renovations or repairs to existing buildings, and costs of equipping or reequipping the
facility. (emphasis mine)
The key question to resolve this issue, then, seems to be whether or not the Sec. of Commerce made that written determination.
North Carolina lawmakers need to abandon their fatal conceit and stop their chaotic central planning efforts. One passage in the Dell bill illuminates the folly of the incentives game:
It is the intent of the State to encourage the sustainability of this
industry cluster in this State and to encourage the maintenance and
growth of computer manufacturing and distribution employment in the
State through tax policies, investments in training capacity, and other
policies and programs.
Sustainability? How’s that working out?