Sat, Aug 26, 2017 - Page 10 News List

Apple gets tax break for data center

IOWA PLANS:Governor Kim Reynolds said that to improve the economy and boost revenue, ‘we should be doing what we can to bring jobs and businesses to the state’


Iowa on Thursday approved a deal to give Apple Inc US$208 million in state and local tax breaks to build two data storage centers near Des Moines and to create at least 50 jobs.

The deal approved by the Iowa Economic Development Authority includes a refund of US$19.6 million in state sale taxes for Apple Inc and a US$188 million break on property taxes from Waukee, a booming suburb bordering Des Moines.

In addition to the promised 50 jobs, Apple has agreed to buy 809 hectares of land for the US$1.4 billion project, enough to allow for future development, Iowa Economic Development Director Debi Durham said.

At an event with Iowa Governor Kim Reynolds outside the Capitol building, Apple chief executive officer Tim Cook credited Iowa’s “world-class power grid” and what he called the state’s culture of developing computer programmers who have created applications ranging from education to entertainment.

“At Apple we admire what you guys have accomplished and we want to be a part of it,” Cook told supporters.

Neither he nor the governor took questions at the event.

Cook promised to invest US$100 million to a newly created public improvement fund to be used for community development, including the revitalization of streets, libraries and parks.

The first project would be a youth sports campus that can host community and high-school games and which is to include a greenhouse, playground and fishing pier.

Critics questioned the wisdom and fairness of giving such tax breaks to one of the world’s richest companies.

“It’s a net fiscal loss that it’s a straightforward giveaway in the economy to a company that’s extraordinarily wealthy and it makes no sense from an economist’s point of view,” said David Swenson, an economist at Iowa State University and critic of such large economic development project tax breaks.

“It only makes sense from a politician’s point of view,” Swenson said.

Reynolds, speaking briefly to reporters after the announcement, defended the use of the state’s US$19.6 million in tax credits at a time when the state’s budget shortfall might require a special legislative session to address.

She said the deal is a minimal investment for the return Iowa will get.

“If we want to grow this economy and provide more revenue, then we should be doing what we can to bring jobs and businesses to the state of Iowa,” Reynolds said.

“This puts Iowa on the world stage. This gives us the opportunity with a global company like Apple to say we are the place to be,” she said.

Google, Facebook Inc and Microsoft Corp have already built billion-dollar data centers in Iowa.

Like Apple, they were drawn to the state by its tax breaks, wind-generated electricity and relative security from natural disasters that could disrupt service.

Economic Development Board chairman Chris Murray said such projects bring people who build homes, generating tax revenue and causing other businesses to explore moving to Iowa.

“They say we should go to Iowa because we have these epicenters there and as you look at the age demographics and the growth of Iowa, I think it’s really difficult to challenge the fact there are ancillary growth benefits from making an investment like this,” Murray said.

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