Google defends $165 million 'few strings attached' tax breaks

Google defends $165 million 'few strings attached' tax breaks

Summary: Is Google "doing evil"?

TOPICS: Google

Google’s “do no evil” mantra is being tested, big time, in North Carolina.

Last weekend, I underscored “Google surprise? Google strong-arms government officials.”

Google’s missteps in attempting to minimize its infrastructure development costs are coming under increasing fire.

A North Carolina legislative committee seeks to review the state's use of business incentives following news of Google's plan to build a data center in Caldwell County, Associated Press reports.

North Carolina Senate leader Marc Basnight, asserted, "It has to benefit the people of the state. If we give away $100, we'd certainly like to get more than $100 back.”

The Charlotte Observer puts forth “In exchange for incentives to come to N.C., Internet giant has few strings attached”:

You can find almost anything on Google, but in its deal to build a computer center in Lenoir you won't find a guarantee to create jobs in exchange for local tax breaks.

City and county governments agreed to give up tens of millions of dollars in potential tax payments to help lure the $600 million project to Caldwell County. But the governments set no job-creation or investment requirements, unlike most similar economic development deals.

City and county boards in December agreed to waive 100 percent of Google's personal property taxes and 80 percent of its real estate taxes for 30 years, which could be worth up to $165 million.

Google said it will create 200 jobs by 2012. And local officials will just have to trust them.

"The terms of (the deal), I think, were really bad," said Lenoir councilman T.J. Rohr, who cast the lone dissenting vote against the package and is opposed to incentives on principle.”

Google now finds itself in a defensive position it is not familiar with.

Lloyd Taylor, Director of Global Operations, Google, took advantage of the Observer’s “Feedback” opportunity to make the Google case in public:

I'd like to ask for your understanding. We waited so long to "go public" with our plans both for competitive reasons and because we don't want to create a stir during the early phases of a site selection projects where many sites don't end up panning out.

Second, you've probably read about Google getting "$100 million" in incentives to locate in Lenoir. That entire hypothetical 30-year figure consists of tax reductions that put North Carolina on par with other states. That is, those incentives come from reductions in property and sales taxes which don't exist at all in many other states. For example, in Oregon (where we have another data center) there is no state sales tax. Without these tax reductions to level the playing field, it would have been a better business decision for us to do our expansion elsewhere…

We're very much looking forward to the day when the first Google search is answered by servers in Lenoir.

North Carolina officials are very much looking forward to a non-hypothetical critique of how $150 billion market cap Google succeeded in leveling the “playing field” to its multi-million dollar satisfaction.

ALSO: Can Google buy its way to future success? and YouTube riches: Social video production or social video pirating?

Topic: Google

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