In an attempt to boost state-wide investments, North Carolina legislators are contemplating offering Apple a significant tax break should it decide to open up a server farm in the state, according to a recent report in the Charlotte Observer. Why Apple needs a new server farm Just a few years ago, all Apple sold through iTunes were music files that ranged in size from 3 to 5 MB on average, and keeping up with bandwidth demands at the time was manageable. But with the advent of Movies and Television Shows on iTunes, not to mention the fact that people are downloading a lot more media content these days, maintaining good bandwidth infrastructure has increasingly become a priority for Apple. Also a factor is the fact that the typical music file on iTunes, thanks to higher quality encoding, now weighs in at anywhere between 5 and 11 MB. And let’s not forget that over 1 billion apps have been downloaded from Apple as well. While precise details of North Carolina’s efforts to lure Apple remain unknown, the Observer notes that the tax break being offered to Apple comes in at around $300 million, which isn’t too shabby considering that setting up a server farm in North Carolina would amount to a $1 Billion investment over the course of about 9 years.
The tax changes would affect the way corporate income taxes are calculated by giving breaks to companies with a relatively small share of U.S. sales in North Carolina but which have large shares of their nationwide property and payroll in the state.
This, however, isn’t the first time North Carolina lawmakers have tried to attract high-tech investments by dangling tax breaks as bait. The Observer notes that lawmakers had previously offered up to $260 million in tax breaks to Google on the condition that they set up a large data complex in the state. It sure must be nice to be Apple at this point. Consumers are gobbling up iPhones and iPods, downloading media content like crazy, and states are offering huge tax breaks on the condition that Apple set up a server farm that they would be setting up regardless. According to the Observer, a final vote on the proposed tax break to Apple is scheduled for this Tuesday.
