On May 16th, local news station WRAL indicated that Apple may be dropping its second HQ in North Carolina, far from its primary headquarters in Cupertino, CA. The report from WRAL suggested that the only thing standing in the way of Apple’s move is local legislators passing a bill on tax incentives.
North Carolina’s top two General Assembly leaders have shed some light on this tax incentive bill. They say the bill will lower the requirements a so-called “transformative” company needs to meet in order to qualify for certain benefits, such as large state subsidies and cash payments based on the money that their employees pay on taxes for up to 40 years. To qualify for these benefits, a company needs to be generating a minimum of 3,000 jobs and investing at least $1 billion, requirements which, according to a report from The Associated Press, Apple’s new headquarters will easily clear.
The report claims that Apple’s second headquarters will be in construction over the next five years, and has also promised to bring an additional $350 billion to the U.S. economy as well as the creation of an estimated 20,000 new jobs. That’s not including the jobs created by the project of constructing the new HQ, which could number between 5,000 and 10,000 North Carolina jobs, according to a North Carolina government official and an economic development official. The company plans to officially announce the location of their new headquarters by the end of this year.
Apple’s statements also recognize changes made by president Trump’s new tax code, signed into law at the end of 2017, which offers a one-time low rate of 15.5% to the company. However, according to San Jose State University Tax Professor Caroline Chen, this could be a good thing.
“What the tax reform bill did was mandate a payment of tax regardless of whether or not you plan to bring your money to the United States”, says Chen. Apple certainly seems to have recognized this, as it plans to bring $250 billion previously-untaxed overseas money back into the United States. With the 15.5% rate, that equals nearly $39 billion additional tax revenue for the U.S.
Chen has also indicated that many other companies may begin to do this as well since the new reform diminishes the benefits of holding funds offshores.
Back in January, Trump praised the effects of his tax reform on Apple’s actions with a tweet that praised Apple’s move to bring money back into the United States, which he called a “huge win for American workers and the USA.”
However, Apple CEO Tim Cook states that this monetary move was not the sole product of this tax reform: “Let me be clear, there are large parts of this that are a result of the tax reform and there are large parts of this that we would have done in any situation.”
As for the headquarters itself, there’s not much information on its actual purpose. Many have speculated that it could serve as a home base for customer support, but the report from WRAL indicates a possibility for higher-paying tech jobs at the institute. There’s a possibility that Apple may choose to place its new headquarters somewhere in the Raleigh-Durham-Chapel Hill triangle, as it would be dropping into an already high-profile area filled with other large blue-chip companies such as EMC, BASF, Cisco, and IBM. However, a recent report from The Washington Post indicates that Virginia is also pressuring Apple to open up its second headquarters near McLean, Virginia, where Apple opened its first retail store in 2001.
Both Apple and Cooper’s office have declined to comment on these plans.
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