NC: Dude, You're Getting Screwed by Dell
So, five years ago Dell came to the State of North Carolina promising to build this huge manufacturing facility that would employ 1,500 workers forever. The Legislature of North Carolina couldn't help themselves and handed Dell $250 million in incentives to build the $300 million plant. In the five years since, there have been several lawsuits over the "Dell Statute" and the incentives given at a legal cost of millions of dollars to the state.
Well, guess what? Dell announced last night that they're closing the plant.
I'm guessing the five years wasn't a coincidence either. The relevant statute (Section 105-129.62(a) of the North Carolina statutes if you care) reads:
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.
My favorite argument is that the statute wasn't designed for one company but that any computer manufacturer that located in NC would be eligible for the credit. While not as limiting as some statutes (I've seen statutes even describe the city/county that the incentives apply to because in most states they can't name the business due to rules limiting the ability to write statutes to benefit one person) it's pretty ridiculous to argue that this is a general purpose statute.
It doesn't look like there's a clawback for the amounts already paid to Dell. The state's argument is that they won't have to pay any additional credits so it's not a loss for the state. I'd say the 1,000 workers that lost their jobs (who paid for the facility with their taxes) would feel differently.
Great job, North Carolina! Just think of this when your elected official touts how job incentives help the state.
