Texas Defeats Arizona In Battle Over Apple Computer Campus Development

This post is based upon an a local report of the decision by Apple to locate a research campus, that would employ over 3,000, in Austin, Texas instead of in Arizona. Arizona proposed a package of incentives that reduced the property tax from 20% to 5% and it included job creation tax credits. The total package of incentives is estimated at $10 million. Some of those involved in the contest estimate the incentives provided by Texas at around $21 million. One of the factors in Apple's decision is the availability of highly educated labor from the state university in Austin. Apple had been discussing a partnership with Arizona State University in its study of Arizona sites for the campus. Some officials believe that Apple was predisposed to the Texas site because it already has a smaller campus in the area. They believe that Apple was using Arizona as competition in order to get more incentives from Texas. They claim that Boeing did something similar when it decided to locate its headquarters in Chicago rather than in Texas. In that case Texas was used as the foil to get more incentives from Chicago.

There is something perverse about this whole process. Apple Computer is one of the richest corporations in the world. It has over $40 billion in cash, and its shareholders have benefitted enormously from the rise in Apple's stock price. Texas and Arizona have spent taxpayer's dollars in educating the workers that Apple requires for its campus. Both states have also reduced Medicaid coverage in response to the falling tax revenues. Yet Apple and other corporations demand incentives from states and localities when they consider new locations for expansion. Government's which invested in educating the workers that Apple needs are required to grant tax incentives to Apple and other corporations in order to bring jobs to their states. This is similar to what happens globally. Nations compete with each other by providing incentives to corporations in the battle for jobs.

I recently posted an article on a Harvard study of US competitiveness. That study was based on a survey of 10,000 alumni. My guess is that business executives believe that the battle between Texas and Arizona for the Apple campus location, is their version of national competitiveness. Freedom from taxation and regulations, that add the their cost, is high on the agenda of corporations that are totally fixated on increasing shareholder value. They expect taxpayers to provide them with an educated workforce, and the infrastructure that they require, but they don't want to pay for it. Rich corporations, behaving in this fashion, shift the tax burden to the less fortunate. This is an exorbitant privilege that governments should rebel against. They only encourage this type of extortion by their willingness to enter into this perverse form of competition.