Apple Inc. appears to be delaying its plans to build a corporate campus in Research Triangle Park, which is sited on the boundaries of Raleigh, Chapel Hill and Durham in North Carolina.
Construction was originally slated to begin in 2026, but the tech giant has reportedly told state officials of its desire to delay groundbreaking for up to four years. The delay would be a considerable setback for the area, which anticipated substantial economic growth and job creation from the project.
The first phase of the project was expected to include six buildings across 41 acres, with a promise of a future expansion on a 281 acre site. The proposed project was intended to house roles in machine learning, artificial intelligence, and software engineering, with estimates of 3,000 jobs with salaries approaching $200,000.
As the region grapples with news of the delay, the broader implications in terms of economic development are somewhat less clear. The taxpayer-funded incentives bound up in the project may have made the development less of an unalloyed positive for North Carolinians.
Massive Taxpayer Contributions
The cost to North Carolina for securing Apple’s investment was substantial, with $845.8 million in tax breaks promised over 39 years and local incentives adding another $20 million. The all-in cost to taxpayers totaled nearly $1 billion, or roughly $333,000 per job added.
For context, this is just a few thousand dollars shy of a noted tax incentive boondoggle: the “border war” between Kansas City between Missouri and Kansas. There, some 414 jobs were created in Kansas at a cost of $340,000 per job.
The track record of the Job Development Investment Grant Program, which would facilitate the tax breaks accruing to Apple, has been mixed at best. Notable projects that have also been pushed back by the recipients of tax incentives include an agreement with Allstate to create 2,200 jobs which was made impractical by a shift to remote work and a commitment by a Vietnamese automaker to create 7,500 jobs which has been delayed until 2025.
Apple’s decision to delay the construction of its Research Triangle Park campus brings into question the future economic impact on the Raleigh-Durham area—but it is far from clear the result will be a net negative for North Carolina taxpayers.
Tax Incentives and Job Creation
The efficacy of tax incentives in fostering job creation more broadly has been long debated. While incentives are often touted as necessary to attract large companies and thereby spur economic development, evidence has for some time suggested that they may not be as effective as advertised.
One main criticism is that the incentives often result in a relocating of existing jobs rather than the creation of new ones—put differently, there is no net addition of jobs to the economy writ large, merely a subtraction from one region or state and an addition in another. This can have beneficial local effects, but those effects may be blunted by the broader net loss inherent where an expenditure is made to maintain the same total number of jobs.
The practice of offering tax incentives leads to a zero-sum game, where cities or regions engage in a destructive bidding war, each vying to spend more taxpayer money to the benefit of no one save for the corporations being fought over.
In fact, research suggests that the primary drivers of job growth are not older firms—but young firms. This would suggest North Carolina would be better off incentivizing the next Apple to start its business in the Research Triangle, rather than trying to attract existing behemoths. Newer firms inject competition, spur innovation, and are more likely to hire new workers.
Thus, policies that support the creation of new businesses, rather than providing tax incentives to existing ones, may be more beneficial for long-term sustainable development—but they don’t make the headlines.
Read the full article here
