This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Tax Breaks Enrich Companies, Burden Communities

By John Solari

RENO, Nev. (J. A. Solari and Partners) -- The headline was an economic coup.

A massive Apple (AAPL) data center and $1 billion of investment from one of the world's most successful companies was coming to Reno. The city, a Northern Nevada community at the base of the Sierra Nevada mountains and minutes from Lake Tahoe, was working to reinvent itself in the face of a deep recession, a decline in gambling and large state budget deficits.

The deal, inked last summer, was generally heralded as an infusion of new economic lifeblood into the Reno community, and a move that would put the growing Reno technology sector into hyperdrive. It promised jobs, construction activity, and an economic ripple effect that would benefit businesses throughout the community.


But slowly the details of the deal became apparent. And those details were not as rosy. They underlined the precarious position that state and local governments are in when negotiating with the smartest, most successful and most powerful businesses on the planet, and how hard it is to calculate if what you are giving up is worth what you are getting.

In all, Reno and Northern Nevada is estimated to have handed out $89 million in tax breaks to Apple for the data center. Apple's sales tax rates (one of Nevada's most important ways to generate income because the state has no income tax and no corporate tax) will stand at less than 1%. The school district waved its taxes on the data center. And Washoe County tax abatements wiped out approximately 85% of Apple's property taxes.

In return for that $89 million, it is hard to put a finger on what Reno actually got. Data centers create little employment -- the 350-acre center is expected to employ only 35 full-time workers, but may provide work for up to 200 contract workers. The construction activity will certainly benefit the area, albeit in a relatively short window. And there will be a modest economic ripple effect. But many of Reno's citizens are left wondering: Is that worth $89 million?

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,113.54 +61.81 0.36%
S&P 500 1,983.53 +9.90 0.50%
NASDAQ 4,456.0160 +31.3120 0.71%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs