On Thursday, August 24th, the state of Iowa granted its approval of a deal that will allow tech-giant Apple (NASDAQ:$AAPL) to receive a whopping $208 million in state and local tax breaks. The deal, which was given the go-ahead by the Iowa Economic Development Authority, is made up of $19.6 million in state sale taxes, as well as a $188 million break on Waukee’s property taxes. The money was given to Apple to build two new data storage centers near Des Moines, the capital city of Iowa. The new centers are expected to create about 50 long-term jobs.
Iowa will also be benefiting from the deal – Apple will be buying about 2,000 acres of land for its data centers, which will help with future development, Debi Durham, Iowa’s economic development director, said.
More on the deal will likely be revealed when Apple’s CEO Tim Cook and Republican Iowa Governor Kim Reynolds talk about the deal with news reporters at a conference scheduled on late Thursday. Despite the fact that specifics haven’t been released yet, however, financial professionals have already begun criticizing the deal. David Swenson, an economist at Iowa State University, is one of them.
“It’s a net fiscal loss that it’s a straightforward giveaway in the economy to a company that’s extraordinarily wealthy and it makes no sense from an economist’s point of view. It only makes sense from a politician’s point of view,” Swenson said.
However, Chris Murray, the chairman of Iowa’s economic development board, argued that projects like Apple’s huge data centers will be able to attract more people and businesses, which can help with tax revenue. If one takes into consideration the age demographics and growth of Iowa, it is easy to see how big projects are necessary to support Iowa’s development, Murray said.
Other big tech companies, such as Google (NASDAQ:$GOOGL), Facebook (NASDAQ:$FB), and Microsoft (NASDAQ:$MSFT) already have data centers – either existing or currently being built – in Iowa. These companies, similar to Apple, chose to build their data centers in Iowa due to bigger tax breaks, clean energy (their electricity is wind-powered) and lower chances of experiencing natural disasters.
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