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North Carolina beefs up tax breaks as Apple scouts new sites

RALEIGH, N.C. (AP) — North Carolina legislative leaders said Thursday they're committing to a big expansion of tax breaks to attract employers promising thousands of jobs, a move that comes as people familiar with recruitment efforts tell The Associated Press tech giant Apple is strongly considering the state for a new corporate campus.

The top two leaders in the state's General Assembly said they would lower the threshold so-called "transformative" companies must meet to get massive state subsidies. Companies investing at least $1 billion and generating 3,000 jobs could get cash payments based on the taxes paid by their employees for up to 40 years.

A North Carolina government official and an economic development official told The Associated Press that Apple is close to deciding whether to build a planned hub in the Raleigh-Durham area. They spoke on condition of anonymity because of the confidentiality of business recruitment. The project could create 5,000 North Carolina jobs, with a later target of 10,000 jobs, the economic development official said.

Apple declined comment Thursday.

Apple also has explored the northern Virginia suburbs of Washington, D.C., as the potential site of its new campus, the Washington Post reported Wednesday.

The maker of iPhones and other tech gear employs about 23,000 at its Cupertino, California, headquarters and a second campus in the Silicon Valley city, with salaries averaging about $125,000, according to a report the company submitted to the city. More than 6,000 work at Apple's second-largest site in Austin, Texas, in customer service, the company's online store and other functions.

Apple hasn't said how big its new campus will be, except it will house many of the 20,000 employees it intends to hire during the next five years. The company has said it initially will be devoted to "technical support" for Apple customers.

Apple announced its expansion plan less than a month after Congress approved a sweeping overhaul of the U.S. tax code championed by President Donald Trump that will increase corporate profits. The reforms offer a one-time break on cash held overseas and Apple has earmarked about $75 billion of more than $250 billion in profits held offshore to build the new campus and new data centers and for other investments. It's unclear whether Apple would have proceeded with its spending plans even if the tax reforms hadn't been passed.

Apple CEO Tim Cook has downplayed the importance of getting tax benefits and other government subsidies in the company's decision-making process, rejecting the notion that it's pitting cities against each other in the same manner Amazon has done as it scouts for a place to build a second headquarters outside its Seattle home.

North Carolina has been historically more reluctant than surrounding states to lure companies to build big within its borders. Republicans have spent the last five years reducing income tax rates — their corporate rate is the lowest in the country for states with such a tax and will fall to 2.5 percent next year — and reducing regulations as a recruitment tool.

But the state also has been increasingly anxious to land a big fish, particularly an automobile manufacturing plant. The state lost out to Alabama in January for a new joint Toyota and Mazda plant despite offering more than $1.5 billion in tax breaks and other incentives, including the acreage to build.

Moore said the legislation comes out of what the state has learned from the failed Toyota-Mazda bid, one of the largest incentive offers in state history, and other unsuccessful efforts.

The North Carolina legislation would allow companies investing at least $1 billion and generating 3,000 jobs to receive those cash payments — essentially rebates on income tax withheld from each job created — for up to 40 years. Currently, the state's most generous incentives program for large projects is capped at 25 years of payments and requires $4 billion in investment and at least 5,000 jobs. A cap of several thousand dollars a year on each job created also would be eliminated.

Berger and Moore said Democratic Gov. Roy Cooper has been presented with the changes. Cooper, his Commerce Department and a nonprofit economic development arm are the state's chief business recruiters.

AP Technology Writer Michael Liedtke in San Francisco, California, contributed to this report.