The fate of a lawsuit that argues that the state should not have used tax incentives to lure Google to Caldwell County hinges on whether individual taxpayers are legally entitled to challenge the company's tax breaks.
The N.C. Institute for Constitutional Law argued before a three-judge panel at the N.C. Court of Appeals on Monday afternoon that it would be wrong under state law to bar the three taxpayers it represents from the courthouse. The nonprofit institute, a long-time opponent of state incentives for corporations, is seeking to overturn a Wake County Superior Court ruling that the taxpayers lacked the legal right, or standing, to challenge the law in court.
"How are people going to challenge the acts of government that they feel are unconstitutional if, as taxpayers, the courthouse door is shut?" argued Bob Orr, the institute's executive director.
Lawyers for Google and the state urged the appellate court to uphold the ruling, arguing that the taxpayers failed to show that they were discriminated against.
The taxpayers' complaint that Google's tax breaks could lead to higher taxes for individuals down the road is "too vague" to qualify, argued Burley Mitchell, a lawyer for Google. Mitchell also contended that the tax breaks Google received are no different from a laundry list of tax breaks the state doles out to farmers, manufacturers and others.
At issue are exemptions from the state's retail sales and use tax, worth an estimated $90 million over 30 years, that lawmakers approved for Google in exchange for its building an Internet data center in Lenoir. The $600 million computer-data center is expected to create up to 210 jobs with an average annual salary of $48,000.
The legal landscape hasn't changed since the taxpayers filed their lawsuit last year. But the political controversy over incentives may have entered a new phase since the computer maker Dell's decision earlier this month to close its Winston-Salem manufacturing plant and lay off 905 workers.
As a result, Dell is foregoing or paying back most of the $280 million in state and local incentives it was offered to locate its plant in Winston-Salem.
The N.C. Institute for Constitutional Law's earlier lawsuit challenging Dell's incentives was dismissed by the state Supreme Court.
Monday's legal arguments about the Google case didn't focus on the merits of the case. The taxpayers won't get the chance to argue the merits unless the lower court's dismissal is overturned. The appeals court may not issue its decision for months.
