Dell knocks out North Carolina taxpayers in court

Lush package cleared

By Ashlee Vance in Mountain View • Get more from this author

Posted in Financial News, 11th May 2006 07:53 GMT

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Dell has won the first round of a legal slugfest disputing close to $300m in incentives awarded to the computer maker by North Carolina.

Judge Robert Hobgood of the Wake County Superior Court today tossed out a lawsuit backed by the non-profit North Carolina Institute for Constitutional Law (NCICL). The organization has been supporting seven citizens' quest to deem North Carolina's lucrative Dell package unconstitutional. The judge, however, found that NCICL failed to show how the Dell deal directly hurts the interests of the North Carolina residents.

"We are obviously disappointed by the ruling and anticipate filing an appeal in the case as soon as we have consulted with our clients and our Board of Directors." said Robert Orr, the executive director of NCICL. "However, we anticipated from the beginning of the litigation that the case would ultimately have to be decided at the appellate level and we look forward to presenting our arguments on the constitutionality of these acts at the next stage of the process."

North Carolina enticed Dell to build a new PC manufacturing plant by giving it a wide variety of perks, including tax incentives, roads to its factory and classes at local colleges that will teach students how to fix Dell gear.

The North Carolina package is pretty incredible when you consider the political leanings of Dell founder Michael Dell and CEO Kevin Rollins – both staunch Republicans – and the overall success of the company. You'd think a pair of wealthy Republicans would be the last to ask for government handouts just to run their business. It would seem the Dell Model isn't all about supply chain efficiency.

Some locals certainly think it's unfair, as Dell will enjoy price breaks and other perks that could create a tilted playing field. Dell, after all, already has its massive size on its side against smaller, local IT shops.

"This issue is not going away, either as a question of constitutional law or as a matter of public policy." Orr added. "All across the country and here in N.C. citizens are questioning these rapidly escalating hand-outs to the largest and wealthiest international corporations at the expense of smaller businesses and individuals who have to pick up the tax burden for those who don't pay there fair share." ®

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