When Apple announced its plans to bring a 100% renewable energy powered manufacturing plant to Arizona, we would do well to ask why?
The answer is partly to be found in the map below:
1) Proximity to Mexico
There's a Foxconn manufacturing base in Juarez - just over the Mexican border - and it seems like the output from the Arizona plant will end up there.
2) Tax Structure
Over the past 15 years Arizona has demonstrated a "pro-business" mentality combined with a minimalist regulatory approach by reducing taxes and decreasing regulations:
- No corporate franchise of business inventory tax
- Low workman's comp and unemployment insurance rates
- No income tax on dividends from out-of-state subsidiaries
- 80% sales factor on corporate income tax scaling to 100% option
- No worldwide unitary tax
- Aggressive depreciation schedule
- 90 day or less permitting
- Virtually all services exempt from sales tax
- No inventory tax
- No Sales tax on manufacturing equipment
- Ability to carry forward 100% of net operating income for twenty consecutive years
- Small businesses with less than $10 million in assets will not be required to pay capital gains taxes beginning in July 2015
- Right to Work State
Arizona also has aggressive tax credits to reduce state corporate income tax liability. This includes phasing in a corporate income tax rate from 6.9% in 2012 to 4.9% in 2017.
So what does this mean for neighboring states?
It's too early to call this is a new wave of innovation, but it's worth thinking about. How can states like California, Texas, and New Mexico join this solar-shift? Do they even want to?
C'mon, New Mexico!
Apple is to be applauded for bringing manufacturing back to the US. More importantly, they can still think different.