by CIO Staff

N.C. Judge Tosses Out Lawsuit Against Dell

May 10, 20062 mins

A North Carolina judge on Wednesday dismissed a lawsuit pertaining to the legality of a $330 million state incentives package offered to Dell to entice the company to construct a manufacturing facility in the state, the Associated Press reports via The Wall Street Journal.

Seven North Carolina taxpayers filed the suit because they said both the state and United States constitutions bar governments from providing individual companies with tax breaks, as they could give firms an unfair advantage and harm the public good, according to the AP.

Superior Court Judge Robert Hobgood’s signed ruling is expected to be released to the public on Monday, the judge’s office told the AP.

Dell was first offered the tax breaks in 2004 by the North Carolina General Assembly and local governments within the state, in exchange for the construction of a manufacturing facility in Winston-Salem that would create 1,500 new jobs, as well as an investment of at least $100 million over the coming decade and a half, the AP reports. Dell, the world’s leading producer of PCs by market share, opened the 750,000-square-foot plant last fall, according to the AP.

Lawyers representing Round Rock, Texas-based Dell cited a 1996 Supreme Court case in its defense that found no illegal activity in the usage of state tax money to draw in or build up local industries, the AP reports.

Attorneys for the seven taxpayers claimed that ruling did not specify whether the incentives provided to Dell actually served a public purpose, according to the AP.

The PC giant—along with a handful of additional defendants, including North Carolina Commerce Secretary Jim Fain—held that the case should be dismissed because the tax breaks did not negatively affect the state’s citizens, the AP reports.

Dell currently takes in as much as $278 million in North Carolina incentives, according to the AP.

For related news coverage, read Dell Cuts Profit Outlook.

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