N.C. appeals court rebuffs challenge to Google tax breaks

Posted February 16, 2010 10:05 a.m. EST

— The state Court of Appeals on Tuesday ruled against three people who challenged the legality of incentives used to lure search engine giant Google Inc. to North Carolina.

Former Libertarian candidates Michael Munger and Barbara Howe, as well as Mark Whitely Cares, sued the state and Google three years ago, saying the tax breaks state lawmakers approved for the the company in 2006 violated the state constitution.

Lawmakers agreed to exempt large Internet data centers from sales and use taxes in return for Google's agreement to build a server farm in Lenoir. Combined state and local tax breaks for the project could be more than $200 million.

The three taxpayers said the tax breaks were unfair because individuals and most businesses couldn't qualify for them.

In a unanimous decision, the three-judge panel ruled that the three taxpayers didn't have the legal standing to challenge the tax breaks.

"The mere fact that (the) plaintiffs pay North Carolina income and sales and use taxes, without more, does not give them standing to
challenge the sales and use tax exemption afforded to eligible Internet data centers," the court ruled.

Apple Inc. also received incentives to build its own data center in western North Carolina.