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Tesla Deal is a Great Deal…for Tesla

The Sandoval administration is creating enough wind patting themselves on the back to qualify for typhoon status over the decision by electric car manufacturer Tesla Motors to build its battery gigafactory in Nevada.  But not everyone is a happy camper.

Nor should they be.

The decision was not exactly a surprise, even though Nevada was competing with three other states to land the facility.  Tesla was looking for relatively inexpensive land in a state where wages were comparatively lower than those paid in Palo Alto, California where Tesla’s manufacturing operation is located.

Not only did Nevada qualify on both counts, but Reno is a lot closer to the company’s home office than Arizona, New Mexico or Texas.  Location, location, location.

Tesla was also looking for a juicy package of tax breaks – something all four states were willing to cough up.  And the Nevada package reportedly weighs in at some $1.1 billion!

According to Sean Whaley of the Las Vegas Review-Journal, the deal “will result in essentially no taxes being collected from the electric car manufacturer for nearly a decade.”  No sales or use taxes.  No real property taxes.  No personal property taxes.  And no modified business taxes (employee head tax).

Sweet!

So much for the claim by “low tax deniers” that a state’s tax climate isn’t a major factor in deciding to move here.

Oh, and since our government-run schools continue to stink on ice, yet Tesla is moving here anyway, so much for the liberal argument that businesses won’t locate here because we supposedly “underfund” education.

But back to the tax breaks…

I’m happy to lower taxes, for sure.  But if lower taxes equals more businesses moving into Nevada, shouldn’t we lower sales, property and employee taxes for EVERYONE?  Why is it right for the government to extend tax breaks to some companies and not others?

And I still can’t get beyond the unfairness of this sort of thing to home-grown Nevada companies.

We have businesses that started in Nevada years and years and years ago.  Those businesses have helped Nevada grow and mature as a state.  They’ve contributed millions and millions of dollars in tax revenue, not including charitable contributions.  And they’ve survived the Bush-Obama recession, which hit Nevada particularly hard.

Where are THEIR tax breaks, huh?

And according to Mr. Whaley’s story, some of the tax breaks going to Tesla will be at the expense of other businesses!

For example, the $80 million worth of film tax credits the Legislature passed last session to entice movie producers to shoot their flicks in Nevada will be cut to $10 million, with the difference going to Tesla.  Oh, and a 40-year-old home office tax credit for Nevada-based companies, worth some $25 million, will be redirected to Tesla, as well.

How is that right?

This is a great deal for Tesla.  Kudos to Elon Musk, the company’s CEO, for playing five states against each other and getting such a great deal for his company.  Well played.

And it’ll be great for the estimated 6,500 people who will be working on the project and the contractors who will build the factory.

For the rest of us though, not so much.