Nevada Governor Signs Tesla Tax Package Into Law
A week after the announcement, and through two days of deliberation by the state legislature, Nevada governor Brian Sandoval signed into law September 11 the $1.25 billion tax package that won over Tesla enough to bring its Gigafactory to the Silver State.
Reno Gazette-Journal breaks down the complete package as follows:
- $725 million: 20-year, 100 percent sales tax abatement
- $332 million: 10-year, 100 percent property tax abatement
- $120 million: Transferable tax credits
- $75 million: $12,500/job transferable tax credits (up to 6,000 jobs)
- $27 million: 10-year, 100 percent modified business tax abatement
- $8 million: Discounted electricity rates for eight years
In addition, the state will buy Tahoe Reno Industrial Center’s main road, the USA Parkway, for $43 million, and will extend the road to U.S. Highway 50 at a cost yet to be determined.
Finally, the legislature had to agree to give Tesla and other EV manufacturers the right to directly sell their wares to customers in Nevada without going through the traditional dealership model.
In exchange, Tesla will provide $7.5 million annually to the state for education funding over the next five years beginning in 2018, as well as invest $3.5 billion in manufacturing equipment and real estate in Nevada.
Meanwhile, the insurance and film industries lost on their respective tax incentive programs as funds were siphoned into the Tesla deal. The former loses a $27 million/year credit that had been a mainstay for 40 years; the latter sees a hard-won $80 million/year credit meant for movie production over the next four years reduced to just $10 million/year.
As for economic impact, the state expects $100 billion over the next two decades, ranging from 6,500 employees making $25/hour assembling the battery packs meant for all of Tesla’s vehicles and others interested in them, to a 4 percent increase in the state’s gross domestic product.
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I bet The education "credits" are the people that get sent to seminars or the University of Phoenix for this and tha. Probably spread over 10 or 15 years. Basically, an illusory press release benefit. Just a guess. Another press release feature is the astonishing 20 X multiplier effect of this investment, all in the state of Nevada alone. The highest multipliers I ever heard of are in the 5 X range. It so happens that the cost of the Medicaid expansion of O-Care in Nevada is slightly larger. So does that mean there's going to be 200 billion dollars of extra economic activity in Nevada alone between O-care and Elon Musk? OK it's gummint spending. Let's assume a measly 10X multiplier. 150 billion in new economic activity in Nevada? Remember, this is a state with an annual budget just a little over 5 billion. My point is that these economic projections reported in the newspaper don't pass the laugh test. They are pure, unadulterated bullshit. The gigafactory will supposedly cost Tesla $5 billion, but the first phase is 3 billion. What are the clawbacks if Tesla doesn't come through? You notice there's no mention of that. Remember, if Tesla goes belly up, a distinct possibility, given the riskiness of the venture, it won't even matter if they have clawbacks. P.S. Here's another word for "transferrable tax credits" It's called "cash"
Anyone who knows if the termination of the battery delivery deal with Toyota will affect the plant's prospects and perhaps even Tesla itself?