By on September 11, 2014

Tahoe Reno Industrial Center

Last week, Tesla and Nevada governor Brian Sandoval jointly announced the automaker would be bringing its Gigafactory to Reno. Now, it’s up to both houses of the state’s legislature to pull it all together with a $1.3 billion tax break.

Reuters reports the Nevada Legislature gathered in Carson City for a special session at noon Wednesday to hammer the details of the package, which Sandoval believes will spur $100 billion worth of economic benefits for his state during the next two decades at an investment payoff of 80:1.

The package would provide the following for Tesla in exchange for hosting the Gigafactory:

  • $725 million in tax exemptions through 2034
  • $300 million in various tax savings through 2024
  • $120 million in tax credits for meeting the state’s investment threshold of $3.5 billion
  • $75 million in tax credits for up to 6,000 jobs created
  • Reduced utility rates

In turn, Tesla will invest over $37 million into Nevada’s education systems during the next five years, and will bring a total of 25,500 jobs to the state, from construction to indirect employment.

As of this writing, both houses are set to return for a second day of deliberation Thursday morning. Until then, this is the tax break bill as established during Wednesday’s session.

Get the latest TTAC e-Newsletter!

Recommended

24 Comments on “Nevada Legislature Deliberates Tesla Tax Package In Special Session...”


  • avatar
    Andy

    I get that this is good business, for both sides. And my own Texas may have offered much the same. But I can’t help enjoying the irony of “Reduced utility rates” as an incentive…

    Has Tesla accomplished anything yet without corporate welfare? Or built anything for regular people yet?

    If we had to choose, I think Texas is better of with Toyota.

    • 0 avatar
      Brad2971

      I presume, as a Texan, you’ve heard of this little thing called the Eagle Ford Shale. In the last couple years, something along the lines of 116,000 jobs have been created to help facilitate nearly 1.5 million BPD of oil production, with most of those jobs paying considerably more than Tesla would likely pay.

      TX does not, and has NEVER, depended upon the jobs Tesla would “provide.” It was just a way to take a playful little slap at CA.

  • avatar
    jim brewer

    I wouldn’t assume it’s “good for both sides” it’s probably a colossal rip off of the Nevada taxpayers. You can be sure there are a few more embarrassing features that they aren’t advertising, and the price tag is understated in any case.

    • 0 avatar
      Brad2971

      Ah, bipartisanship (NV has a Dem legislature {aka Gang of 63} and a Rep Governor). Say what you want about the petty nasty gridlock going on in DC, it helps in mitigating this sort of collusive behavior by making all participants think about the next group of Congresscritters that stalls things.

  • avatar
    mcs

    >> @Andy “Has Tesla accomplished anything yet without corporate welfare? Or built anything for regular people yet?

    >> If we had to choose, I think Texas is better of with Toyota.”

    So, has Toyota avoided taking corporate welfare? Ever heard of the “Texas Enterprise Fund” and what it took to get the headquarters and San Antonio Plant. What’s wrong with Tesla taking money from the rich and giving it to “regular” people. Is it better to take money from regular people and give it to regular people?

  • avatar
    mike978

    The total price tag is quoted as $1.3 billion, but just over half if property tax abatement. Is this really a cost to the state/locality? I ask because if Tesla (or any other manufacturer who gets these kind of deals didn`t come then there would be no property tax either.

  • avatar
    Andy

    To clarify, I don’t support the welfare for Toyota either. Nor do I blame any company for shrewdly minimizing their tax burden. I’m inclined to think there should be a heck of a lot fewer taxes to be avoided in the first place. (Though if they were really “good corporate citizens”, would they be motivated only by profit and tax avoidance?…)

    That said, at least Toyota has a record of success. Tesla still seems very experimental to me, and has only made it this far because of political favors and appeal to the elite. If I got to vote on which company to incentivize to my state, I’d pick Toyota.

    • 0 avatar
      redav

      Is there a difference between welfare and investment? If you give a company money, and they give back (or cause to be given to you) more, is that welfare?

      If these states have done the math–and I assume they have–and the results show a positive expected return on the moneys given to the company, it seems dumb to not pursue such an investment for the reasons of ideological purity or the experimental nature of the company. (Being experimental affects the probability of repayment, which would be included in the math.)

      Now, if they chose not to give a company a hand-out because they have more promising investments to make with that money, that’s a different story.

      • 0 avatar
        redav

        Furthermore, I see nothing wrong with companies that sell products at high price to the wealthy.

        IMO, it’s better to distribute wealth via making/selling stuff than by govt intervention. Let Tesla build an expensive car, sell it to the fabulously wealthy, and use the revenue to pay their workers & suppliers. Tesla may not be showing a profit, but so long as their employees’ paychecks clear, is it a social justice issue?

  • avatar
    ZT

    For Nevada, the deal is probably good because it helps do the work of diversifying the state’s economy beyond tourism and mining. Nevada’s fortunes have had a lot of ups-and-downs owing to the fickle nature of both the aforementioned sectors. The higher-education system was eviscerated after 2008 because gross receipts had fallen after no one could afford to gambling in Vegas any more.

    Maybe Tesla is getting the sweeter end of the deal. That might be just fine if the infrastructure that’s needed to make the Gigafactory work also encourages investment from other companies in Nevada.

    • 0 avatar
      highdesertcat

      Yah! 6500 jobs for Nevada! That directly increased the tax base by at least 6500 who will spend money in the State of Nevada.

      Good deal!

      (Nevada does not have a state income tax because of the gambling laws.)

  • avatar
    stuki

    Now, if only there was enough sense amongst the NV electorate to recognize that “if giving company A deal N encourages them to come, extending the deal to companies B,C,D,E,…. would……..” As it stands now, there are no systemic benefits. Only encouragement to spend more time in front of cameras engaged in self promotion, and politician promoting; in place of focusing on useful work.

  • avatar
    jdash1972

    When Arlington TX gave Jerry Jones $300 million dollars to attract the new Cowboys stadium, the only real winners were Jones and the teams who play. Then they spend another $300 million on infrastructure – the I30 bridges project and renovating other roads to bring people to and from parking. The argument is always the same, that the city will make it up in tax revenue down the road, but the details are always fuzzy. Reno is a sh*t hole so good luck to Nevada, I hope it brings meaningful, good full time jobs to the state but someone is going to get the bill for the infrastructure improvements needed and they already have so many electronic slot machines that you can walk from machine to machine across the state without touching the ground.

    • 0 avatar
      highdesertcat

      All true! But Jerry Jones gave us the Dallas Cheerleaders. That ought to be worth $600M of someone else’s money, easily!!!

      • 0 avatar
        jdash1972

        I’d rather have a public transportation system (which Arlington lacks – no bus service of any kind), or intelligent stop lights (not just traffic cameras to generate income fit the city…, to pay the interest on the money they borrowed to give to Jerry, which was an interest only loan with about one million in interest per month), or anything besides the hideous missile silo destined to be a future superfund site. And they used eminent domain to get the land, too. At least those people paid taxes, Jerry pays nothing, for 30 years….

        • 0 avatar
          bball40dtw

          Plus you have to pay $100 to park there for games. It’s cheaper to buy Six Flags Over Texas season passes, that come with parking, and walk over to JerryWorld.

          • 0 avatar
            jdash1972

            And finally: Tony Romo sucks. I want a refund.

          • 0 avatar
            bball40dtw

            He does. I am a Lions fan, so I know what terrible QBs look like.

          • 0 avatar
            28-Cars-Later

            Stafford did well for me last season and this past Sunday, unless you’re referring to years past. Oh and Romo does suck, you’d think “Americas Team” would have a real quarterback.

          • 0 avatar
            highdesertcat

            bball40dtw, it’s been a couple of years since I attended games there (Cowboys vs Redskins), but do they still let the Vans ferry people all the way up to the entrance? Or do you have to walk in from the parking lot entrances?

            Instead of paying the outrageous parking fees or having a tailgate party in the parking lot, we hired an Airport Limo Svc ($15 a head) to pick us up from the hotel and carry us to the entrance.

            We could have used the hotel’s Courtesy Van for a ride, but that 15-passenger Van was packed for each trip and the wait was very long in between trips.

          • 0 avatar
            bball40dtw

            Years past. Between Bobby Layne (1958) and Matt Stafford (2009) the Lions had such greats as Andre Ware, Joey Harrington, Rodney Peete, Mike McMahon, Chuck Long, Dave Krieg, Eric Hipple, Gary Danielson, and Don Majikowski playing QB. Oddly enough, both Layne and Stafford went to the same high school in the Dallas area (Highland Park), and lived on the same street.

            HDC-

            Last time I went to a Cowboys game, 2011 against the Lions, I took a shuttle from a hotel.

  • avatar
    jdash1972

    Every yard, church parking lot and the Walmart across the street offers parking, everyone tries to cash in. I would go if they paid me.

  • avatar
    jacob_coulter

    I don’t like these sorts of deals, but I do think there’s a big difference between NOT taking taxes and actually subsidizing a business with cash.

    The example was something like a property tax credit. If it’s vacant land that the state of Nevada wasn’t going to get much of anything anyway for it terms of taxes, it seems to me to be a painless incentive to offer a business. Something is better than nothing.

    My problem still with all of it though is the lack of fairness, the people with the best lobbyists win, not the best business idea or product.

    So the American Dream basically becomes who has the inside tract with the current bureaucrat in power. The guy that owns a business and creates jobs but isn’t flashy gets hosed with taxes to make up for the sexy new electric car company.

    And Elon Musk/Tesla/Solar City empire really is built on the backs of corporate welfare and taxpayers. If any of his enterprises had to stand on their own two feet, they’d be dead in the water.

    • 0 avatar
      Brad2971

      If what’s currently going on with the oil&gas business and agribusiness are any indicators (and they were the leading indicators of the previous 80s-90s deindustrialization), you’ll likely see a lot more organic business growth in the next 10-20 years. Conversely, deals like this Tesla deal will likely not be available for those same 10-20 years.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • SCE to AUX: I was shocked to see an SSR in the wild the other day. The Hummer EV will do better, but I wouldn’t...
  • SCE to AUX: Yeah, I’ll bet the engineers didn’t think of that. Have you seen the armor plate under the...
  • CaddyDaddy: Ya, but when Dalton got to Missouri and the Roadhouse, the Riv was the one to go with for the Dirty Work.
  • Corey Lewis: You do British condescension so well!
  • Old_WRX: If they don’t offer that interior in magenta crushed velour fabric it would be such a shame.

New Car Research

Get a Free Dealer Quote

Who We Are

  • Matthew Guy
  • Timothy Cain
  • Adam Tonge
  • Bozi Tatarevic
  • Chris Tonn
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber