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by mikeash
4303 days ago
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I don't think the "blow up in their face" scenario makes sense. If the factory fails, then Nevada is back where they started. Since these are tax breaks, they're just cutting down on revenue they would have otherwise collected from the factory. If the factory fails, then it stops paying taxes regardless. It's not like Nevada wrote a $1.25 billion check to Tesla. It's sort of like giving a really good chef a discount on rent if he moves into your apartment. You think it's worth it because he'll cook some great food for you. If he loses his job and has to move out, you're just back where you started. That you were planning on giving him a total discount of $100,000 over 10 years (for example) doesn't mean you're now out $100,000 whet it didn't work out. I don't like the idea of localities competing on tax breaks like this, but the downside in my view is simply letting successful companies avoid taxes, not any trouble from extending tax breaks to failing ones. |
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>$195 million in transferable tax credits, which other Nevada companies will be able to buy from Tesla in order to reduce their own tax liabilities to the state.
Credits are basically the state writing them a check. Plus the article mentions the state buying the USA parkway for an additional 43 million. And I'm not completely sure how the reduced electricity bill works, but I gotta imagine that it will be passed on to the government somehow.
If Tesla went belly up 5-10 years into this project before the tax breaks are up, the state would lose out quite a lot. Might not exactly be 1.25 billion, but still a lot.
Edit: Wanted to add there is also unseen expenses and burdens placed both on the state and county government where this project occurs. Tesla wouldn't be paying property tax, yet there would be a very significant increase in population to the area. That means more police, teachers, infrastructure, etc. The burden would be placed on local individuals and other businesses. There isn't an exact number to put on this, but I wouldn't be surprised if it would be hundreds of millions of dollars.