Direct Sales OK Baked Into Nevada's $1.3 Billion Incentive Deal With Tesla

The new battery factory that Tesla has announced it will build in Nevada comes with some nice perks: specifically, with a package of tax incentives, road construction, and legislative protection from the kind of dealer cartels that have hindered Tesla's ability to sell cars in some other states. A Bloomberg wire story gives some details about the size of the deal that Nevada made to attract the company: The biggest chunk of the deal, Tesla's sales tax exemptions, is worth an estimated at $725 million. In addition, the company would save more than an estimated $300 million in payroll and other taxes through 2024. ... Among the bills approved in both houses was a provision phasing out and eliminating 1970s-era tax credits for insurance companies, which backers said would free up about $125 million over five years beginning in 2016 for transferable tax credits to Tesla. The package would also gut a pilot program approved just last year giving tax credits to the film industry, freeing up about $70 million for Tesla. ... Lawmakers also agreed to buy right of way to build a road connecting I-80 and U.S. 50, a project estimated to cost $43 million that will improve access to the industrial park from other regions of the state.

Comments

Why is this legal in the U.S.?

[Anonymous Coward]

As a non-American, I find the notion a government exempting one specific company from one or several taxes bizarre. Is this really legal in the U.S.? Why?

Re:Why is this legal in the U.S.?

[Kkloe]

as a non-american, your country probably has\makes the same deal with major industries, you probably just dont know about it

Re:Why is this legal in the U.S.?

[i kan reed]

Because we have a system of elections that are virtually designed to award offices to those most inter-tangled with corporate powers. Privately financed campaigns, winner take all elections that tend towards gerrymandered "safe" districts, unlimited corporate financial support for campaigns.

That doesn't mean this particular action is a result of that corruption(though there's no reason to expect otherwise), just that those in office have a very strong interest in excusing the behavior being allowed to provide incentives to their sponsors.

Re:Why is this legal in the U.S.?

[smooth wombat]

It happens regularly in this country. The taxpayers get the shaft so private industry doesn't have spend their money. Our football teams (U.S. football, not your football), when they need a new stadium, threaten to take their team to another city unless the taxpayers cough up their money to build the new stadium and related matters, while the team continues to charge exorbitant prices.

This country wastes hundreds of billions of dollars each year by making sure private industry doesn't have to suffer the pangs of going out and getting financing for its projects like the rest of us do when we want to buy a home or do major repairs.

Don't forget we used several trillion dollars to prop up our banks and financial firms when, through their own incompetence, our financial system went into meltdown. These folks then used the taxpayer money to give themselves bonuses for the great job they did AND have told us taxpayers to go pound sand any time it is mentioned they should thank us for protecting them.

For all our talk about free markets and capitalism, we are incrementally closer to fascism than we are to a representative democracy. Industry, as a whole, gets what it wants, even if it means the taxpayers have to bend over and take it.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

Because a particular state or locality wants the many benefits that come from attracting a substantial business, so they try to make an attractive offer.

Re:Why is this legal in the U.S.?

[Carewolf]

as a non-american, your country probably has\makes the same deal with major industries, you probably just dont know about it

Yes, but it is bending the general rules that apply to everybody in a direction that is helpful to specific major industries. Making rules that only apply to a named individuals or entities is specifically outlawed by most constitutions. Sure there is still lobbying and the effects of it, but not this overt, out in the open, blantent corruption.

Re:Why is this legal in the U.S.?

[OhPlz]

Things like this are often done at the state level, so there's really no one to hold them accountable for it. The federal government can't go after a state for how it chooses to tax entities within its own borders. Surrounding states have no leverage either, other than to make similar concessions in a kind of bidding war. Happens constantly near the state borders. My state loses a lot of opportunities because the state just to our south will do anything a company asks. Personally, I think this is one of many barriers that start ups face and it reeks of excessive and inappropriate regulation. All companies should be on equal footing.

Re:Why is this legal in the U.S.?

[sycodon]

As an American, I find the multitudes of taxes, fees, charges, and other blood sucking extortion schemes run by Government to be bizarre.

Re:Why is this legal in the U.S.?

[wile_e_wonka]

This factory is expected to be gargantuan and will employ a great many smart people with good paying jobs. The factory will have a great many trucks going in and out. The money going to pay these people is coming from the income from a California company. So, well paid engineers will receive California money to purchase houses and furniture and food, etc. in NV. The engineers will pay sales taxes, property taxes, and will spend money in the casinos (I almost mentioned income taxes, until I remembered that NV doesn't have a state income tax--they have casinos instead). The calculus that NV is making with this deal is that the tax revenue it is giving up from Tesla will more than be made up for by the cut of the income they keep from the money that Tesla will pay to its employees and to NV truck drivers and suppliers, etc. The thought is that this will be a net positive for NV.

Re:Why is this legal in the U.S.?

[Virtucon]

Agreed. There's a billion ways to extract money from businesses. State and local governments have it down to an art. It's no small wonder why we see companies like Burger King crossing the border.

Re:Why is this legal in the U.S.?

[qbast]

As a non-American I find forbidding car manufacturers from selling directly to customers even more bizarre.

Re:Why is this legal in the U.S.?

[plover]

Don't forget we used several trillion dollars to prop up our banks and financial firms when, through their own incompetence, our financial system went into meltdown. These folks then used the taxpayer money to give themselves bonuses for the great job they did AND have told us taxpayers to go pound sand any time it is mentioned they should thank us for protecting them.

The only thing I would disagree with in this statement is the word "incompetence." It seems to me that any banker who could walk away with millions in bonuses after all that theft is an extremely competent criminal.

Re:Why is this legal in the U.S.?

[DrXym]

The US was bitching that Apple paid a really low rate of tax in Ireland just recently while Ireland was claiming it was all above board. I'm not sure if it was or not but Ireland has always insisted their taxation scheme is transparent - it's just that it allows big corps to launder their profits through a few countries to shake off the tax liabilities.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

In my country, this would really be illegal. Subsidies, government investments or loans are possible to some extent and with some conditions, but trying to exempt a specific company from the law would not uphold in court and it would lead to intervention by the antitrust authorities.

Re:Why is this legal in the U.S.?

[EdwardFurlong]

Yep, it happens all the time, company threatens to move out of state, states start competing to give the most tax breaks. In the large city where I live all the surrounding suburbs/ cities have agreed not to give tax breaks to businesses in each others area.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

because corporations buying, controlling, and/or bribing government is legal.... and then the opposite is true, government can bribe corporations into doing things too (in this case, build a factory in a specific state).

essentially the end result is, nevada tax payers are paying for most of the startup and construction costs of the factory.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

Is this really legal in the U.S.? Why?

Because voters don't care about blatant in-your-face open corruption. (Why do you think we have those laws in the first place, which Tesla wanted to be exempted from? Everything is negotiable, if you wave money in their faces. It's government, not Hollywood).

Go ahead, run on a platform of curtailing corruption. You'll lose 49.5% of the voters because you forgot to say that you hate gays and love Jesus, and you'll lose the other 49.5% of the voters because you forgot to say that you're going to forcefully micromanage the economy toward prosperity.

What we need are better lies during campaigns. We need people with a secret agenda of protecting the constitution and its ideals, but whenever asked, say they don't care, and explain that they're going to fix the economy, protect the second amendment but also get guns off the streets, hate various groups for being immoral or wrong-colored but will protect their rights, will end pollution and protect our industries but not interfere with the free market, will protect us all from ourselves but respect our privacy, and bomb terrorists but not get into wars. Their slogan should be "yes we can, but we promise we won't." Then on inauguration day, forget all that, and start repealing a couple centuries of ridiculous corrupt laws which serve no political purpose at all.

We need campaign "politics" but without any politics, switcharooed into politics without any "politics." That's the only way America will ever get anything done, at least with the kinds of voters we currently have.

Alternatively, we could start voting based on things that matter, but I think we've all agreed we don't want that level of responsibility.

Re:Why is this legal in the U.S.?

[SydShamino]

At least the tax breaks for Tesla make more sense than the ones for the film industry. States continuously try to attract film and television through massive incentive programs, but they only work if the state has one of the best packages at the time of filming a particular film or season.

Texas had a good package for a while, and things were filmed here. Other states got better, and shooting moved to places like Louisiana. Right now Georgia has a great package and things like The Walking Dead and Archer are shot there, but don't for a moment think The Walking Dead wouldn't move to Louisiana or Arkansas or northern California if the incentives changed.

It's much more difficult for Tesla to move their factory, since they'll have extensive immovable infrastructure costs. The film industry is used to packing up every 6-26 weeks as films or seasons end.

Re:Why is this legal in the U.S.?

[Jaime2]

The Federal government already has a model to fight this. They just raise federal taxes and send piles of money back to individual states as long as those states fall in line. Once federal taxes are raised and a portion on the state's budget is covered, the only choices are to lower state taxes or lose people. They already did it for highway and education funding. Of course, this has done more harm than good, so it's probably better to just leave states to make their own decisions as the Constitution says they should.

Technically, elections are supposed to be how to make people accountable. However, elections seem to be about gay marriage and religion nowadays.

Re:Why is this legal in the U.S.?

[Archangel Michael]

I'm simply amazed that someone who has thought out taxes and such as much as yourself, hasn't realized that Taxes are Regressive. ALL taxes are regressive.

I have no problem with people seeking to lower tax burdens any way they can, it is their duty to be as efficient as they can with their own money. This is the biggest reason why I think Government waste and inefficiencies should be eliminated by going private whenever possible.

My suggestion is this, Tax Breaks for any company doing public works to improve things like highway improvements to a business park, and government streamlining the process and providing all the permits and such, and letting people (sic) like Tesla build the infrastructure they need to build their businesses. In this case, the tax breaks would be in the form of income deductions for the capital improvements to the Highways.

IMHO, taxes are equivalent to punishment. The language used by the "tax the rich" crowd clearly indicates that they know it is a form of punishment. It should be the goal of govenment to lower taxes, whenever possible. When we realize that taxes are a necessary evil, we ALL should be working towards lowering them.

But here is the the thing, the rich will always tend towards tax avoidance, and the burden of taxes will always fall upon the vast middle and lower edges of society. Thus, taxes (all of them) are regressive.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

The US govt had/has nothing to do with this, its the govt of the state of Nevada.

Just like different EU states have their own tax laws and can make their own deals with companies, so can US states.
 

Re:Why is this legal in the U.S.?

[tomhath]

Why would a government not want to provide incentives? It happens all the time, everywhere. Sometimes it benefits one industry a subsidy (think "green" energy), sometimes it benefits one company (think Solyndra or General Motors), sometimes it actually makes sense to help a company or lure it into your region so you can charge other taxes (Tesla). Keep in mind that the US is a federation of states - not one monolithic government. This is a state (Nevada) which is competing with other states (California and Texas). Kind of like Ireland or Poland luring companies away from France.

Re:Why is this legal in the U.S.?

[weilawei]

As an American, I also find it really fucked up.

Re:Why is this legal in the U.S.?

[knightghost]

Most countries are just sneakier - they have government officials embedded in "private" corporations. France and China come to mind. Other countries indirectly support their home grown monopolies through technicalities.

Re:Why is this legal in the U.S.?

[Adriax]

If you're going to have crime then it's better to have it organized and out in the open. Easier to keep track of and keep from getting too out of hand.

Re:Why is this legal in the U.S.?

[irq-1]

This factory is expected to be gargantuan ... The thought is that this will be a net positive for NV.

But will it be better than funding a thousand smaller businesses? It'll definitely be more risky; more win or lose everything. Building infrastructure (roads/power/water) is the sort of incentive that *only* a government can offer. The justification for the tax breaks is nothing but economic speculation.

Re:Why is this legal in the U.S.?

[Archangel Michael]

The problem being, that should be the policy for all businesses, not just "substantial" ones. The fact that we are looking at incentives to entice people to come, while taxing people already here beyond their ability to pay, is simply stupid. I see advertisements for New York touting "tax free zones" and whatnot, which to me is simply implied admission that tax rates elsewhere and for existing NY businesses are way too high. But rather than realize what should be obvious, they keep taxing people out of the state, so that they can bring in new businesses.

It is stupid if you ask me.

Re:Why is this legal in the U.S.?

[OhPlz]

I don't disagree. I was just pointing out how this ends up happening for the non USians among us. I strongly support state's rights, it is how the nation was intended to work and it brings far more positives than it does negatives. The federal funding scam is abhorrent and the states need to find an effective way of fighting it. DC never will, it's how they force their views on states that don't agree with them. No politician elected is going to want to surrender power they just gained. Even Ron Paul participated in schemes he campaigned against, for "the good of his state".

Re:Why is this legal in the U.S.?

[Archangel Michael]

Well, go figure, taxes chase people away, and lack of taxes invites people to stay!

Re:Why is this legal in the U.S.?

[smooth wombat]

You can only lower taxes if you lower your spending. I have yet to see any government entity, Federal or State, do so.

Further, if you have read The Federalist Papers you will see both how naive Madison, Hamilton and Day were on the tax issue, as well as their ideas on taxes in general. They square, more or less, with how things are done in that those who make more should pay more not as a form of punishment but only because they can.

However, this should be taken in context as in their day the difference between the rich and everyone else was just as wide as it is today but it was somewhat easier for a person to move up the financial ladder than it is today for numerous reasons.

As to taxing the rich, see above. It's not a punishment, regardless of what some on the left will say, but only the fact that they can afford to pay more without that extra money affecting their lifestyles. Compare someone making $50K/year who has a 2% increase in their federal tax rate to someone making $250K/year. That 2% impacts them significantly more than the second person even though the amount is more in the latter case.

If we're going to lower taxes we need to make across the board cuts. There are no sacred cows. Reduce the Social Security programs, cut out military projects, stop most food and fuel subsidies, remove tax loopholes and tax benefits to a bare minimum (mortgage deduction, depreciation, etc), and so on.

At this point there is no other way to lower taxes other than cutting what we spend and having, in this case Nevada, spend over $1 billion of its taxpayers money does not help the matter. That lost money has to come from somewhere and it will not be made up by those employed at the plant, those who build the extra road and development, the ones who feed these people and everything else. It won't happen. A large portion of that money will never be recovered in any form.

So the argument becomes, if we want to lower taxes we have to cut our spending or if not, the tax code needs to be rejiggered so more money can be found to keep paying for all the subsidies and the like we keep spending money on.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

It's not an engineering plant, it's an assembly plant. Middle to low paying jobs for not smart people. Engineering is staying in Cali.

Re:Why is this legal in the U.S.?

[buchner.johannes]

"Under the EU's state aid rules, national authorities cannot take measures allowing certain companies to pay less tax than they should if the tax rules of the Member State were applied in a fair and non-discriminatory way,"

It is not possible to specifically write one company into the law as exempt. Now it has been done by making laws such that they only apply to one company, but these practices are being sued now.

http://www.usatoday.com/story/...
http://europa.eu/rapid/press-r...

So no, it is not common place outside the US, and certainly not as easy.

But the voting in the US is dominated by companies anyways, it is a very different climate and understanding of democracy than anywhere else.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

What we need are better lies during campaigns. We need people with a secret agenda of protecting the constitution and its ideals, but whenever asked, say they don't care, and explain that they're going to fix the economy, protect the second amendment but also get guns off the streets, hate various groups for being immoral or wrong-colored but will protect their rights, will end pollution and protect our industries but not interfere with the free market, will protect us all from ourselves but respect our privacy, and bomb terrorists but not get into wars. Their slogan should be "yes we can, but we promise we won't." Then on inauguration day, forget all that, and start repealing a couple centuries of ridiculous corrupt laws which serve no political purpose at all.

Some people think that what Rand Paul is up to. Rand Paul Vows to Repeal Every Prior Executive Order if Elected President

Re:Why is this legal in the U.S.?

[schlachter]

I think a factory this big is going to lead to a thousand smaller businesses being started in the area or moving from other locations to service Tesla itself and the large population of people that Tesla will employ.

Re:Why is this legal in the U.S.?

[Ixokai]

These things don't really apply to a specific company-- they're written like, "a company building a factory of X size employing Y people [doing Z sort of activity]" doesn't have to pay these range of taxes. The conditions are just specific enough that in practice it probably only applies to one company, but gosh darn if their competitor wants to come in and build the exact same thing they'd probably qualify for the breaks, too.

But why is this surprising? Government giving incentives (be they tax breaks or subsidies-- what's the difference, really? Forms of special protection/privilege is another form) to businesses they think will improve their economy is common everywhere, even throughout Europe. Its a question of just what form and how you do it.

Its only a bad thing if the state is acting in bad faith (ie, if the legislators are corrupt and taking bribes-- which they largely are the way elections/lobbying are working currently, admittedly). The state is doing a calculation. Take in a certain amount of reduced revenue usually for a temporary period to create X direct jobs, Y secondary jobs, and Z boost to the economy -- is the overall economic benefit to the state outweighed by the reduced temporary revenue YN?

It benefits everyone in the state for the state's economy to improve, after all.

Also, this has nothing to do with America/USofA. The states are sovereign within the fairly broad limits of the Constitution. Short of a state applying import duties to stuff coming in from other states (which is the right of the Federal Government to regulate via the Interstate Commerce clause) the federal government has very, very, very little it could say about how much or how a state taxes anyone.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

Are you in Europe? Ever heard of Airbus?

Re:Why is this legal in the U.S.?

[beltsbear]

They don't exempt one specific company by name. They exempt all approved battery producers with over 2000 proposed employees in a certain county or some trick like that. Is if fair? No. But that is how it is done legally.

Re:Why is this legal in the U.S.?

[mspohr]

In Nevada, they can't write a law exempting a specific company from taxes, etc. but to get around this they write the law with enough specifics to practically make it apply to only a specific company.
In Tesla's case, the new law says "any company" which invests at least $3.5 billion and manufactures electric cars... etc. so theoretically another company could qualify for the exemption but not likely to find another company which meets all the criteria.

Re:Why is this legal in the U.S.?

[mspohr]

I find it ironic that all of these "free market" people are so keen on providing subsidies, etc. to corporations. Rick Perry, a staunch "free market" Republican is famous for running around handing out Texas state government subsidies to hand-picked corporations. You can call this socialism, crony capitalism or fascism... it's all basically corrupt and screws the 99% in favor of the needy 1%.

Re:Why is this legal in the U.S.?

[Ralph Wiggam]

This is the correct answer. Northwest Nevada is currently an economic wasteland. The plan is to make it a central hub of the US battery design and manufacturing industry. That applies to a lot more industries than just electric cars. If that plan works, any tax revenue they give up in the short term will be more than made up in the long term.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

As an American, I also find it really fucked up.

Yep, I would so much rather have just leased my last car directly from the manufacturer rather than waste a whole day with a salesman at a dealership.

Re:Why is this legal in the U.S.?

[Hadlock]

In particular, Reno/Nevada offered this because it was beneficial to the state over the long term. Other states were also competing for this long term heavy industry by offering similar deals. The factory would have gone to another state if they had not offered this deal and then they would not be the national leader in battery manufacturing + all of it's cottage industries. The building the road part is genuinely a good idea as it adds value to their industrial park and is a good long term investment.

Re:Why is this legal in the U.S.?

[kilodelta]

Due to some verbiage placed into a Supreme Court ruling in the 19th century, corporations suddenly had the same rights as we flesh and blood entities.

The case in question is Southern Pacific Railroad vs. Santa Clara County in 1886. The head reporter for the court inserted language into the judgement that asserted corporations had the same rights as people.

That court reporter was one Bancroft Davis - may he be rotting in hell!

Re:Why is this legal in the U.S.?

[Archangel Michael]

You miss my point. The more people make, the more they can spend to avoid taxes, which includes moving. You are correct, in that the more people make, they more they can pay in taxes. but that is not how reality actually works. There is a trade off when taxes become so high, in the name of extracting more taxes from those that can pay, that they start spending money on tax avoidance, which leaves the real tax burden on those that are less able to avoid paying taxes.

When Warren Buffet pays less in percentage in taxes than his secretary, this is all the proof you need to realize that taxes, all of them, are regressive. EVEN taxes designed to be progressive.

And you are right about Spending. It should be the GOAL of government to spend less, and we should reward thrift in government. Unfortunately there is no incentive to spend less, only incentive to spend more. And we wonder why government spending is out of control.

Re:Why is this legal in the U.S.?

[jfengel]

There is a certain amount of lock-in to the film incentives, especially for TV series. Shooting a film requires a substantial amount of infrastructure, both personnel and equipment, which doesn't exist everywhere. These people are often not employed by the studio directly, but form local service companies. And where those companies exist, it's easier for more film projects to move in.

Even if Walking Dead were to pack up and move, Georgia may still have accomplished its goals with the subsidies. I know that Maryland is similarly pushing this. They developed a lot of that infrastructure a while back during the filming of Homicide in Baltimore, and there have been a lot of follow-on projects. They're now trying to boost that with House of Cards, which is an enormous undertaking that employs many hundreds of people (at least part time). The resources of material and knowledge built up in the local economy attract other film projects that can do the job faster and better because it's already here, rather than building it up from scratch.

Of course, producers know that, and will drive up the price as far as they can. Maryland nearly lost House of Cards in a kind of game of chicken; neither side wanted the production to move but each wanted to get a better deal. In the end, House of Cards largely won, and people in the local film industry are extremely happy about that. I don't know if it's really a good deal for the state in the end, but at least for the moment it's employing a lot of people, and since it's a series they'll go on having work to do for a while.

Re:Why is this legal in the U.S.?

[0123456]

And what happens to those 'thousand small businesses' when the subsidies go away and the subsidized company moves on to some other state that offers them a better deal?

Re:Why is this legal in the U.S.?

[lbmouse]

One word: Airbus

Re:Why is this legal in the U.S.?

[CoderFool]

Businesses are in business to make money. If they aren't making money then they are burning someone else's money to keep operating until that money runs out.
So they look at various ways to cut costs and reducing their tax bill is one just like you would look for cheaper places to shop and for more deductions on your own taxes.
If one city has a better tax deals or other incentives that reduce the business's bottom line compared to another city, where do you think the business will go to?
If one state has a better deal, where do you think the business will go to?
If one country has a better deal...you get the point. Think of all the production that got offshored in the last twenty or thirty years. Recently think of Burger King moving it's headquarters to Canada or Microsoft keeping some of its foreign revenue out of the US; all for tax purposes.
The only way to level the playing field would be to make tax breaks on other incentives illegal and to discourage offshoring by tariffs or taxes or fees. We have done this in the past and we can argue if it helped or hurt our economy at the time, like when we imported cars from Japan and tariffed them to keep our auto makers competitive.
But there is another level to this.
A business moves to a new area and has to be built, so there are construction jobs. Then it hires people to work for it. Their income is taxed in that state and city. They will use local shops and restaurants and so the state and city gets sales taxes, for example. The shops and restaurants will hire more people to handle more business and there are more jobs at a second level. And these new hires will also pay taxes into the city and states economy and shop locally etc. And if the product made is purchased nationally or internationally, then all that money gets back to that state/cities economy to pay for the infrastructure and wages and taxes etc.
So it looks like a win-win for the state and the city that gets the new business. And since cities and states and this country have to compete for these businesses, it is an incentive for these entities to not get too crazy with their taxes otherwise they lose.
How many businesses do you hear of moving out of high taxed New York and California going to low tax states like Texas or Utah or North Dakota or North Carolina? Right now, New York is advertising tax-free zones for new businesses for ten years. That says their usual taxes are too high. And what happens to all these new businesses when their ten years are up? Do you think they will stay or go seek greener and less taxing pastures?
You may complain about the unfairness of these businesses not paying taxes in these places, but then do you go shopping at Amazon or Walmart and try to get all the deductions you can on your own taxes? If so, then shut it.
No one listens if you are a "do as I say, not as I do" kind of poser.

Re:Why is this legal in the U.S.?

[tomhath]

They just raise federal taxes and send piles of money back to individual states as long as those states fall in line

That only works if the federal dollars are cost effective compared to the mandate. Obamacare goofed on that by assuming states would want to run their own exchanges. Plus if the feds get too heavy handed the constituents will vote them out - which is the main reason Ms. Pelosi is no longer Speaker.

Re:Why is this legal in the U.S.?

[tomhath]

If they're smart they follow the money. It's a free country.

Re:Why is this legal in the U.S.?

[alexander_686]

I would like to know which country you are talking about. Two other points.

First, there is a very thin line on helping an industry and helping out a specific company. I can think of many examples where a countries industrial policy to help an industry ends up only helping a single company.

Second, take a look some of the big projects in your country. I bet we could find some accommodations, in particular with infrastructure. For example, Tesla needs a road so Nevada is going to build it but it is not like Tesla is going to have exclusive use of it. Roads, rail, water, sewer, etc. are all common. Stuff like this I can kind of approve of – it is a chicken and the egg problem.

As an aside, I tend to think industrial policy is self-defeating and a waste of taxpayer's money. In America, it tends to be states racing to the lowest level.

Re:Why is this legal in the U.S.?

[SOOPRcow]

One could argue that he and his State are competing in a free market against other states. There are obviously benefits to having these business operate in your state. If the people of his State didn't support these deals they would almost certainly discontinue electing assembly people and governors who support it.

Re:Why is this legal in the U.S.?

[kelemvor4]

If you're going to have crime then it's better to have it organized and out in the open. Easier to keep track of and keep from getting too out of hand.

I'm sure John Gotti and a few others would agree.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

Well, go figure, taxes chase people away, and lack of taxes invites people to stay!

Or taxes give you Sweden and lack of taxes gives you Somalia.

Re:Why is this legal in the U.S.?

[nedlohs]

Right, so in your country they just makes the "some conditions" work exactly the same way (it's probably how they do it in Nevada too for that matter).

Just like when you are required to advertize a job position but already know who you want to employ - and so the job advertisement becomes amazingly specific on a bizarre mix of required experience.

Re:Why is this legal in the U.S.?

[Dr_Barnowl]

So you're saying that tax is unfair because rich people find loopholes to avoid paying it, and ways to have public money dropped into their hands, and you think the solution to this is to cut taxes?

Wow.

The tax-avoidance behaviour of the rich demonstrates very clearly the reason we need government, and public works, which is that corporations and more particularly corporate officers engage in behaviour that benefits themselves, at the expense of absolutely anyone else. Because the effect of money is to grant power, and the effect of power is to give you a greater ability to change the world according to your design, the natural outcome of this is.. well, the feudal system.

I agree that the squeezed middle and the poverty classes are suffering unfairly, but ithe reason for that is not that they are paying too much tax. The reason is the increasingly unchecked power of those who *don't* pay their taxes.

I say bring an ounce of honesty to it all. Since money is clearly a way to buy power, make it explicit. And *very* expensive. Deficit solved....

Re:Why is this legal in the U.S.?

[Anonymous Coward]

It's much more difficult for Tesla to move their factory, since they'll have extensive immovable infrastructure costs. The film industry is used to packing up every 6-26 weeks as films or seasons end

In Massachusetts the film credits are a 25% production credit, a 25% payroll credit, and a sales tax exemption. I think they have probably done the math on that and figured that this is a reasonable percentage of the costs which actually go into local salaries from out of state investment compared with movie stars and other itinerant workers who just follow the work from state to state and besides eating and staying in local hotels have little other effect on the local economy. But it is hard to just look at an itinerant movie production and see the money flows transparently... how much does really get spent locally and actually stay circulating in the local economy before the money gets profited off elsewhere or the people who made the money just take it back and spend it out of state when they leave?

Re:Why is this legal in the U.S.?

[mspohr]

Not exactly a free market when you are picking favorites and subsidizing industry. This really distorts the market.
As for "the people can just throw the bums out if they don't like the way they are spending their money"... this is remarkably naive.

Re:Why is this legal in the U.S.?

[Archangel Michael]

The tax-avoidance behaviour of the rich demonstrates very clearly the reason we need government,

So you're saying the PURPOSE of government is to tax people, especially the rich? Obviously you think taxes can be progressive to the point of punishing rich people for being successful. What you and people like yourself have failed to realize is that rich people are simply able to avoid taxes, and will do so whenever and however they can. This is not evil, or bad, or even wrong at any level.

However, the premise that taxes can ever be progressive is simply wrong. My prime example is the "luxury tax" enacted early in the Clinton years, that taxed, quite heavily, things like boats, airplanes and expensive cars and whatnot. The idea was to extract extra revenue from these "rich" people's toys. What ended up happening, in classic case of Tax Avoidance, was that section of the economy practically ceased to exist and large numbers of "average" americans lost their jobs, AND the revenue actually dropped. The rich simply stopped buying their toys.

This ended up hurting ONLY the middle class workers. The rich were still rich. The government didn't get the revenue they wanted, and it was quickly and quietly reversed.

The fact is, you tax the rich enough, they leave, and you don't get the revenue you wanted, and the people working to service the rich lose their jobs. Regressive. Period.

well, the feudal system.

We have that now. And it isn't just the "rich" it is those in power that we serve. And yet, you think bigger more powerful government will lesson our serfdom. I actually think big powerful government IS the problem, because of the very reason you say is the cause of the problem. It isn't the cause, it is a symptom of the problem, and making a bigger, more powerful government isn't the solution.

Money will always buy power, however, the role of governance is not to tax, as you suggested, the rich, it is to fairly govern power so that all are equal before government. This meas we have to stop group politics and go back to protecting the rights of the citizen(s). Abuse of power is always done in the name of the group.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

The state pretty much sold out it citizens like whores, and the citizens will be the ones having to pay higher taxes. Most of these states wouldn't be in budget troubles if they stop fuc**ng giving out tax breaks to million/billion dollar companies. And to top it all off and to make it more humorous Washington has the balls to bitch and moan over (or as I call PR pandering, simply said they'll do nothing about it) companies setting up overseas accounts to skip paying taxes.

Re:Why is this legal in the U.S.?

[schlachter]

Maybe some of them will grow and become successful and move out of state to chase their own tax breaks?

Anyways, small business get their own set of subsides from state and federal gov.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

I think you meant Arrow. Archer is an animated series.

Re:Why is this legal in the U.S.?

[Archangel Michael]

Yes, because comparing homogenous people group, in a small Scandinavian country to the melting pot country with 39 times greater population always works!

or .. Yes, because it is either total socialism or total Anarachy?

Nice Strawman though. Easy to setup, easy to knock down. I've seen the Somalian Strawman quite a bit, it must be popular with Liberals. Why don't you compare China or Cuba as perfect examples of socialism? Oh right, because they don't fit the narrative you're trying to create.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

A thousand Bunny Ranches... mmm...

Re:Why is this legal in the U.S.?

[Anonymous Coward]

The state pretty much sold out it citizens like whores, and the citizens will be the ones having to pay higher taxes.

I can't imagine that happening in a state with legalized prostitution and a world famous gambling mecca...

Re:Why is this legal in the U.S.?

[sumdumass]

But the voting in the US is dominated by companies anyways

What do you mean by this? Companies do not get a vote- they can contribute to campaigns and the people behind them can vote, but the companies do not.

Re:Why is this legal in the U.S.?

[mythosaz]

These poor Nevada citizens, winning the bidding war for thousands of new jobs, plus plenty of taxes than the ZERO they'd collect if Tesla went elsewhere.

Poor, poor, Nevada.

Re:Why is this legal in the U.S.?

[Wootery]

If you're going to have crime then it's better to have it organized and out in the open.

Nice job defending the indefensible.

Reminder: corruption is bad, and should not be normalised.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

This is legal because the U.S. can also screw Airbus by subsidising Boeings development costs and spying on negotations between Airbus and potential buyers and get away with it even though the WTO has ruled that the U.S. giving Boeing an unfair advantage is illegal? I must admit I do not understand.

Re:Why is this legal in the U.S.?

[sumdumass]

Further, if you have read The Federalist Papers you will see both how naive Madison, Hamilton and Day were on the tax issue, as well as their ideas on taxes in general. They square, more or less, with how things are done in that those who make more should pay more not as a form of punishment but only because they can.

You have to remember there was no income tax at the federal level back then. The argument was against the states paying the taxes based on the values of land owned within them. What they were pushing was that the tax was equally divided among it's populous with the division of slaves only being three fifths. So the government would say we need to raise $1000 in taxes, it would then present a bill to each of the states for their share based on the number of people living in those states. The states would then tax the people and pay it. Under the articles of confederation, the states would have to assess the value of all lands, buildings, and other improvements within their boundaries and then tax the owners based on a portion needed to pay the federal taxes. They were also pushing for the ability to tax imports and exports.

As to taxing the rich, see above. It's not a punishment, regardless of what some on the left will say, but only the fact that they can afford to pay more without that extra money affecting their lifestyles. Compare someone making $50K/year who has a 2% increase in their federal tax rate to someone making $250K/year. That 2% impacts them significantly more than the second person even though the amount is more in the latter case.

And the argument is convincingly made that $1000 is less than $5000. The antithesis of the impacts on lifestyles is that if more people had an impact on their lifestyle, they would be on the government to spend what is only necessary and avoid waste. In fact, that is one of the premises behind these so called fair tax schemes- people will be exposed to the cost of their wants from government and choose only the ones really necessary while avoiding the rent seekers and dependents.

Something like 43% of working Americans pay no federal income taxes and quite a few get back more than they paid in. It's kind of like having skin in the game. When they pay- when they are the owners, they tend to take better care of things. It's because when it breaks and comes out of your pocket, you notice it more than when someone just replaces it. If more people paid federal income taxes (Not social security or medicaid taxes), they might have more of an interest in their governance.

If we're going to lower taxes we need to make across the board cuts. There are no sacred cows. Reduce the Social Security programs, cut out military projects, stop most food and fuel subsidies, remove tax loopholes and tax benefits to a bare minimum (mortgage deduction, depreciation, etc), and so on.

It's a little more complicated then across the board cuts, but yes, all of the above need reductions.

Re:Why is this legal in the U.S.?

[sumdumass]

Within the state perhaps, but the picking is in bringing these companies to the states instead of others.

I do agree that it distorts the market though. It gives the illusion that these taxes and fees are necessary in the first place just to be forgiven when attracting someone from outside the system. If any state can actually give these subsidies and tax breaks, it is a sure sign they are taxing and charging too much already.

Re:Why is this legal in the U.S.?

[sumdumass]

The correct word would be American. Both USians and USers are idiotic and incorrect. I'm sorry you don't like fact, but facts are facts.

Re:Why is this legal in the U.S.?

[Bill, Shooter of Bul]

These are state taxes. As such, its up to each individual state to determine. I suppose its possible that some states do not do this, however the whole reason why it is done is due to competition amount the states for employers.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

Nice job defending the indefensible.

Reminder: corruption is bad, and should not be normalised.

Remember: people can think whatever they want and speak to that effect.

Re:Why is this legal in the U.S.?

[OhPlz]

Thank you Captain Killjoy.

Re:Why is this legal in the U.S.?

[Anonymous Coward]

cough cough flat tax cough.

Re: Why is this legal in the U.S.?

[Anonymous Coward]

How do you figure this, moron? Tesla is adding 6500 jobs (plus we'll need another 15000 support jobs to support the newly hired) to the hardest hit state for unemployment from the crash. This is also going to put Reno Nevada on the tech map in a big way.

How about doing some fact checking before having diarrhea of the mouth next time...

Re:Why is this legal in the U.S.?

[diamondmagic]

Corporations have been around long before the 19th century and as legal entities managed and owned by us individuals, they most certainly do enjoy the same rights to own property and conduct trade, and are held accountable to not violate the law.

That last part is kind of important. Corporations are considered persons because they're expected to follow the law, too!

Really, what do you think corporations are made of, woodland critters and robots?

Re:Why is this legal in the U.S.?

[Locando]

When they pay- when they are the owners, they tend to take better care of things. It's because when it breaks and comes out of your pocket, you notice it more than when someone just replaces it. If more people paid federal income taxes (Not social security or medicaid taxes), they might have more of an interest in their governance.

This strikes me as a presumption — got any data to back up that assertion? In my mind the causality could just as easily go in the other direction: When people are sufficiently financially shafted by the society they live in such that any kind of income tax is officially considered a hardship, they have less of a chance of believing (or of having the educational wherewithal to believe) that taking an interest in their governance could make two shits of difference in their lives.

What you're describing might make perfect sense for a lawn mower, but government isn't a lawn mower. If you can find any similarities, they aren't by default meaningful unless you can prove them so.

Re:Why is this legal in the U.S.?

[rpstrong]

No - Archer is produced in Atlanta, Arrow is filmed in Vancouver.

Re: Why is this legal in the U.S.?

[Anonymous Coward]

The ignorance on this thread is amazing. The state and it's citizens ate not "giving" anything to Telsa. They simply are not TAKING taxes from them for several years. Taxes they would not be receiving anyway if Telsa did not open a plant there.

In return, they get Telsa to build a plant that will bring jobs to the state for which people get paid to build the factory, supply goods and services to the factory on which taxes may be paid, and increase the economy (i.e.. make a bigger pie for everyone to share).

In other words, they dont TAKE for a limited time in order to RECEIVE immediately and for the long term.

If New Jersey wasn't full of stupid people, they would be offerring incentives instead of trying to regulate Telsa into moving out of the state.

Damn, but liberals are uneducated buffons.

Re:Why is this legal in the U.S.?

[macpacheco]

Except in the Giga factory announcement the State Govt executive coordinating the deal made the following clarifications:
1 - Tesla is 100% performance bound. They don't get a dime worth of benefits unless they deliver. The norm typically has been to give the benefits in hopes of the company getting them honors its word. This deal is the extreme opposite.
2 - The bill the governor's office is sending to NV legislature isn't Tesla specific.
Of course, I haven't read the documents. I'm just pointing out your utter ignorance for the announced facts.
I'm yet to see Tesla / SpaceX / Elon Musk make what could be called a dirty deal.
While most other deals are of the kind: Give me the benefits and I just might do what I promise.
Its a projected 3% increase in NV GDP @ a US$ 1 of incentives for each US$ 80 of economical benefits.
If you want to criticize in any meaningful way, you'll have to question the numbers instead.

Re:Why is this legal in the U.S.?

[Wootery]

Freedom of expression is not freedom from criticism, idiot.

Christ, will this moronic excuse for a counterpoint never die?

When I transition from "should not" to "I will have the government prevent you from saying that", then you get to mention freedom of expression.

Re:Why is this legal in the U.S.?

[macpacheco]

Europe in general does it all over. My Brazil does it. It's rather hard to find a country that doesn't do it.
Sad yes, but hardly a USA specific issue.
The reality is most countries / localities have way too many taxes, which puts them in a position to throw a bone to major new businesses to attract them, so that in time, they start paying the same taxes as others.

Connecting I-80 and U.S. 50

[James-NSC]

I live in the area and that's going to be a significant change to the landscape. Putting in what will eventually be a high-traffic road into an area (on the 50 side) with people who live there specifically to get away from this sort of thing. It's also going to cut one of the areas where wild Mustangs still roam in half.

...

Speaking of Mustangs, Mustang Ranch will be a big winner here as they will be located just a stones throw from the new Tesla factory....

Re:Connecting I-80 and U.S. 50

[afidel]

Mustang's aren't wild, they're feral, the species is not domestic to North America.

Re:Connecting I-80 and U.S. 50

[Anonymous Coward]

Yeah. Nothing like a little rumpy-bumpy after a hard day at the office!

Re:Connecting I-80 and U.S. 50

[sycodon]

So the view of the other single wide mobile homes and the washer dryer sets in the front "yard" will be obscured?

  Nevada, for the most part, is dirt and weeds.

Re:Connecting I-80 and U.S. 50

[afidel]

Woohoo, modded troll by an idiot for stating facts. Typical slashdot.

Re:Connecting I-80 and U.S. 50

[Virtucon]

Sorry, that's a nice area sure Mound House could use with some urban renewal.

Re:Connecting I-80 and U.S. 50

[Anonymous Coward]

Sorry, but you didn't state facts at all. You simply exposed your own ignorance.
Feral animals are a subset of wild animals. (Not all wild animals are feral, but all feral animals are wild.)
Specifically, feral animals are once-domesticated animals which have escaped, and gone wild. I'll leave it up to you to figure out how many generations you'll allow before the offspring are simply considered 'wild' instead of 'feral', but regardless of how long or short that period is, you were still wrong.

http://www.merriam-webster.com/dictionary/feral

Re:Connecting I-80 and U.S. 50

[schlachter]

...and how does a wild Mustang roam in half? sound painful.

Re:Connecting I-80 and U.S. 50

[wiredlogic]

The point is that they are an introduced species that doesn't belong there any more than camels in Australia.

Re:Connecting I-80 and U.S. 50

[tomhath]

Wild just means they live in the wild; whether the animal is indigenous or exotic is another question.

Suercaps

[epwpixieqneg1]

It is nice to porject numbers, but it is quite different how it will play out. With the advancment of the supercaps (in any shape and form, even as the entire car frame and the internal parts of a car) the need for baterries will be going sharply down. Why one needs to store energy in (a lot of) additional weight, if one can use the car construct as an energy storage itself.

Re:Suercaps

[afidel]

Supercaps aren't even really out of the early lab stage, their commercialization curve is at least a decade out.

Re:Suercaps

[Jade_Wayfarer]

Yep, and with the advancement of portable fusion reactors the need for supercaps will be going sharply down. And with the advancement of Star Trek-style transporters the need for cars will be going sharply down. And with the advancement of brain uploading technologies the need for physical transportation will be going sharply down. And so on...

But in reality, businesses will develop their fields until they become completely unprofitable. SSDs are completely mainstream now, but all major HDD manufacturers are still developing new HDDs, and do not seem to slow down.

And I don't see how these supercaps would outperform lithium batteries in terms of cost, efficiency, reliability and so on in the nearest decade or so. Of course, I want my goddamned flying car right now, but that doesn't mean that I wouldn't buy some nice Tesla in the meantime.

Re:Suercaps

[OzPeter]

Supercaps aren't even really out of the early lab stage, their commercialization curve is at least a decade out.

Given that super caps are currently being used in F1 racing (Tackling KERS in Formula One) I'd say that they are a little more advanced than "early lab stage". Although 10 years from F1 to commercial does seem reasonable.

Re:Suercaps

[dfsmith]

Using wikinumbers, here are some relevent energy densities.

• Li-ion battery: 100 to 265Wh/kg (900 to 1900J/cm3)
• Supercapacitor: 0.5 to 15Wh/kg (no volumetric density easily obtainable).

Here's a press release from some company that claims 60Wh/l (~200J/cm3) from their research supercaps.

The dealership model is broken

[MikeRT]

What dealerships should be demanding is that all car add-ons can be quickly assembled on the fly by their service people. That way, all the car company sends them is a vanilla model and the dealership can quickly upgrade the vehicle to customer taste. There should be only one fully loaded vehicle on the lot any time: the demonstration model. If dealerships could get that worked out and improve their reputation for treating customers, they might have some relevance in the future.

Re:The dealership model is broken

[Anonymous Coward]

Most options do not involve simple add-ons, but fundamentally different components or treatment (engine types, upholstery, paint colour). There is no such thing as a vanilla model.

What you propose is essentially moving the final assembly to dealerships. That is much less efficient, it would require massive dealerships with massive investments and the only benefit would be that cars can be delivered somewhat quicker.

Re:The dealership model is broken

[jellomizer]

True... However the dealership model is one of the few decent middle class jobs creator in the country that doesn't require a lot of education and/or certification.

Direct sale just means more profit to the big auto makers (Their price will not be lowered) and less people will benefit from the auto economy.

Re:The dealership model is broken

[tompaulco]

True... However the dealership model is one of the few decent middle class jobs creator in the country that doesn't require a lot of education and/or certification.

Direct sale just means more profit to the big auto makers (Their price will not be lowered) and less people will benefit from the auto economy.

Not just that, but warranty and aftermarket maintenance are performed by the dealerships as well. Without a dealership presence in the state, if your car is busted, then you are just out of luck, or you have to have your car shipped to the manufacturer to get it fixed.

Re:The dealership model is broken

[Talderas]

So what you want the dealership to have is a bunch of chassis & bodies for vehicles. No engine. No front seats, although rear seat could probably be pre-installed. I don't think it would have windows because of the option for tinted vs not. Your dash would be mostly missing. Quickly would be about four to six hours if you're really lucky and more likely than not you'd be waiting until the next day.

You're basically advocating removing all the time efficiencies that are gained by having an assembly line.

Re:The dealership model is broken

[Anonymous Coward]

However the dealership model is one of the few decent middle class jobs creator in the country that doesn't require a lot of education and/or certification.

BULL-motherfucking-SHIT! This is the biggest load of bolloxs I've heard since the Russians claimed they weren't invading Ukraine.

"It's a job creator" is a tired old line that I have zero tolerance for. Car dealers are parasitic middle-men that DO NOTHING BENEFICIAL for anyone involved except themselves. Why would we even want more slimey car salesman with no education/certification/training or skill other than their ability to swindle people into buying $50 floor mats? These are jobs that SERVE NO PURPOSE. And paying people to do it is a giant FUCK-YOU to the kids who knuckled down and did well at school.

And EVEN THEN, most of the money goes not to the workers, but to the owners of the dealerships who have so much spare money they can do the regulatory capture game and grease the local political gears.

Direct sale just means more profit to the big auto makers

Hey, maybe US car manufacturers will be able to compete again. Say hello to Detroit for me while you lament those giants of industry squeezing the lifeblood out of the poor hard-working car salesman.

Re:The dealership model is broken

[Kozar_The_Malignant]

>True... However the dealership model is one of the few decent middle class jobs creator in the country that doesn't require a lot of education and/or certification.

It used to be, but sadly that is no longer true. The owner makes good money, and so do the parts manager, shop manager and sales manager. Sales droids, for the most part, don't make a living wage and don't last very long, with the exception of maybe 10% of them. Parts guys don't make squat. The mechanics make a good middle-class income, but that work needs to be done anyway whether at the dealership or a private shop. Also, being a mechanic these days takes an AA degree and lots of certifications.

If car companies owned the retail outlets, it would all be pretty much the same, except the owner wouldn't be getting rich. If one guy owns half the Ford dealerships in the state, how is that better than Ford Motor Co. owning them?

Re:The dealership model is broken

[Kozar_The_Malignant]

True... However the dealership model is one of the few decent middle class jobs creator in the country that doesn't require a lot of education and/or certification.

Direct sale just means more profit to the big auto makers (Their price will not be lowered) and less people will benefit from the auto economy.

Not just that, but warranty and aftermarket maintenance are performed by the dealerships as well. Without a dealership presence in the state, if your car is busted, then you are just out of luck, or you have to have your car shipped to the manufacturer to get it fixed.

I'm pretty sure that a factory owned retail outlet would provide pretty much the same level of service as an independently owned dealership.

Re:The dealership model is broken

[Anonymous Coward]

aftermarket maintenance

That is a fantastic way to say "oil change". Thank god we have these precious dealers to bequeath unto us their holy ritual that we mere mortals are unable of performing. And let us not speak of those ne'er-do-well dens of scum and villainy known as ANY OTHER MECHANIC.

Re:The dealership model is broken

[ArcadeMan]

Paint color -> e-ink color. There's no matrix involved to address individual pixels, so I don't know why this hasn't happened yet. Maybe not with cars, but at least with phone back shells, etc.

Re:The dealership model is broken

[Anonymous Coward]

It means you can go to the automaker's website, pick the trim and color, and order from there, instead of ending with Please visit a dealer near you nonsense; you were trying to avoid the whole dealer-took-my-car-keys-bs in the first place. The dealership model is a relic from the Reagan years so that his buddy (a car dealer) would not be out of work

Re:The dealership model is broken

[Anonymous Coward]

Yeah, because if you aren't *selling* cars, it's impossible to do maintenance and repair on them.

Most dealerships don't make their business on car sales. They make their money on repair, service, etc. They thrive on the misconception people have that only the dealer can perform warranty work or that anything done by some entity other than the dealer voids the warranty (it doesn't). A dealer once tried to tell me that if I didn't use the car maker's oil and get serviced by at the dealership I'd void my warranty. When I informed him that he had just make a fraudulent statement, he shut up though.

ahhh yes....

[Connie_Lingus]

I love the smell of American plutocracy first thing in the morning!

On thing is fore sure.

[Anonymous Coward]

Harry Reid is smiling.... all the way to the bank...

Re:On thing is fore sure.

[dreamchaser]

As much as I detest the man, Harry Reid has nothing to do with the State Legislature, other than perhaps some back channel clout with certain lawmakers. This is a State thing, not a Federal thing.

Re:On thing is fore sure.

[binary paladin]

And thus far the only people complaining are some of the Democrats anyway.

You know who else is going to be smiling all the way to the bank? All the people working at Tesla and all the people collecting the money they're spending in northern Nevada.

Comment removed

[account_deleted]

Comment removed based on user account deletion

Right to exist?

[Anonymous Coward]

So does Tesla continue to get the protection of law without the associated responsibilities, or is it now Vogelfrei?

I have no problem with exempting Tesla from taxes, as long as no officer of the law will come down to stop me when I walk into their factory and take their stuff.

Link to TFA is paywalled.

[TechForensics]

Link to TFA is paywalled.

I never liked those state/city incentives

[gurps_npc]

Not the legal protections (those are fine), I mean the monetary incentives.

They are anti-competitive, and bad for the economy.

Frankly, the federal government should put a user fee on them at a prohibitive rate - i.e. 50%, paid out of the money given.

That is, if a state wishes to give a benefit worth $100 million to a company, that company owes $50 million paid immediately.

These things are usually paid to convince someone to build X in Y state, rather than Z state. It is almost never paid to get something built inside the USA, rather than outside the USA.

As such, any benefit to that particular state is outweighed by the loss to another state.

It is even worse when it comes to sports teams. Then, usually the teams make out like a bandit without in any way increasing the economy of the state (in particular, big cities will always get sports teams, even if the city refuses to build a stadium, because the city is where the CUSTOMERS for sports teams live. People in NYC are not going to suddenly decided to root for and see baseball in New Jersey if the Yankees and Mets leave the city. Not even if the stadium is build in Hoboken. Instead, some other team will build a stadium in New York, earn a ton of money from New Yorkers coming to them, then buy good players and suddenly everyone will be rooting for the NYC Metros, or whatever they call themselves (just like New Yorkers don't still root for the Dodgers, after all.)

Re:I never liked those state/city incentives

[WillAdams]

Now, now, you can't go criticizing sports teams when the N.F.L. is a non-profit organization which exists for the good of the game and to enhance the beneficial effects which the game has on society, right? I'm sure the goals of the other sports organizations are as noble and that their bookkeeping is similarly transparent.

I'm sure that it's some bizarre, pestilential outside influence which has banned community ownership of teams (save for the grand-fathered-in Greenbay Packers) and required that a minimum percentage of a team be owned by a single individual.

Re:I never liked those state/city incentives

[godrik]

There is a similar law (in spirit) in North Carolina about public universities trying to hire a university professor from another public university. You can not make an offer more than xx% over what they currently have (I think it is 10%). The reasonning is similar, it cost more money to the state to get the same person they were already having at a similar position.

Re:I never liked those state/city incentives

[gurps_npc]

I don't find that to be a similar case

The universities are hiring the professors, the professors would not work if they did not get paid by the state. Passing a law about two parts of an organization not competing for the individual is a very questionable act.

In my case, the states are BRIBING companies and sports teams that would still work if they were not being paid by the state, they would simply work elsewhere. The companies are not supposed to be paid by the states, they are supposed to get money from their customers.

My law is about stopping governments from bribing people, where the law you are talking about is stopping governments from competing with each other.

Re:I never liked those state/city incentives

[Kozar_The_Malignant]

...

I'm sure that it's some bizarre, pestilential outside influence which has banned community ownership of teams (save for the grand-fathered-in Greenbay Packers) and required that a minimum percentage of a team be owned by a single individual.

No, no. It's patriotism. Community ownership is COMMUNISM, and totally un-American. It says right there in the Bible and the Constitution, that the individual profit is sacred. Besides, no fat-cat wants to live in Green Bay, where you get sucked dry by 12 pound vampire mosquitoes in summer and get your nads frozen off in winter.

Re:I never liked those state/city incentives

[fulldecent]

Please look closer. The reason why states are discounting their "prices" is because the prices are higher than the economic cost and value. There is zero economic cost to the state of a corporation generating income in a specific location. The solution is to eliminate corporate income taxes.

Re:I never liked those state/city incentives

[gurps_npc]

Your belief, while common, demonstrates general ignorance of economic theory.

First and foremost, most businesses do not make decisions about where to build factories, etc. on taxes. Otherwise NYC and California would be economic backwaters, rather than the powerhouses they are.

Note, corporate headquarters is different, I am talking about manufacturing factories and customer facilities for sports.

Sports stadiums are NEVER built based on tax rules, they are ALWAYS built based on customer location. It doesn't matter what the tax rules are, a stadium will be in NYC. It doesn't matter how much cash Boise City, Idaho offers, no national sports team will ever call them home. They are just too small a market

As for factories, the far majority of the time, taxes are such a small consideration, compared to prevailing wages, cost of real estate, cost of water, cost of power, skill level of local population, etc. etc. that taxes will almost NEVER be the deciding factor.

This is mainly true because despite conservative propaganda, actual, real corporate taxes in the US are very low. In addition, where it is a factor, it is FEDERAL tax that matters, not the State Tax. As such, states simply can not offer enough of a 'tax break' to bring a business to their state.

So, tax cuts...

[spud_boy_65986534]

to attract specific companies like Tesla provide benefits to the economy on a ratio of something like 80:1, but if a political party (let's say the GOP) proposed general tax cuts that apply to everyone, it would be mocked and pilloried by the commie libs who post here. Why?

Re:So, tax cuts...

[Jeremi]

but if a political party (let's say the GOP) proposed general tax cuts that apply to everyone, it would be mocked and pilloried by the commie libs who post here. Why?

Commie lib here: because the GOP's tax cut proposals always amount to massive cuts for their hyper-rich campaign donors, coupled with a fig-leaf of minor tax savings for everyone else, followed one year later by the inevitable budget crunch

that then impacts the quality of life of everyone except those who can afford to seal themselves away from society. It's a grift -- everyone but the GOP's campaign funders end up poorer afterwards.

Re:Link to TFA is *not* paywalled.

[crow]

It loads fine for me.

Many news sites give you a limited number of free articles. This may be one of those. Typically after you hit the limit, your options are:

*) Pay money
*) Don't read the articles
*) Clear your cookies
*) Use private browsing mode

Re:Suercaps - better link

[OzPeter]

Supercapacitors

A Billion Dollars?

[Jaime2]

How could it possibly be worth a billion dollars to Nevada? It won't bring very many new people into the state because Nevada already has a higher unemployment rate than surrounding states. It won't generate direct tax revenue due to exemptions. Their only hope is that it creates a geographic area where an industry collects, like SIlicon Valley or the Research Triangle. But, that is just an arms race against other states, so it just wastes money from a macro perspective.

Re:A Billion Dollars?

[brunes69]

Money flows. 100,000 people working at a factory all need to spend the money they earn on consumer goods, food, and housing. All of that money makes a lot of taxes for the state, even if Tesla is not paying much tax.

Re:A Billion Dollars?

[tomhath]

Nevada already has a higher unemployment rate than surrounding states

Bingo. Just the savings in unemployment compensation and Medicaid that Nevada pays will be a big chunk of it.

Re:A Billion Dollars?

[Jaime2]

To make their billion dollars back in sales tax, they would have to generate an additional 20 billion dollars in local sales. That's $20K for each of the 100,000 workers, which is six months of the Nevada average gross wage. If the payoff is longer than ten years, then it would be a poorer investment than doing almost anything else with that money. To put it in perspective, Nevada collected less than $20 billion in total taxes in 2012. This one business would have to grow the economy of the entire state by 5% to hope to break even.

One thing they do have on their side is that most of the batteries manufactured at the plant will be sold outside Nevada, so it will surely pump money into the economy. But, I doubt it will pump enough money in to make up for the billion dollar tax break.

On a side note, Nevada has neither personal income tax nor corporate tax, so it's puzzling what the billion dollars in taxes would have been that they are exempted from.

Re:A Billion Dollars?

[Jaime2]

Unemployment benefits are paid from a pool that is funded by employers.

Getting a few thousand people off Medicaid is going to save them money, but a billion dollars is a huge amount of money. Show me some math that shows they will even come close to that.

Re:A Billion Dollars?

[CaptainLard]

Its not like Nevada is paying Tesla a billion dollars. From the summary it only looks like the state is building a road at their own expense. If all the tax rates stayed in place with the factory, then sure they'd have a ton of extra money. But without the tax breaks, Tesla would have likely chosen some place else so nevada wouldn't get that money anyway.

You're right about the big picture though. I'd really like to see a detailed analysis of tax havens to find out if it really helps out anyone in the country besides a few shady politicians at the top. Last I heard, Ireland, etc, weren't doing so hot economically.

Re:A Billion Dollars?

[Anonymous Coward]

FTA: The gigafactory is expected to create 6,500 direct jobs and thousands of indirect jobs.
What's this about 100K jobs?

Re:Link to TFA is *not* paywalled.

[CanHasDIY]

I've found that clearing the cache + changing user agent also works pretty well at bypassing article read limits.

Statists

[Anonymous Coward]

B-but everyone else is getting shook down by the protection racket!

Monkey Experiment Banana

Perspective

[Anonymous Coward]

$725 million in tax breaks is about $1,650 for each child in Nevada public schools, or about $10.6 million for each public school in the state.

Re:Perspective

[Anonymous Coward]

All to subsidize people with mid-six-figure incomes to buy low-six-figure cars.

Steal from the poor, give to the rich?

Re:Perspective

[spud_boy_65986534]

Yep. Just imagine how many Directors of Diversity and Inclusion you can hire with $10.6 million.

So, tax cuts...

[Anonymous Coward]

I love Tesla but this deal is clearly a wasteful boondoggle at something between a 200K - 300K subsidy per $15-$25 dollar an hour job created. Even if everything goes well it would take 20-30 years to make that back for the state. Also battery factories are pretty self contained so there would be few if any spin off businesses that would be part of the supply chain . Top it off, all the R&D and good paying jobs at the company will stay in California.

The 80:1 figure is pure rhetoric... Historically the best corporate welfare pays at most 2:1 and on average is something like .8:1

Wow!!! Nevada is screwed!

[LostMyBeaver]

Laws should be made against building battery factories on American soil. Even more so, laws should be made against selling batteries unless that same company takes responsibility and completely recycles or reclaims all components of said batteries. Lithium is widely available from used cells, but it's cheaper to buy it new, so they just store it in barrels and produce waste.

How about this? When will Tesla research and deliver on an alternative to non-recyclable tires. Does Tesla have a policy stating they will only use technology which fucks our planet for millions if years?

Not for me

[nospam007]

"Direct Sales OK Baked Into Nevada's $1.3 Billion Incentive Deal..."

I like my deals cooked, not baked.

If you build it,

[Higaran]

they will come.

California incentive

[swell]

In a recent debate with the Republican candidate for governor, Governor Brown had to defend his business incentive policies. Particularly the loss of the battery factory. He simply stated that the incentives that Tesla demanded were too much of a burden on taxpayers in CA. Now we know that he was probably correct.

What the fuck.

[Anonymous Coward]

then it would be a poorer investment

Seriously.

What the fuckity fuck?

You people are fools.

Nevada is properly looking at the welfare of her citizens. The lot of you are incorrectly splooging with the wisdom of daytrading housewives.