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

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.?

[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.