Posted on 01/18/2016 10:14:56 AM PST by BenLurkin
Tesla made a raft of promises when it accepted a hefty tax-incentive package to build its Gigafactory battery plant just outside Reno, Nevada. While the building itself is coming together ahead of schedule, one Reno newspaper discovered that other parts of the deal have yet to live up to the government's expectations.
The Reno Gazette-Journal crunched some numbers, and it discovered that several projections are missing the mark. The Gigafactory, built in partnership with Panasonic, was supposed to produce 700 permanent jobs by the end of 2015, for example. In reality, fewer than 100 have been hired. The company's payroll for the project was expected to be $40 million in that same time frame. Currently, that figure is sitting at $2.9 million
(Excerpt) Read more at cnet.com ...
Question is: were those projections actionable? as in “we’ll hire 700 people in 2015, or agree to lose X% of tax breaks”.
If no consequences were agreed on, they were just persuasive speculation.
You’re sounding like my son in law school. 😵
But the ultimate value of the gigafactory’s tax abatements and credits are tied directly to how much the companies invest in the project. The original $1.25 billion estimate of the 20-year tax incentive package was based on an $11 million project. If the investment doesn’t reach that high, Tesla won’t earn as much in tax abatements.
And if the project doesn’t reach $3.5 billion in 10 years, Tesla will have to pay back all of its tax breaks it has already earned along the way.
They never are. These incentives never work, but states keep on making them because “everyone else does”. The same crappy reason no decent parent would accept from a kid is used to justify the waste of millions of taxpayer dollars in every state, every year.
Anyone who cuts a deal with Tesla is either a crook or a jerk.
Ah, but where is the alleged “waste of taxpayer dollars”?
If the jurisdiction in question is writing checks, yes.
If the jurisdiction in question is cutting taxes, no - that’s lowering taxes, a core conservative/constitutional goal, insofar as there is intense pressure from the Left to raise taxes.
If you use the mortgage interest tax credit or take any other deductions, you can’t complain about someone else negotiating non-refundable tax credits.
Don’t confuse tax credits with redistribution of wealth.
If the jurisdiction is cutting taxes for one company and not across the board - it's called crony capitalism and surely the taxpayer will end up footing the bills.
What protections are written against bankruptcy? What assets will the state get?
I have never heard of such protections. These are “gifts” for lack of a better word. Companies promise to try and the money is theirs to keep regardless of whether or not they meet the goals that are set.
As I said, having discussed this with economic developers and state legislators, no state is willing to stop because they’re confinced another state will get the jobs and taxes. As a result the “winner” is just the leader in what often becomes a race to the bottom. If a state were to ask for a loan agreement or contract to be signed, I’m sure the company would simply walk and cut a deal with another state, as it’s a buyers market.
These are "gifts" for lack of a better word.
Really? Dig out your thesaurus try harder.
How does a reduction in taxes on possible future profits count as a "Gift"?
A couple of reporters from the Reno paper were nearly flattened (as in run over) by Tesla’s ‘security’ people after they breached a fence at the site (they were hospitalized) - obviously they were tipped off about odd happenings there, or they wouldn’t have taken that chance...looks like they were on to something.
Note to Tesla: Running over reporters will not necessarily get you good copy.
Either those who were doing the projection don’t have a clue and got it wrong or Tesla is behind schedule but will catch up later on. So what’s the big deal?
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