CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, SEPTEMBER 30, 2014, OR THEREAFTER
FOR RELEASE: TUESDAY, SEPTEMBER 30, 2014, OR THEREAFTER
BY THOMAS D. ELIAS
“TESLA ‘LOSS:’ CALIFORNIA EVADES A MASSIVE GIVEAWAY”
There are very few Americans who need
welfare and government support less than Elon Musk, the hyper-creative head of
the Tesla Motors electric car company, the Space X rocketry and satellite
hoisting firm and Solar City, a leader in renewable energy.
And yet…almost no one gets more
government benefits and business. The principle client of Space X, of course,
is the National Aeronautics and Space Administration, better known as NASA,
which depends on private enterprise – and Russian spacecraft – now that it has
retired America’s space shuttle fleet.
Solar City thrives because homeowners
are subsidized when they put photovoltaic panels on their roofs.
And then there’s Tesla, lately the
orchestrator of a five-state battle over who could be exploited the most. Some
states – notably Texas – call the handouts they give entrepreneurs like Musk
“incentives” and governors like Brian Sandoval of Nevada and Rick Perry of
Texas pride themselves on attracting additional jobs to their states this way.
But the questions remain whether
corporate welfare is right, whether its costs outweigh benefits and whether
companies getting it could survive without.
Would Tesla’s Model S be as popular as
it is without the huge panoply of benefits it comes with? From the start,
buyers of these toys for the wealthy (there’s plenty of room to question
whether well-heeled buyers deserve welfare) got $7,500 credits on their federal
tax returns. California has chipped in an additional $2,500 state rebate. That
knocks $10,000 off the price tag.
Owners also can use carpool lanes on
freeways when alone for years to come, and in California can compel their
condominium or homeowners associations to allow them to install electric
charging stations even if they don’t fit the aesthetics of the development.
Anyone who thinks those incentives
don’t boost sales is simply naïve. The company also got a sweetheart deal when
it took over the abandoned General Motors/Toyota factory in the East San
Francisco Bay city of Fremont.
All that didn’t stir any loyalty in
Tesla when it sought a location for a planned 6,500-job lithium ion battery
factory. It landed just outside Reno after California didn’t match Nevada’s
20-year abatement of all sales tax linked to the plant, a property tax
exemption for the next 10 years, reduced business and corporate taxes – and up
to $150 million in cash from the state if the company eventually invests an
expected $5 billion in the factory.
That adds up to $1.3 billion in cash
and tax credits for a plant expected to hire 6,500 persons and create about
10,000 other permanent jobs. So for the privilege of hosting Tesla, the state
of Nevada will pay well over $78,000 per job created. How long will it take to
recoup that expense? And what about jobs lost when Nevada reduces its film
production tax credits to help pay for Tesla’s welfare?
Nevada has never paid anything like
that to casinos or other big employers. Nor has California ever paid a company
so much. Plus, if Tesla doesn’t pay local property taxes, who will build
schools and hire teachers for children of the new workers. Who will maintain
the roads they’ll use, or their water and sewer systems? No one knows.
The larger question, of course, is
whether any government should make such corporate handouts. Whenever American
companies encounter similar subsidies of goods from other countries like China,
Russia and Sweden, they gripe about unfair competition.
In fact, the subsidies to Tesla might
be seen as unfair competition for other automakers – except that outfits like
Nissan, Toyota, Volkswagen and Mercedes Benz have gotten similar but smaller
welfare packages from Tennessee, Alabama and Mississippi. Why do you suppose
Toyota is moving its national headquarters from Torrance to a suburb of Dallas?
You can be sure it’s not because Japanese executives like the ultra-humid Texas
weather or the frequent hurricanes.
The real question, of course, is
whether any state or national government should allow itself to be extorted
like this by any company. For sure, the way it affects fair competition among
cars and other products is a perversion of the capitalist system.
But don’t expect Musk or any other
corporate kingpin to stop seeking big government bucks in exchange for moving
jobs around. As long as politicians vie for the privilege of handing out
taxpayer money, this slimy practice will continue.
-30-
Elias is author of the current book “The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It,” now available in an updated third edition. His email address is tdelias@aol.com
Elias is author of the current book “The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It,” now available in an updated third edition. His email address is tdelias@aol.com
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