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They chose to use tax money to support one business over the existing businesses in the state. If it requires tax breaks to foster businesses than perhaps they

They chose to use tax money to support one business over the existing businesses in the state. If it requires tax breaks to foster businesses than perhaps they need to work on the whole system and not pick a specific business.

prostoalex 11y ago
> They chose to use tax money Non-existent tax money as of now. The way the incentives work, Tesla would have to generate enough business activity (revenues, sales, profits) to accrue that tax liability. It's quite possible that business activity will never materialize, the tax liability will fail to accrue, and the incentive won't even have a chance to kick in. The state is making a bet that (a) such activity will materialize, (b) once materialized, it will draw such a high amount of ancillary business (suppliers, resellers, distributors, etc.) and residential (property, shopping) activity that it will more than compensate for lost revenue. The bet is not completely uneducated as case studies from the past (mainly around Texas cities attracting Nissan and then Toyota away from Californian cities) suggest that overall it's worth it.
- protomyth 11y ago
  It may make them money, but they picked a winner. I find governments doing this type of stuff just encourages churn of companies. If anything would improve the overall business climate in the US, making all of these deals illegal would be a good first step.
  - prostoalex 11y ago
    The "pick" though was 1 out of 1, and I mentioned in another comment how one could sort of replicate it by moving into a state that has 0% sales tax to boot (finding a cheap property that would not generate a large property tax bill would be step 2). It also seems that Nevada extended a similar deal to Faraday, and actually went out of their way to attract them http://www.autoblog.com/2016/01/28/nevada-lawmakers-spent-250000-lure-faraday-future/ http://www.autoblog.com/2016/01/28/nevada-lawmakers-spent-25... at which point I get what you're saying - why doesn't Nevada just pass a universal incentive for certain industries instead of operating on a company-by-company basis? I agree on the churn, though, in dense populated environments big retailers are known to close up shop in one town to reopen it across the street in different town with different plaza, just because the second town offered a better tax deal. > in the US, making all of these deals illegal would be a good first step It might improve the overall business climate in China though. Once the supplier chain is set up and functioning, it's hard to move it elsewhere http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=1&pagewanted=all http://www.nytimes.com/2012/01/22/business/apple-america-and...
    - protomyth 11y ago
      If you want to read an example of the churn check out the FX industry and incentives. Technically, the pick was tailoring laws for 1 company versus all the other companies in the state. Is there no company in the state that could benefit more than Tesla and produce growth with changed rules? Even if there was, I still believe this dealing making should be illegal since it encourages corruption and is unfair to everyone else. This is the type of thing that has politicians / political staff members "retiring" to cushy jobs in the private sector.

prostoalex 11y ago

> They chose to use tax money Non-existent tax money as of now. The way the incentives work, Tesla would have to generate enough business activity (revenues, sales, profits) to accrue that tax liability. It's quite possible that business activity will never materialize, the tax liability will fail to accrue, and the incentive won't even have a chance to kick in. The state is making a bet that (a) such activity will materialize, (b) once materialized, it will draw such a high amount of ancillary business (suppliers, resellers, distributors, etc.) and residential (property, shopping) activity that it will more than compensate for lost revenue. The bet is not completely uneducated as case studies from the past (mainly around Texas cities attracting Nissan and then Toyota away from Californian cities) suggest that overall it's worth it.

protomyth 11y ago
It may make them money, but they picked a winner. I find governments doing this type of stuff just encourages churn of companies. If anything would improve the overall business climate in the US, making all of these deals illegal would be a good first step.
- prostoalex 11y ago
  The "pick" though was 1 out of 1, and I mentioned in another comment how one could sort of replicate it by moving into a state that has 0% sales tax to boot (finding a cheap property that would not generate a large property tax bill would be step 2). It also seems that Nevada extended a similar deal to Faraday, and actually went out of their way to attract them http://www.autoblog.com/2016/01/28/nevada-lawmakers-spent-250000-lure-faraday-future/ http://www.autoblog.com/2016/01/28/nevada-lawmakers-spent-25... at which point I get what you're saying - why doesn't Nevada just pass a universal incentive for certain industries instead of operating on a company-by-company basis? I agree on the churn, though, in dense populated environments big retailers are known to close up shop in one town to reopen it across the street in different town with different plaza, just because the second town offered a better tax deal. > in the US, making all of these deals illegal would be a good first step It might improve the overall business climate in China though. Once the supplier chain is set up and functioning, it's hard to move it elsewhere http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=1&pagewanted=all http://www.nytimes.com/2012/01/22/business/apple-america-and...
  - protomyth 11y ago
    If you want to read an example of the churn check out the FX industry and incentives. Technically, the pick was tailoring laws for 1 company versus all the other companies in the state. Is there no company in the state that could benefit more than Tesla and produce growth with changed rules? Even if there was, I still believe this dealing making should be illegal since it encourages corruption and is unfair to everyone else. This is the type of thing that has politicians / political staff members "retiring" to cushy jobs in the private sector.