From left, Nevada Gov. Brian Sandoval; Steve Hill, executive director of the governor’s office of economic development; and Telsa Motors CEO Elon Musk talk to the media in Carson City, Nev. (Cathleen Allison, Associated Press)
On September 5, 2014, Charles Fleming writes in the Los Angeles Times:
Tesla Motors’ electric car battery plant will be worth $100 billion to the state of Nevada, according to the men who crafted the deal.
Nevada Gov. Brian Sandoval and Tesla Chairman and Chief Executive Elon Musk said Thursday that the Palo Alto-based company’s lithium-ion battery plant will prove a boon for both sides, including billions in investment from Tesla and billions in tax breaks from Nevada.
The proposed $5-billion “gigafactory,” where Tesla will produce batteries in partnership with Japanese electronics giant Panasonic, will be constructed on property known as the Tahoe Reno Industrial Center near Sparks, in northern Nevada.
Tesla purchased the land and broke ground there in June, halting construction before actually pouring concrete while negotiations with the state continued, said a source with knowledge of the talks who was not authorized to speak publicly.
Trumpeting the news at a press conference in Carson City, Sandoval said the deal would “change Nevada forever … and stream billions of dollars into our economy.”
Hearkening back to the state’s pioneer beginnings, and calling Tesla’s Musk “a rare visionary who has the courage to reach beyond and to convert the unthinkable into reality,” Sandoval said: “We are determined to be a major part of moving our country and our global economy forward. Ladies and gentlemen, we are ready to lead.”
Under the terms of the proposed deal, according to Nevada documents, Tesla would receive up to a 100% tax abatement for the next 20 years for all sales tax, and up to a 100% tax abatement for the next 10 years for all real property tax, personal property tax and modified business tax.
Tesla would also receive a transferable tax credit of 5% of the first $1 billion it invests in the state, and of 2.8% for the next $2.5 billion.
The governor’s office said the deal would include a $5-billion investment over the next three to five years, and a subsequent investment of an additional $5 billion over the following five years.
In addition to 6,500 factory jobs, at $25 an hour for each position, the Tesla deal would create 16,000 other jobs — including 3,000 construction jobs — while increasing state employment by 2% and regional employment by 10%.
The state concluded that the Tesla deal would have a $1.9-billion “total fiscal impact” over 20 years, including an infusion of $430 million in state revenue, $950 million in local revenue and $500 million in K-12 education revenue.
The deal represents a win for the state, one analyst said, but at a cost.
“We have reached an agreement with the Tesla motor company, subject to legislative review and approval, that will enable Tesla to build the world’s largest and most advanced battery factory, right here in the Silver State,” Sandoval said.
Nevada beat out California, Texas, New Mexico and Arizona for the Tesla factory. California Gov. Jerry Brown and Sacramento legislators had lobbied fiercely to keep the electric car components in the state, where Tesla already builds and assembles its popular but expensive electric cars.
“I’m devastated for the 6,500 families who won’t have the chance at these jobs unless they move to Nevada,” said state Sen. Ted Gaines, a Republican representing the Sacramento suburb of Rocklin. “Tesla is a California-born company that the state has invested heavily in, and we want it to succeed. It makes complete sense for it to expand right here, close to its headquarters, yet they are headed out of state.”
Gaines called the move to Nevada “a clear indictment of our business climate” and said Tesla’s decision was a strong signal to legislators “about how hard they have made it to operate here.”
Tesla representatives had stressed, as they weighed their options over the last several months, that a speedy start on the factory was essential to the company’s plans.
Although Tesla’s domestic sales for 2014 have been flat, the company has recently begun selling its Model S cars in England and China. The company has also begun production of a crossover SUV, the Model X, and is hoping to fast-track production of the Model 3.
All those vehicles, and the ability to sell them at a lower price, depend upon a steady supply of mass-produced batteries, which Tesla has said it cannot manufacture in sufficient number at its production facilities in California.
Tesla stock closed up $4.85 at $286.04 on Thursday, its highest closing price since its initial public offering in 2010. The shares traded as high as $290.50 in the late afternoon.
Gary Reber Comments:
Firstly, the green energy scamufacturer Tesla Motors was the recipient of a $465 million subsidized loan, following which the predictably bankrupt company’s CEO bought himself a $17 million mansion — living large.
Then Tesla Motors benefited from the Advanced Technology Vehicles Manufacturing (ATVM) Loan Program, a $25 billion direct loan program funded by Congress in fall 2008 to provide debt capital to the U.S. automotive industry for the purpose of funding projects that help vehicles manufactured in the U.S. meet higher mileage requirements and lessen U.S. dependence on foreign oil.
Now Tesla Motors will benefit and boost its monopoly owners wealth interests with effectively billions of dollars in taxpayer subsidies from the State of Nevada. Such mega benefits and incentives are being given to Tesla Motors in the name of JOB CREATION. Of course, the bottom line is that taxpayers are subsidizing the creation of the projected 6,500 factory jobs at a pay rate of $25.00 per hour.
Such huge incentives are just the beginning as the company forecasts growth to be in the several billions of dollars over the course of the next seven years, further enriching the stock ownership portfolios of the monopoly ownership. Yet the workers just get to have jobs, but no ownership such as could be provided using an Employee Stock Ownership Plan (ESOP) with new shares issues and paid for our of future earnings without reducing worker wages or other benefits.
Once again, taxpayer supported government welfare is extended to the private sector without the stipulation of broadening private, individual ownership of NEW productive capital investment related to technological innovation and invention. This is in the form of government loan guarantees and tax incentives that are issued in the name of JOB CREATION, while oblivious to the CONCENTRATED OWNERSHIP CREATION resulting from bolstering the financial ownership interests of the awarded companies’ ownership class.
What is needed is a massive loan guarantee economic growth plan with aims to balance production and consumption by empowering EVERY American to acquire private, individual ownership in FUTURE wealth-creating, income-producing productive capital asset investments and pay for their loans out of the earnings of the investments.
Unfortunately, with Tesla Motors and others, the direct loans and loan guarantees do not stipulate the demonstration of broaden private, individual ownership among the employees of the companies receiving taxpayer financial support. Instead the direct loans and loan guarantees are pitch as JOB CREATION measures while completely hiding the fact that a privilege ownership class benefits as the owners of investment assets.
In the FUTURE ALL direct loans and loan guarantees should stipulate that companies demonstrate broadened ownership of their companies by their employees and other Americans.
What we need is for the Federal Reserve to stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every child, woman and man to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets, The shares would be purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable goods and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and reinsurance back by the government, but would not require citizens to reduce their funds for consumption to purchase shares. ALL subsidized loan guarantees would have the stipulation that the companies benefiting from the loan infusion demonstrate NEW owners be created among their employees and others in which ownership shares are purchased on credit wholly backed by projected “future savings” in the form of new productive capital assets.
We need to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the Federal Government or raise taxes on ordinary taxpayers. We need to free the system of dependency on Wall Street or the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting Federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency of with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings. The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today––management and banks––that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by the commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. This entity would serve to seed the new policy direction and would fulfill the government’s responsibility for the health and prosperity of the American economy.
Our political leaders, academia, and the media fail to understand that our financial system has resulted in a fundamental imbalance between production and consumption. We have ignored the systematic income inequalities that persist and grow exponentially due to the steady progress of tectonic shifts in the technologies of production, shifting productive input from labor to the non-human factor of production––productive capital, as generally defined as land, structures, human-intelligent machines, superautomation, robotics, digital computerized automation, etc. Productive capital assets are OWNED by individuals and, respecting private property principles, those individuals are entitled to the earnings generated by such assets.
The significant problem has been the systematic denial of participation as capital owners on the part of the majority of consumers. While the wealthy ownership class has essentially rigged the financial system to their benefit, and by that is meant to continually concentrate ownership of productive capital among the richest Americans, the majority of Americans have been and are dependent on JOB CREATION. Yet, none of our political leaders, academia or the media addresses this inbalance with the richest Americans entitled to income growth associated with productive capital ownership and the majority facing further job losses and degradation due to technological advancement.
Ordinary Americans of so-called “middle-class position” have used consumer debt financing as a means of bettering their life with an abundance of consumer products and services. The government has used income redistribution via taxation and national debt to prop up the economy with monies spent on supporting a massive military-industrial complex comprised of a small group of owners and millions of “employed” and various social programs to uplift the American majority’s life and prevent their decline into poverty––supported by government dependency.
The ONLY way out of this mess, if we are to not become a complete socialist or communist communal state governed by an elite class, is to embrace growth managed in such a way that EVERY American is empowered to acquire over time a viable wealth-creating, income-producing capital estate and pay for their acquisition out of the FUTURE earnings of the investment. Such is the precise means that the richest Americans continually advance their wealth and thus, income.
We need leaders who will put this issue before the national debate stage, and we need the media to put forth the questions whose answers will provide the financial mechanism specifics to reverse the ever dominant OWNERSHIP CONCENTRATION. Such concentration and the economic power that result is taking control of our representative government, with productive capital ownership channeled through plutocratic finance into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.
We are absent a national discussion of where consumers earn the money to buy products and services and the nature of capital ownership, and instead argue about policies to redistribute income or not to redistribute income. If Americans do not demand that the holders of the office of the presidency of the United States, the Senate, and the Congress address these issues, we will have wasted the opportunity to steer the American economy in a direction that will broaden affluence. We have adequate resources, adequate knowhow, and adequate manpower to produce general affluence, but we need as a society to properly and efficiently manage these resources while protecting and enhancing the environment so that our productive capital capability is sustainable and renewable. Such issues are the proper concern of government because of the human damage inflicted on our social fabric as well as to economic growth in which every citizen is fairly included in the American dream.
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
http://www.latimes.com/business/autos/la-fi-hy-tesla-nevada-20140905-story.html
http://www.latimes.com/business/hiltzik/la-fi-0914-hiltzik-20140914-column.html#page=1
http://www.latimes.com/business/autos/la-fi-tesla-nevada-20140906-story.html#page=1
“Nevada’s economic incentives for Tesla Motors won the state a coveted battery factory and an estimated 6,500 jobs, but at one of the highest costs a state has ever paid to lure a company — nearly $1.3 billion.”
This is an example of crony-end game capitalism disguised to the taxpaying citizens as a necessary to create jobs. NO WHERE is there a stipulation that the battery plant be financed so that the workers will end up owning a significant share of the new capital assets and the benefits of the wealth-creation and income generated. While supposedly 6,500 jobs will be created, subsidized by taxpayer incentives, in large measure the new factory will be technologically infused with advanced “robotics.” digitalized operations, and super-automation capital assets, that will be OWNED by Elon Musk and a select narrow group of wealthy owners who get to cash in our taxpayer incentives and subsidies.
Nevada should have insisted on the Tesla forming an Employee Stock Ownership Plan (ESOP) so that the new factory would be financed with the workers acquiring significant ownership shares with capital credit loans paid off within a three to seven year period with pre-tax earnings from the investment.
http://www.latimes.com/business/la-fi-0916-nasa-shuttle-20140917-story.html
