Nevada’s proposed $1.25 billion tax break for Tesla would just crack top 10 biggest tax breaks

Nevada is determining how much in tax breaks to offer Tesla – and the current deal appears to be $1.25 billion.

The tax incentive package assembled by Gov. Brian Sandoval to woo Tesla’s “Gigafactory” battery plant is unprecedented in size and scope for the state of Nevada and is one of the largest in the country.

The overall value to Tesla is estimated to be $1.25 billion over 20 years—a figure that is more than double the $500 million package CEO Elon Musk said would be required to draw the company.

If the deal is approved by the Nevada Legislature, Tesla will operate in the state essentially tax free for 10 years.

In exchange, the company must invest a minimum of $3.5 billion in manufacturing equipment and real property in the state—a threshold that is much lower than the $10 billion state officials say they expect the company to invest in Nevada over the next two decades.

This is a big financial deal, one that Nevada apparently doesn’t want to let get away. If approved, this would be the tenth largest tax break offered by a state to a corporation:

If approved by the Legislature, the tax incentive package would be the 10th largest in the country, according to data compiled by Good Jobs First, a labor-backed non-profit that analyzes tax incentives. Here are the current top 10 tax incentive deals in the country:

  • Washington: Boeing, $8.7 billion
  • New York: Alcoa, $5.6 billion
  • Washington: Boeing, $3.2 billion
  • Oregon: Nike, $2 billion
  • New Mexico: Intel, $2 billion
  • Louisiana: Cheniere Energy, $1.7 billion
  • Pennsylvania: Royal Dutch Shell, $1.65 billion
  • Missouri: Cerner Corp., $1.64 billion
  • Mississippi: Nissan, $1.25 billion

It would be interesting to know a few things:

1. What happens if Tesla does not provide the jobs or the value projected? Does their tax break adjust downward accordingly?

2. Who is Nevada competing against and what are their offers? With such high stakes, it wouldn’t be unheard of for a party to overbid against themselves.

3. What do Nevada residents think of this? Tesla could lead to jobs and tax revenues a decade down the road but this is a lot of potential revenue that a corporation will benefit from.

With this kind of money being thrown around (or at least theoretically available), don’t most municipalities and states have to play this game in order to attract businesses? And in the long run, who can keep up with this competition?

McMansions can derail your retirement plans

Amidst concerns baby boomers will have difficulty selling their homes, here is a suggestion that buying a McMansion can derail retirement plans:

We occasionally hear about a friend who somehow saved up enough money, or just decided to chuck it, and walks off to retire at age 60, 55 or even 50. It can be done.

Also, some people live in a McMansion, drive a Tesla, and vacation in the south of France. But we know it’s a very expensive lifestyle. And we know we all can’t afford it, as the real estate bust of the 2000s so cruelly reminded us. We need to appreciate that, like buying a McMansion, taking early retirement is a very expensive proposition. Yes, a fortunate few can afford it. But most of us just have to get real.

Two things are interesting here. The first is that purchasing a McMansion seriously hampers retirement plans. Purchasing one uses up a lot of money and saddles the owner with a large mortgage (plus the home might be underwater and it can cost a lot to fill such a large home). A more prudent investor would purchase a more modest home rather than splurging on a McMansion.

The second interesting part of this is the comparison to owning a Tesla or vacationing in France, both relatively rare things. For example, Teslas start around $70,000 and only about 22,500 were sold in 2013. In the 2000s, it was common to see McMansion purchases compared to SUVs, a mass production item that cost much less than a Tesla. The implication then is that McMansions are even rarer today, making it even more of a folly to own one.

Want better crash test ratings for your car? Have a trunk in the front

The latest model from Tesla Motors received high marks in crash-test ratings. What is the secret to the safety of this electric car?

The luxury electric sedan earned an overall safety rating of five out of five stars from the federal agency, Tesla announced Tuesday. It also earned at least five stars in every category, a feat that puts it in the top 1 percent of cars tested by NHTSA…

Because the $70,000-plus electric car does not require a large gasoline engine block, there is added room in the front of the car for crumple zones, which absorb energy from front-end collisions. The motor is only about a foot in diameter and is mounted close to the rear axle, away from the most common impact zones. The car’s front section is instead used as a second trunk.

“A longer crumple zone means there’s a longer period of time in which the crash is unfolding,” said Russ Rader, a spokesman for the Insurance Institute for Highway Safety, which has not yet tested the Model S. “The vehicle can slow down over a longer period of time, which benefits the people inside.”

In its press release, Tesla compares it to a diver jumping into a pool of water from a tall height. “[I]t is better to have the pool be deep and not contain rocks.”

Didn’t more cars in the past have the engines in the rear? This idea could prompt all sorts of government action: why not require, or at least strongly recommend, the front of the car should not have an engine for safety reasons? Perhaps Tesla is doing some other interesting things with their design to minimize crash damage but this seems like an “easy” fix to the number of injuries and fatalities in cars each year.