Tesla Motors has now confirmed it has broken ground on land outside Reno for a potential site for a $5 billion lithium-ion battery factory that would employ as many as 6,500 workers.
According to a Las Vegas news account, in a letter to shareholders, Tesla CEO Elon Musk said the site several miles east of the Reno-Sparks area “could potentially be” the location for the so-called gigafactory. “Consistent with out strategy to identify and break ground on multiple sites, we continue to evaluate other locations in Arizona, California, New Mexico, and Texas,” Musk wrote.
Tesla is partnering with Japanese electronics company Panasonic to build a 10 million-square-foot battery factory. The intent is to cut the cost of batteries for its new Model 3 electric automobile by 30 percent so the car can retail with a price of $30,000, instead of the $70,000 starting price of its current sports car line.
Lance Gilman, principal and director of the Reno Tahoe Industrial Center, later told The Associated Press the bidding war with Texas, California, New Mexico and Arizona has just begun.
If you talk about a horse race, no one else I know of has even left the starting gate,” Gilman told AP. “You are looking at a piece of property that is ready to go tomorrow.”
The 167-square-mile site is just 200 miles from Tesla’s Palo Alto, Calif., headquarters. Nevada also has the nation’s only lithium mine, which would cut the cost of transportation. A Union Pacific railroad track is near the site. The area has plenty of solar and geothermal power resources, which is attractive to Musk, a big backer of renewable energy. (Pay no attention to the fact lithium-ion batteries have a tendency to catch fire.)
Gov. Brian Sandoval and local mayors would not discuss with reporters any potential incentives being offered to Tesla to sweeten the deal.
But just days before this announcement, the Reno newspaper reported that work at the industrial park site has stopped, and this was confirmed by a developer of the site.
This is August.
What possibly could Tesla officials be waiting on?
November perhaps?
That’s when Nevadans will decide whether to impose a 2 percent margins tax on all businesses grossing more than a million dollars a year. The money — an estimated $800 million a year — supposedly would fund education. The tax would give Nevada an effective corporate income tax rate on profits of 15 percent — the highest in the West and nearly double California’s business tax rate of 8.8 percent.
Might be hard to cut the cost of your batteries by 30 percent while paying a corporate income tax of 15 percent.
The most recent study of the tax’s impact for Nevada Policy Research Institute by Beacon Hill Institute at Suffolk University said it would destroy 3,600 full-time-equivalent private sector jobs. If the Legislature spends the money as intended, but there is no requirement that they do so, the margins tax might add about 2,000 public sector jobs in education.
That is still a net loss of 1,600 jobs, reduction in real disposable income by $240 million annually and a decrease in investment by $7.1 million annually.
But that doesn’t address the tax’s impact on potential economic and job growth. Anyone care to add in the jobs that will not come to Nevada as result of such a tax? Perhaps we should start the count at 6,500 and see where it goes from there.
We urge the voters to keep these numbers in mind come November.
— TM
Dear Fellow Nevadans,
How would you feel if the government taxed you in a way which forced you to borrow money to pay the taxes, because you did not have enough cash flow from your take home pay? Would you think such a tax was unjust? Well, the Margin Tax Initiative (Presented as: “The Education Initiative”) does just that. In our business, we will be forced to borrow money, pledging our assets, to pay the tax, because we self-finance our sales, and actual cash flow is very limited. Stated “Income” and actual “Cash Flow” are vastly different. The proposed Education Initiative does not take this into consideration. There is no current Federal or State Tax which is so devastating to our business. Only the proposed Education Initiative is so egregious.
Would you think it unfair if you were taxed, even if you had little or no take home pay? The Margins Tax does not consider if your business is profitable or not. It taxes on Gross Income (with limited deductions for expenses) even if you are making little or no profit!
If your take home pay was $2,000 per month, would you think that a tax requiring you to pay over $1,000 per month, about half of your take home pay was unjust? Would such a tax have a negative impact on your life and ability to care for your family? Well, the Margin Tax Initiative (Presented as: “The Education Initiative”) has this type of impact on many businesses in Nevada. In the Restaurant business for example, the bottom line profit is often between 1.5% and 5% of gross sales. Is it a just tax which asks such businesses to pay almost all, or more than half of their profits in a new tax?
Would businesses in Nevada be forced to cut expenses and raise prices to their customers as a result of this proposed tax? Yes! Would some employees lose their jobs because of this new tax? Yes! Would employers reduce future pay increases to existing employees to pay the new tax? Yes! Will businesses looking to relocate to Nevada decide to move to another state because of this proposed tax? Yes!
Will every Nevada citizen who purchases goods, services, food, clothing, pay more for all such items because of this tax? Yes!
Will the proposed new money generated from the “Education Initiative” be guaranteed to get to the teachers and improvements in education? No! The Legislature may cut other funding currently going to the schools because of this proposed new source of school funds. There is no guarantee that the schools and teachers will actually realize much or any increase in their budgets.
The Education Initiative (Gross Margin Tax) is a poorly thought out very damaging tax! Please vote NO on the Education Initiative!
Lex Adams
RW Group