The Truth About Elon Musk's Subsidies 

"BrtStlnd" (BrtStlnd) 06/03/2015 at 14:40 • Filed to: Hank Scorpio

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Yesterday there was !!!error: Indecipherable SUB-paragraph formatting!!! on the front page discussing the government assistance that Musk’s companies have received. I looked into exactly what they were given and here’s what I found.

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$500 million was given to Tesla to finance the building of their factory in Fremont, CA. This has already been repaid by the company and here’s why: the loan came with stock warrants that would have allowed the government to acquire TSLA stock at $7.53/share - it’s currently trading at $248.96 as I type this.

$1.3 billion in tax incentives from Nevada to build the Gigafactory. I don’t know first hand, but I’d assume the state chose to offer this because of the 6,000 jobs being added at the new factory - that’s a lot of future paycheck revenue to justify foregoing the lost corporate tax. The Gigafactory itself will be privately financed: $2B from Tesla and ~$3B from its partners.

$750 million went to a plant being built for SolarCity in Buffalo, for which the company will pay rent and hire 3,000 Buffalo-area residents. The government will still own the plant, regardless of what happens to its current tenant. This would probably be the one major investment by the government that I would call a grant, but Tesla could have financed it themselves so the real value granted is avoiding the added cost of financing.

The remaining ~$2.3 billion came in a smattering of different projects as a result of the !!!error: Indecipherable SUB-paragraph formatting!!! . I had difficulty tracking down exact figures and specific projects, mostly because the size and breadth of this stimulus package is staggeringly huge - $21.5 billion for energy infrastructure improvements and $27.2 billion for renewable energy research and investment. Needless to say, Tesla and SolarCity both have a significant presence in this area. Additionally, this act also included a total of $51 in tax incentives for various companies and industries.

In the interest of not plagiarizing, I drew the figures from the first three items from this piece on Marketwatch, which happens to include a great eyebrow pic.

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Laird Andrew Neby Bradleigh > BrtStlnd 06/03/2015 at 14:43

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But.. But.. The eco-Communists are trying to take our money.. we all know that :P

Santiago of Escuderia Boricua > BrtStlnd 06/03/2015 at 14:47

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All companies large and small will get any tax break, loophole, or subsidy they can get.

PS9 > Laird Andrew Neby Bradleigh 06/03/2015 at 14:50

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And they will after Barrack HUSSEIN Obummer executes Jade Helm and stuffs all the hardworking Real Americans(TM) in walmarts and farms their brow sweat to give to the unworthy lazy poors.

Laird Andrew Neby Bradleigh > PS9 06/03/2015 at 14:52

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And they’ll ban guns’n trucks’n all things murican.. NO more burgers..

BrtStlnd > Santiago of Escuderia Boricua 06/03/2015 at 14:53

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This comment needs more bootstraps.

Santiago of Escuderia Boricua > BrtStlnd 06/03/2015 at 15:00

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So is Tesla going to pay their workers in Nevada more? That $1.3B is going to come out of the workers’ paychecks

BrtStlnd > Santiago of Escuderia Boricua 06/03/2015 at 15:02

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I have no idea what kind of salaries Gigafactory workers will earn.

BigBlock440 > BrtStlnd 06/03/2015 at 15:03

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$1.3 billion in tax incentives from Nevada to build the Gigafactory.

It’s funny how people get all riled up about this one, because really, what would Nevada get without it? Just more uninhabited desert wasteland. Here, they’re spending exactly the same amount of money as they would be on the desert wasteland, only now they get 6000 jobs and tax money the desert wasn’t going to provide.

BrtStlnd > BigBlock440 06/03/2015 at 15:05

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An oasis of jobs and future tax revenue in the middle of a literal desert.

this is not matt farah's foxbodymiata > PS9 06/03/2015 at 15:07

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Something something eco-muslim terrorist hippy cahoots something something shots from the knoll something something war on american values especially christmas something something immigrants something something I don’t understand Keynesian economics.

TahoeSTi > BrtStlnd 06/03/2015 at 15:08

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And they are still just burning cash, with alot of things that need to go right to stop the burn. http://investcorrectly.com/20150603/analy…

BrtStlnd > TahoeSTi 06/03/2015 at 15:11

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Very true. I would argue that the public value reaped from these ventures is in the advancement of battery and solar technology, not necessarily whether or not Tesla itself succeeds.

TahoeSTi > BrtStlnd 06/03/2015 at 15:14

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Public value is great for everyone but the companies investors.

BrtStlnd > TahoeSTi 06/03/2015 at 15:16

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Yes, and truthfully they invest in a company like Tesla at their own peril/discretion. Not really part of the equation for the various governments.

E30Kid > Santiago of Escuderia Boricua 06/03/2015 at 15:18

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How do you figure?

Santiago of Escuderia Boricua > E30Kid 06/03/2015 at 15:19

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That’s the point, they’re losing corporate tax revenue so they have to make it up somewhere else

E30Kid > Santiago of Escuderia Boricua 06/03/2015 at 15:26

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It’s future revenue that was unaccounted for before this factory plan; why would Nevada attempt to get it back? Are you saying that Tesla employing people in NV will invoke a net reduction in overall revenues (or increase in costs) for the state?

EDIT: NV doesn’t have state income tax either, so I don’t understand this argument.

BigBlock440 > Santiago of Escuderia Boricua 06/03/2015 at 15:43

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And what corporate tax revenue would the empty desert have provided that Nevada will now be missing?

deekster_caddy > Santiago of Escuderia Boricua 06/03/2015 at 16:21

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Considering the US has one of the highest corporate tax rates in the world (maybe THE highest?) this is definitely true.

If only the gov’ts would just lower tax rates to begin with. More corporations would keep their jobs stateside, more corporations would not be begging for subsidies and breaks. Both of these things would help the economy. Obviously it’s way more complex than my little paragraph.

Santiago of Escuderia Boricua > deekster_caddy 06/03/2015 at 17:01

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Or they could just close the loopholes that let companies pay taxes elsewhere. They’re getting the benefits of doing business in the US without paying their share for it.

deekster_caddy > Santiago of Escuderia Boricua 06/03/2015 at 17:04

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Yeah, there are all kinds of issues with tax code. I wish I knew 10% of it, I can’t even come close. But I know that companies love to create jobs, and high taxes here mean they will create those jobs elsewhere, or be stifled, or beg for tax breaks. But Musk - he is just working the system (as a good businessperson should).

ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) > PS9 06/03/2015 at 17:07

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Your post needs more ‘Murica, Fuck Y(ou)eah!

Manic Otti > BrtStlnd 06/03/2015 at 18:24

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I’m sure Bloomberg, Chase Morgan, FannyMae, Comcast, and T-Mobile, and Wal-Mart have never received any tax breaks, pay their fair share of taxes without making use of any loopholes or evasion strategies, and are operating to further the overall good and progress of humanity.

Manic Otti > BrtStlnd 06/03/2015 at 18:28

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$30 Gigabucks/ hr.

Manic Otti > BigBlock440 06/03/2015 at 18:40

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Nike just got a 2 billion dollar tax break in order to create 500 jobs in Oregon. So here’s a company that charges inflated prices for their products and profits from cheap foreign labor vs a company that manufactures and assembles products in the U.S. and is furthering renewable energy, yet Musk is getting called out for taking advantage of tax breaks.

Santiago of Escuderia Boricua > deekster_caddy 06/03/2015 at 19:39

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If we have better infrastructure and talent, they will still come here. They’ll make slightly less profit, boo hoo

deekster_caddy > Santiago of Escuderia Boricua 06/03/2015 at 21:24

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Only to a point. Infrastructure and talent are nice to have, but as a country we also need to keep blue collar jobs, not everybody needs a PHD. There are other reasons besides dirt cheap labor that manufacturing jobs have moved overseas en masse. Anyway, it’s a very large and complex issue with no single ‘solution’.

John Norris (AngryDrifter) > BrtStlnd 06/03/2015 at 22:59

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Just curious, if the Federal and State governments offered 6-12% tax credits to Ford F-150 buyers would you consider that a financial benefit to Ford, or just to the F-150 buyers?

orcim > Santiago of Escuderia Boricua 06/04/2015 at 04:51

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And they definitely do. I always have fun with my “welfare momma’s are bad, must kill SS/Gov’t/Democrats/etc.” acquaintances when I tell them I’m fine with no welfare, just as long as it includes everyone and everything (to be fair is all).

The meme of “charging what the market will bear” (or put another way, “get what you can”) is a powerful force.

BrtStlnd > John Norris (AngryDrifter) 06/04/2015 at 08:06

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I would consider it a benefit to both Ford and the customer.

Ike > BrtStlnd 06/15/2015 at 16:45

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Converse > Santiago of Escuderia Boricua 07/16/2015 at 11:22

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They will probably be a paid a fair wage that they agree upon when they get hired. Remember, no one holds a gun to your head to work for a certain wage.

However, Nevada was somewhat smart to give the tax breaks as the Gigafactory was always going to get a tax break and it was just up to the states which one would do it and take the additional jobs, add on industry (support and suppliers to the factory) and the tax revenue from payroll.

Tesla has no reason to penalize their workers for the building of a new plant.