Fred LaSor: More cars to be built in Nevada?

Gov. Brian Sandoval called lawmakers into special session Thursday to discuss incentives as Chinese automaker — Faraday Future — is considering construction of a mega plant in Nevada. As word filtered out of a possible electric car factory near Las Vegas, the numbers that were being discussed were impressive:

More than $1 billion will be spent by the Chinese firm for plant construction during the first decade,

More than 3,000 construction and installation workers will be needed early in the project,

Some 4,500 workers will be employed when the factory is open, with an average wage of $22/hour,

Faraday Future will prioritize the hiring of Nevadans, and will additionally invest a million dollars a year in K-12 education.

Overall, 20 year projections from the Governor’s Office of Economic Development are for economic impact in the state to be around $85 billion and for Clark County’s economy to grow by nearly 5 percent as a result of the Chinese investment.

An investment of this magnitude turns governors into eager bidders because of the economic benefits that come to their state. In addition to construction work and direct employment, housing and retail industries will benefit over the long term, as will many other businesses. Tesla received a $1.3 billion incentive package last year to convince them to build a plant near Reno. That deal was not without criticism, including a column I wrote that asked how we could grant tax incentives to a huge company then turn around and ask small businesses to pay a higher business margins tax.

Sandoval and lawmakers are in special session to consider a 15-year abatement of sales and use tax, and 75 percent abatements of real property, personal property and modified business taxes for ten years. There are other sweeteners to this deal for the Chinese factory, but you get the drift: another big business will receive economic incentives that small businesses do not.

Consider that for a moment. If the Chinese decision to come here hinges on taxes, why do lawmakers pass additional taxes on small businesses and not expect them to do the opposite: decide to move or lay off workers because of their tax treatment?

The Phoenix-based consulting firm Applied Economics studied the proposal and projects “significant economic benefits for Southern Nevada” from Faraday’s investment and from other economic activity associated with their presence. But already at least one member of the Assembly has expressed reservations about the $335 million tax package, pointing out that small businesses just this year got a tax increase.

And if we learn any elected politician or members of his family will be selling land or supplying electricity to Faraday Future we should be outraged. Such insider dealing – and this would not be the first – ought to be grounds for immediately losing elective office and being barred from future office. At the very least, such ill-gotten gains should be taxed at 100 percent: no official’s family should become super wealthy because of advance knowledge of large investments coming to his or her state.

Based on the little we now know Faraday Future sounds like a good deal for Nevada and I am generally supportive of it. At the same time, I think small business should enjoy the same tax treatment. What’s good for big business is good for small.

Fred LaSor retired from the U.S. Government 18 years ago and lives in Minden.


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