In July, company co-founder Elon Musk said he expected $500 million in assistance from the state where the battery plant would be located. Nevada more than doubled that—$1.25 billion over 20 years, including a near total tax break for the first decade. One watchdog group that tracks state subsidies to business says it is the latest step in a race to the bottom, with states spending big money for trophy deals.
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"All too often, tax breaks aren't worth it because you're taking money away from other things that matter to all the other employers," said Greg LeRoy, executive director of Washington, D.C.-based Good Jobs First. "Small businesses in Nevada will have less money in the education system, the job training programs and infrastructure—things that matter and benefit all employers."
But Republican Gov. Brian Sandoval said the long-term benefits to Nevada far outweigh the cost of nearly $200,000 per job.
"Tesla will build the world's largest and most advanced battery factory in Nevada, which means nearly 100 billion dollars in economic impact to the Silver State over the next 20 years," Sandoval said in a statement.
Under the agreement, Tesla promised at least $3.5 billion in direct investment in the state. The company has said the plant will eventually create about 6,500 mostly high-paying jobs.
But LeRoy is unimpressed.
"I think they are exaggerating on ripple effects. Certainly, Gov. Sandoval's 80-to-1 cost-benefit claim is off the charts wrong. No deal generates anything like that," LeRoy said in an interview.