In the first and only debate for Governor, Republican Neel Kashkari attempted to pound Governor Jerry Brown over the head with the loss of the Tesla Battery Plant, and the 6,500 jobs it would bring, to Nevada. The charge was to highlight how tough it is for business to flourish in California. In Sunday’s Daily Pilot, Republican Assembly candidate and Newport Beach council member Keith Curry equated attempted to reform Prop 13 with respect to commercial property as another blow for business in California, even though businesses have been exploited loopholes in Prop 13 not available to homeowners for years. Does government have a role in helping the private sector or is it, as Anaheim mayor Tom Tait (and his supporters) might say, crony capitalism?
Anaheim Mayor Tom Tait (Photo: Chris Prevatt)
Let’s examine the Tesla plant first. It’s a $5 billion plant that will employ 6,500 people near Lake Tahoe. Musk with a breathtaking package of tax breaks and incentives valued at $1.25 billion during the next 20 year years, huge in a state with a budget of slightly more than $20 billion. Tesla will operate in Nevada tax-free for 10 years
Tesla inventor Elon Musk got a package of tax breaks and incentives worth about @1.25 to $1.3 billion over the next 20 years — or about 5 percent of Nevada’s state budget to operate the plant virtually tax free for the next decade. Other states actually offered Musk more. Brown offered a generous package but it wasn’t enough to sway Tesla which remains based in California. Nevada economic development director Steve Hill told Reno Gazette newspaper that the new Tesla “Giga Factory” would draw $10 billion in direct investment to the state and generate $100 billion in economic activity a 10 year period which Hill said “makes the offer worth it.” There is a concept, lost on many, that sometimes to make money, you need to spend some. Musk was originally looking for a deal of $500 million, but Nevada and other states upped the ante and there’s a lesson here for Brown and Tom Tait — look to the long term instead of the short one.
These new workers are going to buy homes, rent apartments, buy cars, gasoline, groceries, furniture, clothing, go to movies, out to eat, buy electronics, support youth activities and use services like insurance, electric power, water, and pay local taxes. Imagine the economic impact in exchange for a short term draw of taxes; 10 years will go by in the blink of an eye and while it is a risk to states without a guarantee, so is an investment in a college education, especially if one goes to medical school or law school. One hopes the investment made in the education results in a higher income and a higher standard of living in exchange for incurring debt that is paid back over a longer haul.
Attorney General Jerry Brown
But to suggest the loss of the Tesla Plant is systemic to California’s unfriendly business environment is dumb. I run a small business and my state tax burden is remarkably low. Cutting my state business tax is half would not allow me to create a single new job, but being in California has created more business opportunity for me which has allowed my agency to expand. We had a good year last year and I paid more in taxes than I typically do. I view this as a good problem to have and hope I pay more in taxes next year because it means my firm was more successful than last year.
Back to Curry’s Daily Pilot column for a minute. It’s another one of the those “our Republican assembly and senate slate will protect business from Democrats seeking to raise taxes” scare columns that misses the point that targeted spending cuts and selective tax increases are the reason California’s budget has stabilized and the state is on better footing than the last time Republicans held any sway. Curry, and his band of affluent Republican candidates, sure aren’t speaking to the middle class here. It’s a full on plug for a vote from the one percent. And while that is likely Curry’s base, I’m not sure the middle class families in Fullerton and Brea will be receptive to Young Kim protecting a businesses tax liability over their own home’s tax liability. If corporations are indeed people, perhaps they should pay their share of Prop 13 taxes like really people do.
Not a single Democrat in office wants to reform Prop 13 when it comes to homeowners…and make no mistake, new homeowners are paying a lot more in taxes than their next door neighbors in a similar styled home. But business property owners are making out like bandits. Corporations, with access to accountants and lawyers, are changing what constitutes “a change of control of corporate property” in order to avoid a reassessment which undercuts California city tax payments by billions of dollars. A business can sell 100 percent of its real-estate property often without it generating a reassessment allowing companies to change hands without a new deed being sent to the assessor’s office while keeping the buildings’ tax base at low levels.
The Orange County Register has changed hands in ownership as have some of the new newspapers Freedom Communications acquired over the past couple of years? Is there a new deed? Probably not. Freedom Communications changed hands in ownership. Shouldn’t the new owners pay?
1 Comment
Republicans hate me on this one. Nanotechnology will destroy about 50 percent of manufacturing jobs in 10 years. I have read articles on the advancements of nanotechnology and I’m shocked. That means wages will have to go up on service jobs, Republicans hate minium wage hikes. Nevada until the recession was proof that you could have a service industry-gambling and not have much of manufacturing and have good wages. Nevada has a higher average income than Indiana which manufactures more. The castros had a lot of unionization similar to the grocery business in California which use to pay not bad wages for retail, since the housing bubble burst Nevada which has the model that Republicans prefer no state income tax and high property tax unemployment rate has been similar to California. The housing market still influences Nevada even if Testa went there.
Republicans hate me on this one. Nanotechnology will destroy about 50 percent of manufacturing jobs in 10 years. I have read articles on the advancements of nanotechnology and I’m shocked. That means wages will have to go up on service jobs, Republicans hate minium wage hikes. Nevada until the recession was proof that you could have a service industry-gambling and not have much of manufacturing and have good wages. Nevada has a higher average income than Indiana which manufactures more. The castros had a lot of unionization similar to the grocery business in California which use to pay not bad wages for retail, since the housing bubble burst Nevada which has the model that Republicans prefer no state income tax and high property tax unemployment rate has been similar to California. The housing market still influences Nevada even if Testa went there.