Blog School Board Approves $68 Million in Incentives to Bring Tesla Factory to Texas

Tesla’s prospective factory project in Austin has gained support from the Del Valle Independent School District, which voted Thursday to approve incentives to lure the automaker to the area.

The proposal would give Tesla property tax incentives of $68 million and place the Tesla factory on land owned by the district. Tesla is interested in a 2,100 acre parcel at the intersection of State Highway 130 and Harold Green Road.

Travis County Commissioners are also considering whether to grant a 20-year property tax abatement to secure the factory. That particular proposal has experienced some objection from community members and commissioners pushed a vote on the matter until next week.

Tesla is also considering Tulsa for the Cybertruck factory. Chief Executive Elon Musk visiting the city last week, meeting with the Oklahoma governor. Tesla has conducted an enthusiastic campaign to attract the automaker, and has had less opposition from the community. However, Austin has long been the favorite and seems to be lining up the incentives to seal the deal.

 

[hotgrips]

Every new Tesla is another nail in the Dealership coffin.

 

[WB4KTF-Glen]

Do you really not understand how the tax incentives work? The school district will be getting millions of dollars more in taxes over the life of the agreement than if Tesla did not build there and the site remained a gravel pit.

In Texas, the STATE will provide the replacement $68 Million to the School District, so they do not lose any income for the schools. Our taxes still pay for it all.

 

[hotgrips]

The cost to the town is not 68 million. The existence of the factory there will result in benefits that will naturally follow.. The factory will not put any additional burden on the school budget.. Empty land is not generating tax dollars anyway.. The existence of the factory will be a huge feather in their cap. It will raise the value of homes in the tax district, which will mean more property tax for the town. There will be a large number of available jobs for others who live in the district. The interest in the Cyber Truck is huge. It will raise that district to a higher level than it is currently. It will bring more income to business owners of all kinds in the region. Tesla existence there will be a very large benefit to the area.Those who came to the decision will not regret it. It is only for 20 years. In those years the factory will grow and steadily build up to a very high appraised value which will be very welcome in 20 years. Don't lose track of the fact that the factory will not increase the cost of running the school system. It is a very smart incentive to offer to Tesla.

 

[Darmie]

Gee... So Tesla really must not care much about education, since it doesn't want to pay its fair share of the cost of schools.

This is absurd. School districts are there for the kids, not to subsidize industry.

Tesla should be ashamed. So should Texans.

Maybe rather than pay Elon huge salary packages, Tesla should pay its taxes like everyone else.

That's what is sounds like but it is not the case. This has nothing to do with the fair share. There are no subsidies if there is no money to begin with. If you see some of the schools here in Texas, you would understand the money doesn't always go to the children. Schools are being built at an alarming rate, bigger than state capitals. Most all our property tax goes to the school system. Here's another one for ya. Most of the fees collected for any vehicle registration goes to the schools. ... And where did you get that Elon receives a huge salary? He doesn't.

 

[CyberGus]

According to taxfoundation.org, The per-capita state taxes in Texas are about $4000, which is less than Kansas, Nebraska, and Wyoming. California comes in around $6000.

Sales tax in Texas is north of 8%, and property taxes make up the bulk of the remaining revenue (zero income tax). The property tax value is based on current property value: tax on my 1800 sq-ft house in North Austin are almost $8000/year, up from just over $4000/year from when I bought it only 6 years ago, due to the increase in "appraised value".

The land for the Tesla factory is valued in the millions, but has almost no improvements, and probably gets the agriculture exemption (buy a goat, and you're a rancher!) so the taxes currently collected are relatively low. The value of the factory itself will dramatically raise the overall property value (and thus the taxes) but will not increase the costs of the local school district 1 cent. The tax deferral is a win-win.

"Now wait a minute" you're thinking, "what about the kids of those thousands of workers, huh?" And you're right, the factory will undoubtedly result in local population growth. But unless those workers live on the factory grounds, they will be paying property tax for their residences. If the schools get more students, they also get more funding.

And in 10 years, they will benefit from the regular tax rate of the factory.

 

[aburrows]

Do you really not understand how the tax incentives work? The school district will be getting millions of dollars more in taxes over the life of the agreement than if Tesla did not build there and the site remained a gravel pit.

An educated population is scarce in the USA.

 

[RKBA]

The property tax value is based on current property value: tax on my 1800 sq-ft house in North Austin are almost $8000/year, up from just over $4000/year from when I bought it only 6 years ago, due to the increase in "appraised value".

Be sure to file a "Homestead Exemption" on your house. It's free and will limit your property tax increases. Companies will offer to do it for a fee, but it's a simple 1-page form you can do yourself.

 

[Economite]

Do you really not understand how the tax incentives work? The school district will be getting millions of dollars more in taxes over the life of the agreement than if Tesla did not build there and the site remained a gravel pit.

1. Taxes are levied against every piece of property, so that each property owner pays its fair share.
2. Tesla doesn't want to pay.
3. Tesla says that if the school district makes it pay its share, it will locate somewhere else.
4. Because the school district wants tax revenue from other folks who might follow Tesla into the community, it waives Tesla's taxes.

This is basically blackmail. It may be common--though certainly not on the scale that Tesla demanded in Nevada. But is sure as hell isn't right or fair.

Why levy a tax on non-residential property at all if it the tax is just going to be waived for any rich company that is able to use this strategy?

Should I get an "incentive" on my taxes if I threaten to move? Should Elon every pay taxes anywhere?

Its a horrible practice-- though apparently endorsed by the Texas government-- and it's hard to imagine why you guys are so supportive of a strategy that allows a rich company to avoid paying taxes that everyone else pays.

 

[petecrayton]

Gee... So Tesla really must not care much about education, since it doesn't want to pay its fair share of the cost of schools.

This is absurd. School districts are there for the kids, not to subsidize industry.

Tesla should be ashamed. So should Texans.

Maybe rather than pay Elon huge salary packages, Tesla should pay its taxes like everyone else.

Well, I suppose they should just build the plant in China?

 

[1414]

In Texas, the STATE will provide the replacement $68 Million to the School District, so they do not lose any income for the schools. Our taxes still pay for it all.

Yep, what a lot of people who support these tax incentives for large companies don't seem to understand is that every time one is offered it directly raises everyone's taxes. And these supporters tend to disproportionately be people who are generally anti-tax...go figure. The applicable government(s) still spend the same on services, so by giving a huge tax incentive to one company, they must make up for it by raising everyone else's taxes. It's government spending, but instead of actually spending it on something, we're donating it to usually wealthy companies. And every one of those companies would have built their factory somewhere and "created" those jobs and that tax base anyway. We need a federal law to ban these tax incentives, they create a competition for every already-cash-strapped local government to give more and more taxpayer money away out of fear of economically falling behind other places every time any wealthy corporation wants to build a large facility. Well, I will now step off my soap box...

 

[Economite]

An educated population is scarce in the USA.

Especially, perhaps, in Denver, where some people were never educated in good manners. How rude.

 

[Economite]

Well, I suppose they should just build the plant in China?

If, because he doesn't want Tesla to have to pay its property taxes in the US, Elon prefers operate in a country where people have few civil rights, where the government acts arbitrarily, where there is little respect by those in authority for the rule of law, and where members of ethnic minorities are kept in reeducation camp and used for what amounts for slave labor, I say good riddance. But it does say something about his values that this is the threat that he implicitly makes to maximize tax rebates/subsidies.

 

[1414]

If, because he doesn't want Tesla to have to pay its property taxes in the US, Elon prefers operate in a country where people have few civil rights, where the government acts arbitrarily, where there is little respect by those in authority for the rule of law, and where members of ethnic minorities are kept in reeducation camp and used for what amounts for slave labor, I say good riddance. But it does say something about his values that this is the threat that he implicitly makes to maximize tax rebates/subsidies.

I suspect building an American factory is about economics. It seems likely that there is reason nearly every major auto manufacturer, even those from Asia or Europe have factories in the US. Shipping a finished car is expensive, and the final assembly is mostly mechanized now anyway, so labor expenses don't make a huge difference. Like every other manufacturer, parts and components that are made internationally are assembled in the US because it's cheaper to make the parts overseas and to assemble the vehicles in the US that are intended for the US market. Tesla has built factories in China...for the Chinese market (and some of their battery manufacturing). It seems to make enough business sense to locate car assembly plants in the general area where the cars are sold that it overrides the cost savings from exploiting inhumane conditions.

It's not a statement of ethics, it's a maximization of profit.

 

[240W]

I suspect building an American factory is about economics. It seems likely that there is reason nearly every major auto manufacturer, even those from Asia or Europe have factories in the US. Shipping a finished car is expensive, and the final assembly is mostly mechanized now anyway, so labor expenses don't make a huge difference. Like every other manufacturer, parts and components that are made internationally are assembled in the US because it's cheaper to make the parts overseas and to assemble the vehicles in the US that are intended for the US market. Tesla has built factories in China...for the Chinese market (and some of their battery manufacturing). It seems to make enough business sense to locate car assembly plants in the general area where the cars are sold that it overrides the cost savings from exploiting inhumane conditions.

It's not a statement of ethics, it's a maximization of profit.

Yep, that’s the goal of businesses, maximize profit.

At the end of the day, I think that the city and state will be better off with a large business coming in even after all these tax incentives (same with a better standard of living for the residents), it’s not blackmail since they can choose another location to set up shop.

It’s either that or letting it be an empty lot, would that really be better?

 

[Solar/EV Fan]

Although I'm a huge supporter of Tesla, I'm opposed to granting special tax incentives to it or any company. The lure of more jobs would just be offset by losses in other areas of the local economy, and the net gain is often an illusion over time. The incentives (credits) is ultimately lining the profits of the company and its shareholders. A company should be able to stand on its own without any special favors.

 

[drtimhill]

It would funny if they produce vehicles in Texas but you would have to buy it from out of state because of Texas' franchise laws.

Well that's really the whole point isnt it? Texas can hardly refuse to let Tesla sell cars in the state where they are made.

 

[drtimhill]

Although I'm a huge supporter of Tesla, I'm opposed to granting special tax incentives to it or any company. The lure of more jobs would just be offset by losses in other areas of the local economy, and the net gain is often an illusion over time. The incentives (credits) is ultimately lining the profits of the company and its shareholders. A company should be able to stand on its own without any special favors.

Indeed. Look at the farce with Foxconn in Wisconsin. Huge publicity, VAST tax breaks. Nothing to show for it.

 

[BozieBeMe2]

Gee... So Tesla really must not care much about education, since it doesn't want to pay its fair share of the cost of schools.

This is absurd. School districts are there for the kids, not to subsidize industry.

Tesla should be ashamed. So should Texans.

Maybe rather than pay Elon huge salary packages, Tesla should pay its taxes like everyone else.

Please read the way these incentives are structured. The district will end up far more ahead, by having Tesla as a neighbor. The increase in population alone will net them more taxes than what they are currently getting & I highly doubt that the district has plans in place to adsorb this increase in cash flow

 

[jerry33]

Well that's really the whole point isnt it? Texas can hardly refuse to let Tesla sell cars in the state where they are made.

I can see you don't live in Texas

 

[jerry33]

Indeed. Look at the farce with Foxconn in Wisconsin. Huge publicity, VAST tax breaks. Nothing to show for it.

On the other hand, the Michelin tire plant in Nova Scotia brought great economic advances to the area. It's certainly true that quite a few don't pan out, but the ones that do are stellar. I expect the TeraFactory to be one of the stellar ones.