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Tesla in line for $15M in CA tax credits ( Plus 4400 New Jobs)

Discussion in 'News' started by RobStark, Jun 9, 2015.

  1. RobStark

    RobStark Active Member

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    SACRAMENTO, Calif. (AP) — Gov. Jerry Brown's administration is proposing a $15 million tax credit to electric vehicle-maker Tesla Motors after California lost out in a heated bidding war for the company's new battery plant.
    .
    The Tesla credit would offset taxes for the Fremont, California.-based company to buy manufacturing, research and development equipment, buy property and hire 4,400 workers.



    http://www.mynews4.com/news/local/story/Tesla-in-line-for-15-million-in-California-tax/FBHzjivgLEOu8gAcXxpNag.cspx
     
  2. Causalien

    Causalien Reaper of Trolls

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    Looks like the fight for the next battery plant has already begun.
     
  3. Objective1

    Objective1 Member

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    Couldn't this be a pointless subsidy for Model 3 production hiring?
     
  4. RobStark

    RobStark Active Member

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    Pointless? NO automaker in America pays State sales tax on capital goods.

    In CA, Tesla needs the State to approve a specific request for each batch of purchases.

    Stupid. But gives us good info on what is going on inside Tesla.

    Pointless? It keeps CA within arms length on being competitive relative to not only the Midwest but the South regarding taxes and regulation on auto manufacturing.

    Like Toyota,GM, Ford and Chrysler at some point Tesla manufacturing can move out of California if the tax and regulation advantages of moving South prove too great.
     
  5. cpa

    cpa Member

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    Rob, I am not certain that your comment about manufacturers not paying sales tax is accurate (at least as far as California goes; I am not familiar with other states.) All sales in California of tangible personal property are subject to sales (or use) tax, unless the purchases are specifically exempt. Common exemptions include unprepared food, prescription drugs, edible plants and seeds for production of food and property purchased for resale.

    It is unclear exactly what you meant by "capital goods." Generally, "capital" implies that the purchase is for equipment used in the manufacturing process. In this situation, Tesla is the "consumer" of the equipment and would be subject to paying sales or use tax on the purchase price (albeit at a much lower rate because of the manufacturer's partial exemption.)

    When Tesla purchases raw materials like aluminum, tires, computer components, etc. for the manufacturing process, they are making purchases for resale, and must provide their suppliers with their resale certificate. Accordingly, the vendors do not charge or collect sales tax from Tesla, and ultimately Tesla charges and collects sales tax from us when we purchase our cars, because we buyers are the "consumers."

    I doubt that this "tax credit" will apply to waiving the sales tax on manufacturing equipment. Currently this partial exemption in California reduces the statewide rate to 3.3125%, plus any local add-on sales taxes. This is about a 4% reduction in the ordinary, statutory rate, and I highly believe that they would not zero it out. This tax is paid once, upon purchase.

    However, businesses are subject to annual real property taxes, personal property taxes on the aforementioned manufacturing equipment, supplies, furniture, etc. and unemployment taxes on the first $7,000 of wages earned each year by each employee. I could easily imagine a deal whereby Tesla gets exemptions from real and personal property taxes on new facilities and equipment that would be in effect for a number of years. I could also see the wages on each new hire after a certain date be temporarily exempt from unemployment taxes. The fact that the report mentioned a "board" leads me to believe that the entire Board of Equalization will weigh in on this proposal and turn their bean counters loose to determine how to reallocate from other sources the lost revenue from such a program.

    To an accountant, "taxes" are a vague and ambiguous term. It is easy to draw specious conclusions from such terms when specific information is omitted.:smile:

    Apologies if this was all about semantics...
     
  6. RobStark

    RobStark Active Member

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    NO other automaker manufactures in CA.

    It is very accurate. GM pays not sales tax on capital good in the Midwest.

    The foreign automakers don't pay sales tax on capital goods in the South.
     

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