America—the land of opportunity for individuals and corporations alike, is becoming a battleground in which states war with one another to provide the best fiscal environment for businesses in an attempt to lure them to their economy. Texas is notorious for this – like when it coaxed the makers of Siracha sauce across its borders in an attempt to bring jobs and boost the economy of the Lone Star State. Most recently, merger attorneys in San Antonio have been watching the marriage of Burger King and Tim Hortons, poised to become our favorite one-stop-shop for donuts and burgers, just before they elope out of the country and flee into Canada, as this article in The Fiscal Times talks about.
But it’s not just a feeling of disappointment that fills us patriots as we are set to potentially lose out on the businesses benefits to our neighbor to the north. Some industry analysts have begun to pick apart the “corporate tax burden” in a way that exposes the tax breaks crafted by states like Texas – and these breaks may actually do more harm than good. Merger attorneys in San Antonio like Douglas Shumway are asked to consider Tesla’s case in point. The electric car maker’s initiation of an “unusually brazen” bidding war between five states in the West may be detrimental to the state it chooses to dwell in, despite its haughty claim that it will create 6,500 well-paid manufacturing jobs.
Here’s why: Tesla is essentially a business with a perceived superpower. One of its assertions includes building a “Gigafactory” to produce its vehicle batteries which would “double world lithium-ion battery production” and bring thousands more jobs in terms of construction labor and operations. Then Tesla asked for a 10 percent subsidy, stepped back, and shouted “Go!” from its smug spot to watch Nevada, Texas, California, New Mexico and Arizona begin the bidding war.
And the states lost no time rushing into the frenzy, despite what may be good for them, merger attorneys in San Antonio like Shumway have observed. Let’s think about this: 10 percent of Tesla’s $5 billion price tag is $500 million. That’s 8 percent of Nevada’s entire state budget. California’s flurry of activity to convince Tesla of its merits includes essentially waiving the state’s requirements for manufacturing in compliance with their Environmental Quality Act, and officials in San Antonio, Texas proposed property tax abatements that totaled as much as $800 million in subsidies.
But how much would winning such a bidding war actually benefit any of these states? Studies say very little. So little, in fact, some merger attorneys in San Antonio, activists in Arizona and other watchdogs in the West are joining together to “write an unusual open letter urging officials not to give in to Tesla’s Gigafactory demands by draining financial resources intended for public services.” Because giving the biggest tax breaks to the biggest potential players in the economic sector doesn’t actually make much sense. “These are public dollars states are choosing to forego” in attempting to win over big businesses like Tesla, the letter reminds the public officials attempting to make these deals.