Editorial: State agency playing fast and loose with tax incentives

Let’s make a deal. What’ll it take to get you to close the deal? A little wheeling? A little dealing? A little quid pro quo? Pay no attention to the price tag. That’s for the suckers.

After a meeting of the Governor’s Office of Economic Development (GOED) this past week, the agency put out a press release boasting that it had approved “the creation of thousands of new jobs in Nevada through the expansion of existing Nevada companies, and companies that are moving to the state.”

GOED Director Steve Hill positively crowed, “We continue to see extraordinary businesses show interest in Nevada for a myriad of reasons, including location, available incentives, business friendliness and the quality of life. These companies will add to the gaining strength of our economy by creating thousands of jobs for Nevadans and continuing the narrative that Nevada is a great state in which to do business.”

Nowhere in the press release did it ever state what those “incentives” were. The word “tax” was nowhere to be seen.

Yet, in one meeting alone the agency magnanimously doled out a total of more than $6 million in tax abatements over the next 10 years to six different companies — five in Clark County, one in Washoe and none anywhere else in the state.

Apparently based on a strict mathematical calculation commonly known as a whim, the companies had their sales taxes slashed to a mere 2 percent for two years — instead of nearer 8 percent for those not so privileged — and their property and modified business taxes are being cut by either 25 percent or 50 percent for several years — depending on how good a deal each could wrangle.

The biggest tax forgiveness packages went to the multi-billion-dollar Internet marketer Amazon — $1.8 million — and something called TH Foods — $2.2 million.

There seemed to be little rhyme nor reason for the size of the largess in comparison to the relative benefit to the state and those taxpayers still required to pay the going rate. You know, the sticker price.

The numbers crunchers claimed one company would generate more than $68 in additional tax revenue for the state for every dollar of abatement, but another would generate only $2.50 for each tax dollar forgiven. Of course, that is pure speculation and conjecture.

Even though one of the stated reasons in the law creating such tax abatement incentives is to create high-wage jobs, only two of the companies so favored last week said their average hourly wages would exceed the targeted statewide average of $21.35 an hour and two companies reported their wages would be less than $15 an hour — one of those Amazon.

This wheeling and dealing was done despite the fact the Nevada Constitution clearly states, “The Legislature shall provide by law for a uniform and equal rate of assessment and taxation …” It ain’t uniform or equal if a select few get breaks while others don’t.

And pay no never mind to that part of the Constitution known as the Gift Clause, which states, “The State shall not donate or loan money, or its credit, subscribe to or be, interested in the Stock of any company, association, or corporation, except corporations formed for educational or charitable purposes.”

Remember, that $6 million in tax breaks was from one single meeting of the ever so generous GEOD, which has already doled out billions of dollars in tax “incentives” to Apple, Tesla Motors, Faraday Future and countless other billionaires.

Hey, no peeking behind the curtain at the fact the 2015 Legislature just raised taxes by $1.5 billion on all of us who are too insignificant or too timid to cut special deals, nor at the fact the state is already running a budget deficit of $400 million.

For that $6 million in tax abatements this past week, the companies claimed they might create as many as 2,000 jobs.

In 2012 alone small businesses in Nevada created 15,000 jobs without asking for any tax abatements or credits. What does that make them? Rubes? Suckers?

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

Amazon plans a warehouse in Nevada like this one in Phoenix. (AP file photo via R-J)

Amazon plans a warehouse in Nevada like this one in Phoenix. (AP file photo via R-J)

29 comments on “Editorial: State agency playing fast and loose with tax incentives

  1. deleted says:

    Never trust anyone whose goal it is to make money off you because they will lie cheat and steal to do it.

    http://www.bloomberg.com/news/articles/2016-11-25/wells-fargo-wants-claims-over-fake-accounts-decided-out-of-court

  2. Rincon says:

    Seems to me that I’ve heard Conservatives in this space claim that tax breaks are far preferred to subsidies. Tax breaks for tech companies are no worse than those for fossil fuel companies, so why worry?

  3. Wendy Ellis says:

    I saw this in my 4TH ST8 email earlier, and just took a break to read it. I really like the perspective you used to present the information. “Whim.” Perfect. Do you think the whole story about these deals will ever come out? Or is the corruption simply too widespread? Somebody is benefiting, and I couldn’t name a single normal business owner who is.

    After work, I’m reading the links.

    Wendy

  4. Steve says:

    “Targeted tax breaks” are not tax breaks. They are crony capitalism.

  5. Rincon says:

    ALL tax breaks are targeted.

  6. Steve says:

    Some are much more targeted than others….Tesla has some specific to Tesla while those fossil fuel tax breaks are equally applied to all business….

  7. Steve says:

    And we hear from the far, far, lefty wingnut again. This time announcing off the top he’s wrong!

  8. Rincon says:

    He’s not necessarily an idiot, but his memory isn’t always the greatest. Of course, I make the tacit assumption that he read my words in the past. After all, doesn’t everyone wait for my pronouncements with bated breath?

    Fact is, the fossil fuel companies receive a mass of government benefits unique to only their industry. To quote from a presumably nonbiased source, Investopedia: “Several major tax benefits are available for oil and gas investors that are found nowhere else in the tax code. Read on, as we cover the benefits of these investments and how you can use them to fire up your portfolio.” http://www.investopedia.com/articles/07/oil-tax-break.asp

    This article also doesn’t mention the largest breaks given to oil companies granting them royalty free drilling rights in the Gulf of Mexico, costing taxpayers tens of billions of dollars in foregone royalty fees. http://www.politifact.com/truth-o-meter/statements/2010/jun/16/edward-markey/markey-says-oil-companies-pay-nothing-gulf-drillin/

    I picked Politifact, but you can also find this information easily elsewhere.

  9. Steve says:

    And we continue down that old path…fun to reminisce, eh? I enjoyed sparking the predictable retort from Patrick.
    Lets move on, shall we? I believe the next step was:

    So called green energy has far more “targeted tax breaks” than so called “dirty” energy does.

    Then we had:

    End all “targeted tax breaks” for all. Up to and including the mortgage “targeted tax break”.

    And the last one before moving on to other topics of derision was;

    Stop trying to force people to spend their own money in ways one side or the other prefers.

  10. deleted says:

    Rincon:

    I guess there are plenty of words you could use, but idiot seems most appropriate.

    I mean just above he says that oil companies don’t get any tax breaks other businesses don’t get, and obviously the depletion allowance oil companies get (along with many other targeted tax breaks they get) is just example. How does anyone make such a dumb, unsupported statement, then, when the evidence is presented, they pretend it doesn’t exist?

    What other word can you use to describe that?

    He’s a fuking idiot if you ask me.

  11. Steve says:

    Patrck reads only the words he chooses to see.

    then he uses the false conclusions based on those selected words to try and make himself look like a cyber bully!

    laugh

  12. Rincon says:

    Eliminating all tax breaks is a good idea in my estimation. If the people are going to either pay for something or lose an equal amount of tax revenue, then subsidize it in the open and quit hiding behind the tax code. That being said, how come we don’t eliminate the biggest subsidy (or cost break if you prefer) of all for oil? If we had gotten off the foreign oil habit 30 years ago, we would have avoided 3 wars and 9/11. Should we have oil taxes pay for our coming war with Iran and our continuing costs in Iraq and Afghanistan or are we going to socialize the costs as we have all the others? Instead, maybe we should try to avoid the next war and quit buying so much oil from foreign countries.

  13. Steve says:

    Fracking has set the ceiling price for oil. 60$ bbl
    And fracked oil comes from US and Canada. So, believe it or not, even in this instance capitalism has worked, even in the lessening effects of those tax breaks.
    And the effects on so called “green” energy schemes!

  14. Rincon says:

    Capitalism works best when resources are vast. Until the technological improvement called fracking came along, we were not as fortunate. It is new technology that has saved the day, probably for our lifetimes. Unfettered capitalism guarantees though, that we will consume this precious resource as fast as possible until it becomes too expensive to use on such a large scale.

  15. Steve says:

    Fracking was discovered way back during the civil war.
    Water wells have been fracked since the 1940’s.
    http://oilprice.com/Energy/Crude-Oil/The-Real-History-Of-Fracking.html

    The real advance has been the ability to direct a drill to horizontal so it can bore along the shale.
    This was what took so much invention and that was made possible by our reliance on middle east oil pushing the price high enough to create a return on investment to create the technology needed to drill horizontally.
    The price of oil also prompted much of the push for fuel efficiency and electric vehicles. Even back in the 70’s people rushed to buy those Honda CVCC’s without any government incentives, remember?
    Again, it is capitalism we have to thank for this. Socialism would have simply called for “fair pay” and “living wages” to compensate for the price of energy.
    Capitalism should be allowed to push the prices of health care around too. Everybody claims to love their Medicare and Medicaid, but it’s really the healthcare industry that loves filling the right boxes, crossing the right “T’s and dotting the right “I”s to grab as much of that government money as they can.
    In fact this can been seen in how such a bloodsucker like Martin Shkreli could do what he did.
    Were it not for the regulations, originally created to protect people from snake oil, now turned into defacto subsidies for drug companies; people like Shkreli wouldn’t have a chance in that world.

    Check out his twitter reaction to the Australia school kids making one of his drugs in a grammar school lab.

    Their teacher, Alice Willimson, details the very reason this happens, the over socialized control of US healthcare in the form of false safety. We have gone too far.

    Williamson said:
    “We’d have to go through a whole new clinical trial because we would have to compare the Sydney Grammar stuff with the officially sanctioned stuff—and Turing would have to give us the drug to allow those comparisons to be made.”
    It’s the same exact stuff!

  16. Rincon says:

    So explain to me, if those countries with socialized medicine are so wasteful, why do they pay far less for drugs than us and why can they pay 40% less than we do and have citizens (and their babies) that live longer than us? Somehow, we’re getting inferior results for our money.

  17. Anonymous says:

    Ever look an English commoner in the mouth?

    I would say you are reading from “select” sources.
    Here’s what happens when competition is disallowed.

    http://www.weau.com/content/news/Tomah-VA-Veterans-could-have-been-infected-with-Hepatitis-HIV-403632336.html

  18. Steve says:

    Anon is me.
    Using a few different browsers on one PC as a test. Needed to add my info again!

  19. Steve says:

    And…… this browser doesn’t like the url site…
    Remember the 90’s?
    Browser wars are back, baby!

  20. Rincon says:

    “Ever look an English commoner in the mouth?”

    “Researchers have found evidence that British oral health is actually as good, or even better, than it is in the States.” http://www.webmd.com/oral-health/news/20151216/are-british-teeth-really-worse-than-american-teeth#1

    “I would say you are reading from “select” sources.” Let me make sure I understand you. Are you saying that we in the U.S. do not pay 40% more (let’s say 30% just in case it’s changed a little over the past few years. I don’t want to pick nits) than those in most other OECD countries?

  21. Steve says:

    NEver claimed something needs done, Rincon. Just stated ACA isn’t the answer and a commoner in Britain is a good comparison for those ACA was supposed to help.

    From page 2 of your link.
    “However, the dental status of the poorest and least-educated British appeared to trump that of their American peers, the study showed.”

  22. Barbara says:

    Being in the individual market, my insurance policy was cancelled for non-compliance at the start of 2105. Not wanting to pay a $6700 per person deductible and over $740 per month for a premium, I and my daughter went uninsured for 2015. I switched to Liberty Health shares recently where I pay $279 per month and am eligible to have my health care costs shared by other members after paying out $500 in claims. I have been completely satisfied and plan on staying with Liberty Health no matter what the government does with health insurance.

  23. Rincon says:

    And you say OTHERS are cherry picking? You glossed over these statements to find your little fig leaf:

    Study finds the English may actually have slightly better dental health

    Researchers have found evidence that British oral health is actually as good, or even better, than it is in the States.

    “[And] our results showed that Americans do not have better teeth than the English,” he added. “In fact, they had significantly more missing teeth, and inequalities in oral health were much worse in the U.S. compared to England.”

    Overall, American adults were found to have a higher average number of missing teeth than their British counterparts: 7.31 versus 6.97, the study revealed.

    The investigation also revealed that better-educated and wealthier Americans tended to be in better overall oral health than their British equivalents. However, the dental status of the poorest and least-educated British appeared to trump that of their American peers, the study showed.

    Keep in mind, I did not claim that Brits had better dental health. I was disputing your intimation that American teeth were better. The Brits pay 40% less and get essentially the same results.

  24. Steve says:

    Again, I clearly stated commoners. Then showed a specific example of one size fits all health care in common with the status of the British version.

    Your article was for the whole population of each country and you are trying to make it about the whole population….which ACA is not supposed to be about. VA health care is very much like what ACA has become, including the push to Medicaid for all who are similar to those English commoners….

    Commoners and the low/no income us population are the descriptors I opened with.
    It’s not me changing anything, you are trying to make it about the whole population. ACA (again) is not about the whole population.

  25. Rincon says:

    I think we both may have read too quickly Your quote, “However, the dental status of the poorest and least-educated British appeared to trump that of their American peers, the study showed”, clearly says that the dental health of British commoners is BETTER than that of American commoners.

  26. Steve says:

    So, privatize the VA, eliminate the “Individual Mandate” and put all the “American Commoners” on Medicaid with (patterned after the current VA model) one central location for all services!

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