Upon hearing the news that Tesla – the electric car company initially funded in large part by government handouts – had decided to build its new battery plant in Nevada instead of Arizona, politicians and so-called job creation experts cited it as another example of how Arizona needs to increase incentives to be more competitive.  But as more details emerged from the final subsidy agreement, it is more accurate than ever to say that taxpayers never win when their elected leaders engage in a crony capitalist bidding war.

Of course, we all want to build a strong business environment in Arizona so employers look to us to build and expand.  That’s why we fight for lower taxes and a more sane state regulatory policy for all businesses.  However, when the government starts picking winners and losers, and negotiates sweetheart deals that end up hurting the economy more than helping, it has simply gone too far. And boy, did the Tesla deal go WAY TOO FAR.

As reported in the Wall Street Journal, Tesla was successful in extracting over $1.3 Billion in special tax breaks to help fund about 25% of the cost of the new battery plant.  Tesla will be exempt from paying property taxes for 10 years and sales taxes for 20 years, and will receive an additional $200 Million in transferable tax credits that they can sell to other businesses. Conveniently, this giveaway could not come at a better time as the company is hemorrhaging cash (it has $2.6 billion in cash and $4 billion in liabilities) and has overhead costs skyrocketing.

What does Nevada taxpayers expect to get in return for their “investment?”  Tesla projects to employ about 6,500 workers, which comes out to over $200,000 per job created.  All paid for by taxpayers.  It’s no wonder that many even consider the sweetheart deal to be unconstitutional.

Crony capitalism is nothing new.  In fact, the head of Tesla is a known master of the practice.  But it’s about time hardworking taxpayers stop paying for it.