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Nevada: Tax Breaks to Amazon and Tesla


 What do Tesla and Amazon have in common?

Tax incentives have the power to turn heads. Would the powers behind Amazon and Tesla have looked at Nevada were there no tax incentives to draw their eyes?

Amazon

Amazon.com, the world’s largest online retailer, will receive Nevada tax breaks in exchange for spending $28 million in capital equipment and building improvements at a new warehouse in Reno, slated to open in 2015.

All but the constitutionally imposed 2% sales tax will be abated, along with “abatements of half of the modified business tax for four years and half of the personal property tax for 10 years.” Nevada stands to lose $1.3 million in taxes. Presumably the benefits outweigh that cost.

The company is planning to close its distribution center in Fernley, which is located approximately 30 miles east of Reno. The new Reno warehouse will be “a completely different operation than the Fernley facility,” according to Mike Grella, Amazon’s executive director for development. The Reno facility will focus on large items, such as big-screen televisions. The Fernley facility focuses on small items that can be loaded on conveyor belts.

Amazon began collecting Nevada sales tax on January 1, 2014,

Tesla

Last month, Nevada Governor Brian Sandoval (R) announced that Tesla will build a $5 billion advanced batter factory in the state. Competition for the factory was fierce. To secure the deal, Nevada offered a generous tax incentive package that includes a ten-year exemption from property taxes and a 25-year exemption from sales tax and employer excise tax. Close to $200 million in transferable tax credits were also approved.

In exchange for the incentives, Tesla will create:

  • $100 billion in economic impact to Nevada over the next 20 years.
  • 3000 immediate construction jobs for Nevada workers
  • 6,500 jobs on site
  • 16,000 additional jobs in the community

Governor Sandoval assured that the deal made good economic sense for Nevada. He said that more than $80 in economic impact would be received for every $1 spent in tax incentives.

Not every business receives tax incentives, but many can benefit from automated sales tax software. Learn more.

photo credit: AMagill via photopin cc


Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.