Upon hearing the news that Tesla – the electric car company initially funded almost exclusively 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.

The Arizona Free Enterprise Club strongly urges voters in Maricopa County to reject a proposed $935 million hospital bond (over a $1 billion with interest) this November that would raise property taxes and reduce the quantity and quality of health care choices for valley residents.

Proposition 480 asks voters to give the Maricopa Integrated Health System (MIHS) a $1 billion general-obligation bond to pay for a dramatically expanded public hospital system with little accountability or transparency on how the money is spent.  This billion dollar blank check for MIHS will likely lead to financial mismanagement and cost overruns that will leave taxpayers on the hook.

Additionally, Prop 480 would represent a dramatic increase in government-run healthcare at a time when our state, and our nation, is still trying to cope with the uncertainty and spiraling costs of Obamacare. By expanding the county hospital system, privately-run hospitals and facilities are further crowded out – forcing people into government systems with fewer choices and longer wait times.  The costs of sustaining and expanding government healthcare continue to explode, with no end in sight.

Taxpayers would be wise to avoid giving MIHS a billion dollar blank check that will increase taxes and adversely effect our health care system. Join us in opposing Prop 480.



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The Arizona Free Enterprise Club is a free market policy and lobbying group dedicated to promoting a strong and vibrant Arizona economy.