Las Vegas pays for state’s tax incentives to lure Tesla, Switch, but sees little benefit from the deals, LV think-tank director says

By Ray Hagar, Nevada Newsmakers

Las Vegas lost out on the majority of economic benefits when the state made tax-incentive deals with major companies — like Tesla and Switch — to lure them to Nevada, an executive of a prestigious Las Vegas think tank said on Nevada Newsmakers.

Robert Lang, director of the The Lincy Institute and Brookings Mountain West, told host Sam Shad that Las Vegas taxes paid for the deals to lure the tech giants to Nevada but Las Vegas residents saw little benefit after they arrived.

“My problem with incentives in this state is that Las Vegas generates the majority of the tax base, which would allow you to offer incentives,” Lang said. “In other words, if you have a tax to abate, you have to have a lot of taxes in the first place. Las Vegas produced even more (taxes) than its share of the population, which is 75 percent of the state’s population.”

Nevada’s system of tax incentives also favors regions with large percentages of white residents, Lang said

“It is a system that systematically produced a greater public investment in a part of the state that has a much larger white population and much larger native-born-in-the-state population than Southern Nevada, which is not only the leading place for minorities, which has something like 90 percent of foreign born and 90 percent of African-Americans, but is also the leading tax generator,” he said.

Lang cited statistics that showed from 2011 or 2012 to 2018, Las Vegas only got 23 percent of the economic benefits of state tax incentive plans. Storey County, where Tesla and Switch are located in the Tahoe-Reno Industrial Park, got 66 percent, he said.

“The North got basically three quarters,” he said.

“It is really easy to diversify your economy when you have an entire state of 3-plus million and and a metropolitan area (of Las Vegas) of 2.3 million pumping the money in.”

Without Las Vegas’ tax base and population, Nevada would have the bargaining power of North or South Dakota, Lang said.

“I didn’t see any of the Dakotas bidding on Tesla,” Lang said. “Without Las Vegas, Nevada is a Dakota. It’s got 800,000 people and the biggest city is Reno? It would not have been in the game. Idaho wasn’t even in the game.

“So you needed Las Vegas to leverage that and it (tax incentives) is invested several hundred miles away in a county that’s got 4,200 residents and is 92 percent white,” Lang said, referring to Storey County. “And you need a county with 2.3 million people, which is majority-minority, who had worked to produce the capacity to offer such an abatement.”

Las Vegas is missing out on potential jobs because of the state’s tax-incentive system that favors Northern Nevada, Lang said.

“All of these kids (from Southern Nevada), whose parents have been working in the gaming industry, those parents want their kids to have alternative (job) opportunities to gaming. Everybody in the culinary has been working (for this).

“They (state of Nevada) did provide that opportunity — 400 miles away,” Lang said, adding another North-South gripe:

“Don’t even get me started about the public investment between the two universities (UNLV and Nevada, Reno).

Lang said his opinions will be laid out in an upcoming book that he co-authored, “Blue Metros, Red States, the Shifting Urban-Rural Divide in America’s Swing States.” Co-written with Dave Damore and Karen Danielson, it is due out on Oct. 9, Lang said.

“It’s all about the bluest metros, that are 1-million plus (in population) and keep producing excessive amounts of revenue for states and those states fail to return a majority of that revenue to the biggest metros for their own economic development, infrastructure, social services, education and so on,” Lang said. “It is a phenomenon around the country but Las Vegas is an exemplary case.”

The Switch Tahoe Reno 1 Data Center billed as is the largest, most advanced colocation facility in the world and it was “poached” from the Las Vegas area, Lang said.

“We were told the one business, the one sector that is really succeeding in Southern Nevada — data hosting — that we have to share that with Reno?” Lang said.

“No one told Boeing, hey, we will give you a deal to build the 787s in Seattle but you’ve got to do the air frames out in Spokane,” he added. “Switch was poached from Las Vegas, through an incentive that required a number of jobs be in Reno or the incentives would not kick in.”

Lang was also angry about a t-shirt he said students are wearing on the University of Nevada, Reno campus.

“There’s a t-shirt that kids walk around with on the UNR campus,” Lang said. “You know what it says? It says ‘Make Nevada Great Again.’ And it shows a wall across Southern Nevada and is says, ‘Build The Wall.’

“Build that wall and you cut off most of your taxes,” Lang said. “Build that wall and you cut off most of your diversity. So it would make Nevada great again to reduce 90-something percent of the minority composition of the state?”

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