Tesla Motors Inc.’s decision to build a $5 billion battery factory just west of Reno in Storey County continues to pay dividends, not only for the region, but the entire state.
The so-called “Tesla effect” has seen company employees starting to relocate from San Francisco to Northern Nevada. Other companies are looking to relocate or move part of their operations because of Nevada’s favorable incentives and corporate tax structure.
Those factors got Bloomberg BNA to try and understand the extent of tax issues’ effect on U.S. corporate decision to relocate, or invest in new states. The nine-page study, released earlier this month, ranked Nevada second among states with the most favorable corporate tax environment.
Nevada was listed just behind Texas and ahead of Florida. California, New York and Illinois were listed as states with the most adverse environments.
The report found Nevada was named the most favorable state in the West, with 40 percent of respondents claiming they would choose Nevada in a hypothetical relocation.
“If we look at the survey, Nevada’s business climate ranks very high,” said Diane Tinney, senior product manager for Bloomberg BNA. “That’s not very surprising. You’re a business friendly state, with no corporate income tax.”
Corporate tax professionals listed corporate income tax as a top concern when relocating operations to a new state, according to the report.
Tinney cited Zappos in Las Vegas and Apple and Tesla in Northern Nevada as examples of companies thriving because of the state’s corporate tax structure. In September, Nevada offered Tesla a $1.3 billion package to build the world’s largest lithium-ion battery plant.
Tinney said it’s not always about the tax rate, but the whole package of what a state can offer a company to move their or stay in their current state. In Nevada’s case, she said, the political climate, state and local economic development officials’ ability to work with companies, and a welcoming attitude toward new businesses.
Tinney said the survey of 100 U.S. corporate tax professionals occurred as the Nevada Legislature was debating Republican Gov. Brian Sandoval’s $7.3 billion budget. Sandoval’s budget included a $1.4 billion tax package, most of which is to be spent on investments in education.
Tinney didn’t believe the new taxes and fees would cause hiccups or be a negative to Nevada’s efforts to lure businesses. She said for companies and corporations it’s all about what a deal “looks like from a cash flow perspective.”
Other key findings included most corporations (84 percent) have been offered incentives by a state or local economic officials for a new development or corporate relocation. At the same time, only 33 percent of corporations surveyed have been offered incentives to stay in their current state, suggesting that poaching is more frequent than cutting deals to keep companies from leaving.