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October 31, 2014

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Nevada’s tax deal for Tesla would be one of the largest in U.S. history

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AP Photo/Paul Sakuma

In this June 22, 2012 file photo, Tesla CEO Elon Musk waves during a rally at the Tesla factory in Fremont, Calif. Tesla Motors has selected Nevada for a massive, $5 billion factory that it will build to pump out batteries for a new generation of electric cars, a person familiar with the company’s plans said Wednesday, Sept. 3, 2014.

If it's approved, Gov. Brian Sandoval's $1.3 billion Tesla subsidy would be among the largest such offers in United States history.

A 2013 analysis by watchdog group Good Jobs First ranked 240 mega-deals offered by governments to recruit or retain major employers between 1976 and 2013. Each subsidy was at least $75 million.

By that ranking, Nevada's Tesla deal would be tied for No. 10. Only 13 deals have ever topped $1 billion, according to the group's research.

If Tesla uses all its incentives, the Nevada deal would be in the top three among subsidies for auto companies. Chrysler received $1.3 billion from Michigan, Nissan $1.25 billion from Mississippi, General Motors $1 billion from Michigan and Ford $909 million from Michigan. The three Michigan auto subsidies came in the wake of 2008 recession.

The only other Nevada subsidy to make the mega-deals list: An $89 million subsidy for Apple to build a data center near Reno.

Forty states had at least one mega-deal. Michigan led the country with 29 and New York was second with 23.

These big tax deals are growing more frequent. Between 2008 and 2013, the average frequency of mega-deals per year doubled compared to the previous decade.

Presuming Tesla's projected 6,500 jobs come through, the deal would cost about $170,000 per job. That's far less than the average of $456,000 for mega-deals where job figures were available.

With the exception of Apple, Nevada was a bit player in the business of government subsidies until today.

A New York Times' analysis in 2012 pegged Nevada's subsidies at $12 per capita, the lowest rate of any state.

By comparison, Nevada's competitors in the Tesla sweepstakes offered far more: California ($112), New Mexico ($123), Arizona ($230) and Texas ($759). Even Alabama offered nearly five times more than Nevada at $58 per capita.

Sun Library Services Specialist Rebecca Clifford-Cruz contributed to this report.

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