A New, Progressive Tax That Even Republicans Like

No, there are no typos in the headline. A new tax is sweeping the states, having already passed in both Democratic (Washington) and Republican (Virginia) controlled legislatures, and is on the fast track in states like New Jersey (Democratic legislature, Republican governor) and North Carolina (Republican legislature and governor).

I know, I know, Republicans are the party of "no new taxes" and the Norquist pledge. So I've got to be pulling your leg. But no: Washington and Virginia have both passed new fees on electric and hybrid vehicles because they pay less in gasoline taxes since they obviously use little or no gasoline. New Jersey (see link above) is considering a tax on every mile an owner drives (talk about government intrusion and paperwork!), regardless of whether the car is gas or electric, to make sure that electric car owners pay their fair share for road  upkeep. North Carolina plans a fee of $100/year on electric vehicles and $50/year on hybrids.

If you have seen the story on North Carolina's "Moral Monday" protests, you know that the Republican legislature is passing laws to restrict voting rights and to cut [insert almost any program here, not to mention taxes] as fast as is humanly possible So I have little doubt that North Carolina will have this law approved by the end of the legislative session.

I'm just not sure Republicans have thought through all the implications of these taxes. Most significantly, they are progressive in nature, as they would only be paid by people rich enough to afford high-priced cars like the Tesla and the Chevy Volt. And Republicans like their taxes as regressive as possible, as state after state has reduced personal and corporate income taxes while raising the sales tax

Better not tell them. Their heads might explode.

Yes, $11 million per job is possible, and a record

I posted on August 29 that it appeared that Sempra Energy had received $55 million in federal tax credits and Nevada incentives for a solar generation facility in Boulder City, Nevada, to just create five jobs. I wondered if this were even possible.

In the course of working to update a table of the largest incentives in the U.S. for an academic article, my research assistant found a website of Department of Energy loan and loan guarantee programs that shows how many jobs each recipient was expected to create. It turns out that solar generator Fotowatio Renewable Ventures, Inc., which received a $45.6 million loan guarantee, will create just four jobs. Granite Reliable's wind generation facility, which received a $135.8 million loan guarantee, will create just six jobs. Note that a loan guarantee does not have a subsidy value equal to its face value, but much less: essentially it is equivalent to what it would cost to obtain such a guarantee on the open market, but that is difficult to determine. I will not attempt this calculation here.

But these figures show that Sempra could indeed just create just five jobs for its Copper Mountain solar generation project, especially since it was adjacent to an existing facility. Thus, it appears that Sempra's subsidy package really does come to $11 million per job. To the best of my knowledge, this is the first time a project has cracked $10 million per job. Obviously, energy is the point of this subsidy, not jobs, but it is still an amazing number. Using a different measure called aid intensity, we find that the subsidy equaled 39% of the $141 million cost of the facility. That is a high intensity, but hardly off the charts. A comparison with aid intensities in the European Union would be useful, and I hope to be able to do that soon.

Update: Sempra Energy, the recipient of this subsidy, has one campaign contribution show up on the Open Secrets website for the 2008, 2010, or 2012 election cycles: $2500 to the San Diego County Republican Central Committee . Nevada Governor Sandoval was there for the ribbon cutting, since Nevada state and local governments contributed $12 million in subsidies for this project.

$11 million per job? Is that even possible?

The Las Vegas Review Journal reports that Sempra Energy received $55 million in federal tax credits and state incentives to build its 48-megawatt Copper Mountain Solar Facility in Boulder City, Nevada. This is the largest facility of its kind in the country. While construction of the project required 350 people, both sources say that only 5 permanent jobs were created. That would mean each job cost taxpayers $11 million! I've never heard of a cost per job that high in all the time I've been writing about subsidies. A couple of million per job for data centers, I've heard of that. But over $10 million per job? I'm flabbergasted.

I wonder if that is even possible. How do you run a 48MW power plant with 5 people? I understand that it just sits there collecting the desert sun during the daytime. Doesn't it need 24-hour security? Doesn't it need maintenance from time to time? Couldn't some of the 775,000 solar panels suffer damage sometime? Even a few more jobs would quickly lower the per-job cost.

Consider this a plea for help. The energy industry is not my specialty. So, if anyone knows more about solar plants, or Nevada, or especially this project, please let me know what a reasonable level of employment would be, either in the comments of by email. Thanks in advance.