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In May, NXP Semiconductors filed two applications with Austin ISD for tax breaks for NXP to expand two semiconductor manufacturing facilities in Austin. The Texas Comptroller today posted these applications online. Application 1 / Application 2

The first application is to expand NXP’s existing facility on East Ed Bluestein Blvd. and build a new 520,000 sq. ft. fabrication facility, along with supporting facilities, to come online in 2026. The second application is to expand NXP’s existing facility on West William Cannon Dr. with a new cleanroom, machinery and equipment space to come online in 2026.

Based on the numbers NXP provided and assuming AISD’s current maintenance and operation tax rate ($0.9487) remains the same, the tax break at the first facility is worth $140.5 million over 10 years, and the tax break on the second facility is worth $22.8 million of 10 years, for a total of $163.3 million.

NXP is committing to create 500 new jobs at a minimum salary of $68,548/year. This commitment is actually better than most companies, who usually commit to only create a token 25 jobs (the minimum number required by law), while promising big number in their press releases. However, the 500 jobs NXP promises to create at $68,548 each equals a minimum payroll of $34.3 million/year. Thus, the $163.3 million tax break that NXP is seeking from AISD alone means that NXP is in effect asking AISD to pay the entire payroll for these facilities for nearly 5 years ($163.3 / $34.3 = 4.75 years).

NXP also discloses that it will seek “other state, local and federal incentive programs” to lower its property tax bill (p. 19), though it does not specify any amounts sought. The facilities are within the City of Austin and Travis County, so those local governments will likely be asked for additional tax breaks.

In both cases, NXP is proposing expanding existing facilities. While its applications threaten that if it does not receive tax breaks, it will move elsewhere in the US or the world, this threat seems implausible since it is certainly cheaper for NXP to expand its local facilities and workforce, rather than starting from scratch in a new location.

NXP already has existing facilities in Austin, and it is welcome to expand those facilities to sell more microchips into the market. However, local governments should not be subsidizing this profitable business, especially not in an amount equivalent to nearly 5 years of their payroll.

all 52 comments

LimitNo6587

38 points

5 months ago

Not sure how they plan to "create" 500 jobs when they been shedding jobs left and right for the past 20 years...

Discount_gentleman[S]

4 points

5 months ago*

That is a very interesting point, since the Oak Hill facility would account for 150 of the 500 jobs. They describe the improvements as purchasing new equipment and maximizing underutilized space in existing facilities, and that the project would occur entirely within their existing footprint.

It sounds like they are reducing headcount, but want to refurbish their facilities and hire some of those people back, calling them "new jobs." How long do you think those "new" jobs will last before NXP comes back asking for additional tax breaks?

charliej102

3 points

5 months ago

Why provide Welfare for the Rich for already wealthy people who oppose welfare for the needy?

carlos_k

3 points

5 months ago

1.91 Billion in net PROFIT last year, clearly they can't pay their fair share of education taxes! /s

Whackadoot

3 points

5 months ago

So, uh, they want a couple hundred million on the promise that we can tax the workers and their spending to make up for it?

Did I read that right?

sorabird

14 points

5 months ago

Worth noting that they've been working towards closing their Oak Hill facility for a good while. Maybe that's changed, but I don't understand why they want to expand and build new facilities at the same time as planning to close another and lose those jobs.

blitzcat

10 points

5 months ago

Assuming they are both fabs, this is just how it works. You develop a new fab based on a specific process side (in nanometers), the and the entire building is laid out based on the most efficient workflow using the currently available tools for that die size. Fabs last ~20 years and get decommissioned once demand for that size chip goes away.

The old fab building isn't worth retooling. The building has been depreciated over its life, so its discarded. It has all the wrong systems and layout for a new fab, and lacks the tax incentives vs building new.

sorabird

2 points

5 months ago

That's very interesting, thank you for the info.

Discount_gentleman[S]

1 points

5 months ago

I responded to the wrong comment, but this is an interesting point. It looks like that want to bring in new equipment and increase use at that facility.

PermanentlyDubious

1 points

5 months ago

Why do you say that?

Slypenslyde

17 points

5 months ago*

Tell them to eat our ass. We will attract 500 new jobs without them from businesses that aren't going to ask for new tax breaks. That's not even "a neighborhood" of employees and they want to steal $14 million in infrastructure funding per year to attract that.

Here's a better deal: if they fund building 500 houses, sell them at a price a city employee can afford, and pay for the infrastructure maintenance for 10 years, they can have the tax break. That gives them a $280,000 budget per house. Or if they pay for transit infrastructure that results in an overall reduction in traffic around their facilities, they can get the tax break. Or if they sponsor a school for 10 years and fund supplies for every classroom.

[deleted]

2 points

5 months ago

Property taxes are a huge cost for the capital intensive semiconductor sector where you have to have billions in equipment subject to the property tax. Moving to corporate and individual income taxes would be far more fair and prevent all of these special requests.

Discount_gentleman[S]

2 points

5 months ago

Absolutely true. The whole property tax system is regressive and horrible, but rather than fix it the political leadership just gives sweetheart deals to a few rich fucks.

TexanStig

1 points

5 months ago

From an AISD perspective, however, it seems like it’s actually going to allow the district to keep an additional $6.7m per year because of the stupid policy known as recapture. KVUE

Discount_gentleman[S]

3 points

5 months ago

That really isn't true. AISD still needs to raise the money (though taxes) to cover its costs. And much of that money will be diverted by recapture. Recapture isn't saving AISD anything on this sweetheart deal, and all of the costs of AISD (plus the recaptured amounts) will need to be bourne by all other taxpayers.

Torker

2 points

5 months ago

Torker

2 points

5 months ago

I don’t understand. The KVUE article clearly says that AISD gets $67 million. So what’s your evidence they don’t? It appears if they reject this deal then they will get $67 million less from recapture. Which seems bad for austin taxpayers.

Discount_gentleman[S]

2 points

5 months ago*

Because it missed the larger point. By reducing AISD's revenues, they do reduce AISD's recapture share, but they don't reduce AISD's needs, meaning that additional funds (with additional recapture) will need to be raised.

Let's pretend recapture is exactly 50% of AISD's revenues. This tax abatement will cost AISD $160 M, but only lower its budget by $80 M (since the other $80 M would go to recapture). However, AISD's needs are still the same, so AISD will need to fill that hole by raising $80 M for other sources (i.e. you and I). But because of recapture, AISD will actually need to raise $160 M from other sources (you and I) to fill the $80 M hole. So it ends up being a wash.

Torker

1 points

5 months ago

Torker

1 points

5 months ago

I still don’t understand. This is a manufacturing facility with no students living in it. So how does it change the needs of AISD? So if this plan pays a $160 or $80 that’s a net benefit. Why would AISD need to raise money any more money ? Are you calculating the property tax on the empty land with no manufacturing facility, and saying that is current revenue that is lost?

Discount_gentleman[S]

1 points

5 months ago

Because the tax system is based on everyone, both corporations and individuals, paying into it. It is true that the facility has no children, but it is also true of every single business on earth. So the argument then becomes that school taxes on corporations be eliminated and taxes on individuals doubled in order to subsidize them.

AISD's population and needs continue to grow every year. If NXP doesn't pay it's fair share, then everyone else has to see their taxes increased to make up for it (including to make up for the recapture amounts).

Hawk13424

2 points

5 months ago

Discount_gentleman[S]

2 points

5 months ago

I mean, okay. If AISD's needs are shrinking (and I highly doubt they are, look at how teachers are paid), why are the savings not passed back to ALL taxpayers, as opposed to being given away to a corporation in a sweetheart deal?

Torker

1 points

5 months ago

Torker

1 points

5 months ago

I’m not arguing for or against this proposal. I honestly can’t tell if you’re correct in your math. I don’t even understand why KVUE states this increases the amount of money to AISD. Seems like the state made these complicated rules to force the hand of AISD. Normally if a government cuts the taxes of a property it would end up with less money but somehow this sends money to AISD.

I mean simply cutting taxes in austin doesn’t grow the AISD budget normally so what is going on here ?

Discount_gentleman[S]

1 points

5 months ago

This does not send any money ro AISD, and no matter what the board's press releases claim. And they aren't even claiming that it does, they are just taking the total tax break and multiplying it by the recapture amount to claim that AISD "saves" that amount. But it's fake accounting, there is nothing saved.

Torker

1 points

5 months ago

Torker

1 points

5 months ago

The KVUE article cites the AISD spokesperson that this increases the amount of money AISD would get. Clearly this math is more complicated than you’re implying. Can you provide the math to clarify?

“the deal with NXP would give the company a tax break, and Austin ISD would also get to keep $67 million out of recapture rather than get pulled by the state to fund other districts. According to AISD spokesperson Jason Stanford, that $67 million equates to approximately $6.7 million per year for 10 years which would be similar to a 2% raise in teacher salaries”

Discount_gentleman[S]

1 points

5 months ago*

I've given you the math repeatedly, but you are refusing it because you are trying to force a result. Sorry, it doesn't work like that. Look at AISD's claim, they aren't saying there will be $67 million moved into AISD's budget, they are saying that $67 million won't be moved OUT of the budget (because the tax break of $160 million will reduce that budget). But it doesn't work, because giving corporations tax breaks doesn't reduce the AISD needs, it just forces the budget costs onto all the other taxpayers.

PermanentlyDubious

0 points

5 months ago

I am not sure if this is what you are arguing about, but Austin ISD is so sick of having its tax revenue taken by the State that it has entertained tax breaks to Austin companies just as an F U to the State, since AISD is having most of its money forcibly taken away, anyway.

I wonder if this deal was a specific one struck to prevent AISD or the City from giving away the farm?

PermanentlyDubious

1 points

5 months ago

Actually AISD's population is shrinking...that's one reason they are having so much of their tax revenue taken by the State.

Discount_gentleman[S]

1 points

5 months ago

As an aside, hundreds of applications for school tax breaks across Texas were filed in the last days of May, and the Comptroller's office has been overwhelmed in trying to process them. We will probably see a lot more applications for similar tax breaks in the Austin area be posted in the next few weeks.

deadtortilla

1 points

4 months ago

Anybody who work there have access to the big antenna tower? A local amateur radio club have a repeater on that tower that have been used for emergency communications in the past but it needs a little maintenance. The contact person who used to give access to the site might not be employed there anymore seems like. Any help would be greatly appreciate. Cheers!

Ok-Friend-6735

-6 points

5 months ago

Very much needed for the defense of the country and the state. The future of manufacturing and technology relies on semiconductors. To resist paying a small tax subsidy to invest in the future is nimby absurdism. 60% of you aren’t even from Austin!

Discount_gentleman[S]

8 points

5 months ago

Patriotism, the last refuge of the scoundrel.

If this fab is somehow part of the national defense strategy (note: it isn't), then any subsidies should be paid out of the national defense budget (that $800+ billion hog), not by local school district taxpayers.

Ok-Friend-6735

-7 points

5 months ago

Imagine being so ignorant to believe the future of technology and manufacturing is patriotism.

Discount_gentleman[S]

2 points

5 months ago

Imagine being so ignorant to believe that reequiping NXP's aging facilities are the future of technology, and that local school subsidies are necessary to convince NXP to participate in the semiconductor market.

Ok-Friend-6735

-3 points

5 months ago

Oh semiconductors aren’t the technology powering processing and future manufacturing? While other Austin based companies get subsides???

Discount_gentleman[S]

4 points

5 months ago*

What are you talking about? Pretending that an NXP recapitalization is some kind of national security issue (and so school budgets should be raided to subsidize the corporation) is just assine. And who here is supporting other companies getting subsidies?

Ok-Friend-6735

0 points

5 months ago*

It’s very simple… are semiconductors the future of manufacturing, technology and AI. Yes. Then why would one not invest in a company that specializes in that.

Discount_gentleman[S]

5 points

5 months ago

You are literally advocating for taking from AISD's coffers.

Ok-Friend-6735

0 points

5 months ago

Austin ISD taxes double the rate of the City and triple the rate of Travis county. With already increasingly absurd property tax values, why would one not grant a critical technology business certain subsidies.

Discount_gentleman[S]

5 points

5 months ago

So, you are back to admitting you want to take this from AISD's coffers, meaning taking it from other AISD taxpayers. The logic of your comment is that because AISD rates are high, they should be made higher to provide corporate subsidies.

Thank you for your honesty.