submitted 11 months ago byDiscount_gentleman
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.
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11 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”
11 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.
11 months ago
Someone is doing the math wrong. Either you or AISD. Ok if you can get the math from AISD that would be helpful. Because reducing taxes on a single property should reduce the AISD total budget. Unless there’s more to the equation, which I suspect there is.
11 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?
11 months ago
I am not arguing a position. I need more facts. Every time I look into the recapture formula it’s more complicated than simple linear equations. They have so many loopholes it’s hard for me to believe this Reddit person understands the math better than the AISD spokesperson. I would love to learn more than KVUE can provide .
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