Foxconn grabs $3 billion tax break from Wisconsin. As the New York Times reports
“Foxconn’s plan for a $10 billion factory in Wisconsin is certainly good news for President Trump and Republican politicians Gov. Scott Walker and Speaker Paul D. Ryan, whose district the plant would call home.
But the deal with Foxconn, the Taiwanese electronics supplier, comes with a heavy price tag for Wisconsin taxpayers: $3 billion in state tax credits that dwarf the typical incentive package companies receive from local governments.”
Washington State currently gives away more in tax expenditures (tax breaks) than it collects as revenue from the same tax base. Wisconsin is obviously following the same route. However the real question is whether these huge tax breaks to lure business to a state make sense or are just more corporate welfare for Big Business at taxpayer expense.
As the New York Times article goes on to mention:
“Over all, the subsidies for the Foxconn plant, which would produce flat-panel display screens for televisions and other consumer electronics, equal $15,000 to $19,000 per job annually.
That compares with $2,457 per year in the usual incentive arrangement, according to Timothy J. Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich. The new Foxconn jobs are expected to have an annual salary of at least $53,000 plus benefits, according to Mr. Walker.
“It’s a very, very costly package, and I’m skeptical that the benefits justify such big incentives,” Mr. Bartik said. “This is well beyond the typical deal.”
Instead of Foxconn paying $53,000 per year to their workers, they have the state pick up $15,000 to $19,000 of that cost. What a great deal for Foxconn and its stockholders.
As noted by Greg LeRoy:
“If Foxconn lives up to its investment commitment and receives the full $3 billion tax break, it will be the fourth-largest incentive deal in United States history, according to Greg LeRoy, executive director of Good Jobs First, a nonpartisan nonprofit research group in Washington that tracks economic development subsidies.
“We can only describe this as a gift from Wisconsin taxpayers to Foxconn shareholders,” Mr. LeRoy said. “This is a guaranteed loser for the state.”
Whatever happens to the the old Republican mantra of conservative economics that the goal of the free enterprise system and limited government meant that they did not pick winners and losers? It certainly looks like they picked Foxconn to be a winner and state taxpayers to be the losers here.