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Wisconsin Won't Break Even On Foxconn Plant Deal For Over Two Decades (theverge.com)
Last month, Foxconn announced plans to build a $10 billion factory in southeastern Wisconsin in exchange for $3 billion in tax breaks. While the factory was heralded as a big win for President Trump and Governor Scott Walker, a report issued last week says the plan is looking less and less like a good deal for the state. In the report, Wisconsin's Legislative Fiscal Bureau said that the state wouldn't break even on its investment until 2043 -- and that's in an absolute best-case scenario. The Verge reports: How many workers Foxconn actually hires, and where Foxconn hires them from, would have a significant impact on when the state's investment pays off, the report says. The current analysis assumes that "all of the construction-period and ongoing jobs associated with the project would be filled by Wisconsin residents." But the report says it's likely that some positions would go to Illinois residents, because the factory would be located so close to the border. That would lower tax revenue and delay when the state breaks even. And that's still assuming that Foxconn actually creates the 13,000 jobs it claimed it might create, at the average wage -- just shy of $54,000 -- it promised to create them at. In fact, the plant is only expected to start with 3,000 jobs; the 13,000 figure is the maximum potential positions it could eventually offer. If the factory offers closer to 3,000 positions, the report notes, "the breakeven point would be well past 2044-45."
Literally everything in your post is wrong. This is a state thing, not a Trump thing. He might jump out in front of the parade and try to take credit, but this has been in the works since long before he came along and involves Wisconsin tax credits, not federal tax credits. It isn't a trade deal, it is a package of tax incentives to locate a factory in a state.
The only thing you got right was being snarky about the deal, because crony capitalism and sweetheart deals are worthy of snark. But this deal is standard fare for big factories being newly sited. States bid against each other to draw investment, just like cities bid against each other to see who can give the most money to a billionaire to build a stadium for his NFL team.
The Wisconsin Foxconn deal being about "tax breaks" is a fiction propagated by the two sides making the deal. It's best to forget that phrase here. Instead, almost all of the $3 billion that Foxconn is eligible to get is in the form of INVESTMENT and PAYROLL CREDITS. Each year, if they hit certain targets, the state cuts them a check.
Tax breaks mean that the public costs involved in starting up that new plant have to be borne by other taxpayers, other companies.
You may not care about the free market, but this is a case of the government picking winners and losers.
You are welcome on my lawn.
This is not "breaking even" because they did not pay any money out to begin with. If Foxconn pays even one dollar in taxes, then Wisconsin has more revenue than it would otherwise.
Nope. I checked the PDF linked in the summary. Foxconn will be receiving a refundable tax credit, which means the state is forecasted to write them a check for hundreds of millions for several years, in addition to any infrastructure expenses the state will occur.
Don't believe me? Check the PDF yourself, which outlines the estimated payments in Table 1 on page 13. Table 4, on page 17, shows the break-even analysis, which compares the net of state payments and increased taxes.