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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."
In previous years, Foxconn has promised to build other large plants in other US states - but never actually built them.
#DeleteChrome
Assuming it even gets built - the lifetime of these highly automated plants is not two decades. It will need to be rebuilt in order to not close down prior to that point. There will be a whole new set of "incentives" at those points in time to keep the plant.
But, the construction companies - often owned by the associates and family of local politicians - will make a killing. The "incentives" likely won't even cover their planned cost overruns. That's all that matters to the powers that be - the kickbacks and other gains to be made during the up-front expenditures.
The goal of those in power has been reached when the construction money has been spent.
Does anyone not understand that our President is in the business of real estate?
Foxconn is not a Chinese company.
That depends on what you mean by Chinese. It's founded and headquartered in the Republic of China (Taiwan), which the US won't formally recognize as a sovereign country to avoid pissing off the People's Republic of China (China), who considers Taiwan part of China ("One China" doctrine). So there's a charade, where the US pretends it's dealing with a Chinese company, and Taiwan doesn't correct them, to keep everybody happy.
They threatened to pull out if the city or county didn't offer them massive tax incentives. As soon as the incentives were up, even though the contract was supposed to be for a number of years after that, they shuttered the plant, laid off a few hundred full time workers, plus all the seasonal staff.
Big fuck you to everybody who'd been working there from up to 50+ years before. As a result I've been boycotting Campbell's and Pepperidge Farms for over 5 years now. Look into your region situations and you will likely do the same.
People blame globalization for all the woes without looking at how much of it is really the people and companies closer to home.
If they don't have the factory, they never get any tax revenue of course.
Many economists would disagree. If a labor pool is available, it is likely that someone else would invest or start a business there instead. So this factory may just be replacing one set of jobs with another. The difference is that the alternative jobs wouldn't get any tax breaks, so the people of Wisconsin might have been better off if they had declined Foxconn's offer.
From what I read, Foxconn only gets an annual credit IF they employ a certain amount of people in the first place. So when they automate - they stop getitng credits. They don't get bilions up front, they get it paid out over years. Years in which they have to employ so many people to get the credit in the first place.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Ah, the secondary business scam -- the one where businesses claim large multiplier effects on secondary revenue and employment that mysteriously do not apply to other employers in the area since, if true for all, small business owners would be swimming in gold plated swimming pools and unemployment would be -50%.
None the less, these tax breaks are really just a prisoner's dilemma. State offer them because other states offer them, but they would all be better off if no one offered them, and factories were optimally placed based on other factors.
No no no no.... This is a global market. The option of placing this factory in the USA anywhere is dependent upon these tax breaks, as the amount of taxes, fees, regulations, etc, to create this factory in some other country is vastly lower. Think about this for a moment... the state is not GIVING them $3 billion dollars. The state is simply NOT TAKING AWAY $3 billion dollars in the form of taxes for some amount of time up-front. You think if this plant was in China there would be a $3 billion dollars in taxes collected from a plant like this? LOL on the contrary, the government would probably be footing or subsidizing the cost of building the plant in the first place.
We would likely all be better off if there was a federal law to ban this nonsense.
And on a totally different note, the federal government needs to keep its grimy hands off of state business. The States have the right to certain modes of tax, or not to tax as they see fit. I'm sick to death of people advocating the loss of States' rights just because it happens to result in a ruling that aligns with their personal philosophy. New Hampshire has no sales tax, instead they raise their taxes through real estate taxes. Other states have high sales taxes and low real estate taxes. Diversity and many different personalities and tax structures among the states is a very good thing.
Better known as 318230.
I remember the old days when someone would start a business, maybe take out a loan to do so, maybe not, then manage the business to make profit while paying a reasonably fair wage, maybe provide health insurance. Apparently that’s no longer considered the proper way to manage a business. Going public with an unprofitable business is considered the right way as well as shaking down the government for handouts as perks. Me, I can’t understand how the new way is better for society. (Yes, I understand that the Foxconn deal, were it to actually happen, would probably be a net good for the hires, but I don't see how the state benefits.