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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."
It wouldn't be happening otherwise.
“He’s not deformed, he’s just drunk!”
I-94 North-South Freeway Project may be moved up!
the brat stop can use more people eating there!
Well, at least Trump was right about America making the "worst trade deal in the history of trade deals, maybe ever". Only thing he got wrong was claiming someone else was responsible for it. "Big win" indeed.
While that is possible..
The major factor here is mostly votes I suspect.
Basically the local politicians can use public money to buy 'jobs' (at obviously stupid prices, as ITS NOT THEIR MONEY, so they dont care).
The locals get pummeled with 'we bought new jobs! tech ones even!!' in elections, and vote accordingly.
The downsides for the politicians are small, and far in the future (never pays off, jobs evaporate, etc), so for them its a win.
for the locals? not so much (to say the least).
Remember folks, a politicians ONLY priority is to stay in power, or even better gain more power.
They sometimes rationalize this to themselves as 'helping' because after all, they see themselves as the best person to be in power.
The only rational solution is to vote against over pending politicians, however the majority doesnt see that, so it is bordering on impossible.
Democracy only works when coupled with *personal* *responsibility*. As that has basically been eradicated in public office jobs throughout the west certainly (but not exclusively), democracy is now just a way to swindle the voters.
Solutions to this are all shot down HARD as not being 'inclusive' or 'fair' - which is likely why the powers that be are pushing such concepts so hard these days (and no, I dont mean removing womens votes, so dont play that stupid strawman, there are plenty of incompetent voters from all genders, beliefs, walks of life..)
Just remember folks, you are paying the Chinese to give you a few measly jobs back, and you are paying more than the jobs will ever return...
Does it feel good?
You need to actually read before you comment.
They are not being given a tax break on profits, they are being given redeemable tax credits which they can trade directly for CASH each year.
So, it all becomes a simple matter of applying the Apple/Google/etal tax method of pushing a whole ton of 'licensing fees' back to china to make sure the factory never actually earns a dollar, and then claiming those nice fat credits yearly as cash payments.
No wonder Foxconn are considering more factories in the US - its basically free money.
This is faked news. President Trump did FANTASTIC work bringing thousands of jobs to Wisconsin just like he promised. Once again we see how liberls twist and lie about basic facts to push their agenda.
At least with MA/CT, you pay state taxes to the jurisdiction that you work first, not where you live. You then take that money off of whatever you may owe the state you live in. This is actually good for the Wisconsin as other than the roads the only thing an out of state resident worker costs is road upkeep. A drop in the bucket compared to what residents taxes fund. Now you can talk municipalities losing revenues. But really their budgets are based on number of residents and is geared to break even for the most part. Considering most of these workers would be the age to have a family and most of a towns expenditures are for schools this really isn't a big deal having out of state workers either.
I'll give it a shot: looking only at tax revenue from people working at the plant is incorrect accounting. A large factory creates more jobs in the supplier ecosystem it supports, everyone from vending machines to lighting to plastics and on and on. That's people recouping more money, and that's people who aren't as likely to end up on the welfare roles than if the factory weren't there.
Here's the Republican math: the best social program is a job.
...because I was going to steal $100 from someone but only got to steal $40.
Bottom line is, people in the area will be getting jobs, and they will be getting more tax revenue than if the plant didn't come to the area altogether. The fact that an increase in a population's wealth and production can be spun into the state losing money is amazing.
In previous years, Foxconn has promised to build other large plants in other US states - but never actually built them.
#DeleteChrome
The Fiscal Bureau did not consider the substantial savings that the Social Security and Medicare programs will realize over the years.
Every employee that jumps off of the roof of the factory will save the state well over $100,000 in retirement benefits that will never need to be paid, which will make the break-even point much sooner. That's why part of this deal stipulates that the plant buildings must all be at least 15m tall, and they must be directly abutted on all sides by concrete pathways.
That is ridiculous. Of course the state will incur extra costs because of this plant. To suggest otherwise is disingenuous.
Then, there is the fact that such an approach has knock-on effects: it becomes a race to the bottom. Other companies will demand similar deals just to stay in the state.
Go ask Kansas how well things work when you run your budget at the bottom. Ask people how things work when you can't pay your teachers.
The real "Libtards" are the Libertarians!
Wisconsin Won't Break Even On Foxconn Plant Deal
FTFY.
Or to be really clear:
Wisconsin Won't Ever Break Even On Foxconn Plant Deal
The real "Libtards" are the Libertarians!
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.
It's called Alt-Right Conservativism, you give a ton of Tax Payer money to a foreign company to open a factory, they open the factory for a few years then automate the jobs away and walk away with all the Billions of tax payer money. The tax payers are fucked over and rich people get richer, what's not to like?
Given that the govt does very little for individuals and spends most of its budget on creating an environment where businesses can operate without people just looting them or stealing their IP or bouncing cheques on them you have it ass backwards. Individual income tax needs to be abolished and only corporations should be taxed on their revenue (not profit). They are welcome to distribute all their after tax profits to the owners tax free once they have paid their fair share.
**Life is too short to be serious**
That's good to know, thanks.
"First they came for the slanderers and i said nothing."
I think people would be more than happy if more companies demanded the same treatment, since they would all be creating jobs and building $10B factories.
They are SPENDING $10B in-state, I did the calculation when the original announcement broke, Wisconsin breaks even pretty much within the next few years when it comes to the amount of money the state 'gets back'.
Let's say they're not even hiring anyone, Wisconsin gets ~0.5B back in income taxes when Foxconn gives the money to anyone that builds the plant.
Let's say this building and the economic increase in spending within the area results in 10,000 people that no longer collect unemployment, there is another ~0.5B in state services they no longer have to spend.
There you go, 3 year payback and you haven't even calculated the ancillary services that building a facility like this produces, 10000 people need houses, need cars, need appliances, need repairs, need contractors, ... You're pumping $0.5B/year into the economy on wages alone.
Custom electronics and digital signage for your business: www.evcircuits.com
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?
10 - 3 = 7. It sounds like Foxconn is dumping $7B into the state. How long will it take the state to break even from the $7B opportunity cost?
50 years ago, IBM came to Austin and set up shop. Texas Instruments followed. At this point, it is a thriving tech mecca sucking many people away from Silicon Valley. Why?
Its not just because of IBM but it is also because of the "pro" business attitude of Austin and Texas in general. At the same time, California has become fairly hostile to business resulting in a carrot and a stick: Texas offering the carrots and California whipping with their sticks.
Yes... there are pros and cons to each side but you either want growth or you don't. If you don't want growth, that's fine but politicians would run on "no growth" platforms if that were the case. But they don't because generally growth is considered progressive, positive, futuristic, blah blah blah. Voters vote pro-growth. The confusion comes when they find out that pro-growth equates to pro-business. Then they have ambivalence and second thoughts.
Wisconsin could build upon this seed and over the next 50 years build up to a viable competitive center for high tech manufacturing; or... they could botch it.
$100 says they botch it.
Nahhh... many many people just hate.
Why don't they just take that money and give it to taxpayers instead?
The best thing for Wisconsin would be for this to end up like the Foxconn factory in Harrisburg, Pa - they didn't build that one.
The government of the State of Wisconsin doesn't exist to "break even" or make a profit. They exist to serve the people in the state. A huge factory directly employs thousands, and indirectly employs many more at support businesses and businesses that will provide goods and services for Foxconn employees.
If Wisconsin becomes a prime location for manufacturing of display panels, it will be a huge win for the people of the state, regardless of whether Foxconn ever pays a dime in tax.
No. Trickle down economics doesn't work... never has, never will. Businesses are not what drives the economy, consumers are; if consumers don't spend, businesses blow in the wind and die.
Fascism: An authoritarian and nationalistic right-wing system of government and social organization. See also: NAZI's
I think people would be more than happy if more companies demanded the same treatment, since they would all be creating jobs and building $10B factories.
A race to the bottom is one we are sure to win, and that is a pity. Infrastructure, defense, and yes social programs for those that need them do cost money.
There are only two questions really.
1. How much of those things are we willing to pay for.
2. Who is going to pay.
3. (Yes I said two.) The unwritten third is if you don't pay for certain programs and such then how much are you going to pay for law enforcement and jails? That may be higher.
Some of the best places to live also have high taxes, but then those taxes go to making it some of the best places to live. The real problem is the really crappy places have no real tax base, plus once you get crime and all the rest, you can't afford to fix it. Sure you can jack property taxes up to stupid levels, but then more people leave. Dropping property taxes doesn't magically fix such places, because then you have even less money to work with.
Personally I think we need fewer sweetheart deals for companies. It invites corruption. We also need it nationwide. A state can lower or raise taxes, but not for specific companies, though taxing pollution and has potential.
Foxconn didn't get where they are by providing great paying jobs. I'm not sure I buy that they are going to suddenly do so now. To build a factory in America means they believe they can profit more than the same good or service built elsewhere and shipped here, so basically your increase in salary is the shipping costs. When you factor in actually having some environmental controls, assuming Trump's wrecking crew don't ruin them all, well I can't see many people getting paid much.
Personally, I bet they automate almost everything and that is how they make it profitable. So you likely have some engineers making some decent money, and thats it, and even then, those engineers don't have to be American citizens. They could develop offshore and transfer the results.
MARGA - Make American Robots Great Again?
And yet the state still has to cover the cost of things like unemployment, sewage treatment, roads and all the other things that Foxconn and their employees will make use of but won't pay for, since there will be no payroll taxes. The state will have to pay for unemployment when the jobs are automated away, and Illinois will clean up since many of the people will just commute from there over the border. Foxconn now gets the city and state to pay for maintaining all the roads for the workers without paying a dime. Similarly, there are all the other services Foxconn will use and again not have to pay for and the income taxes on the employees won't cover it. The employees won't be paid a huge amount either with an average wage of $53K. The payback time is only the best case scenario. The area already has very low unemployment with companies already having a hard time filling positions. The unemployment rate is 3.3%. It would make a lot more sense for Wisconsin to encourage the plant to be built in an area where there is high unemployment or underemployment, not a place where there is already full employment.
This post is encrypted twice with ROT-13. Documenting or attempting to crack this encryption is illegal.
Oh, citation: http://www.jsonline.com/story/...
This post is encrypted twice with ROT-13. Documenting or attempting to crack this encryption is illegal.
So? Governments don't exist to make a profit, and businesses don't exist to pay taxes.
Businesses exist to provide goods and services for a profit, which is easier if taxes are low.
Governments exist to serve the citizens, which is easier if the citizens have economically productive work -- like when the governments decide not to drive the businesses away with high taxes.
Seems like both are doing the right thing to accomplish their purpose.
In the short term, looks like a win. It's just enough to wave in front of his fans and claim he's making America great again. Made a deal, brought in 3000 jobs, hooray a win.
15 years from now when it closes, still not having made back the tax break that brought it here in the first place? Not the part he's interested in.
Weaselmancer
rediculous.
Maybe Foxconn should build it's factory somewhere where people don't expect their neighbors to help out with the schools, roads, police.
By taking huge tax credits, these companies are showing how much they value the communities where their employees live.
Play Command HQ online
Corporations don't pay taxes, people do. Corporations only collect taxes.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
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.
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.
Unemployment? So you would rather the 13,000 people never get hired in the first place, for fear that some of them might get fired eventually? Your right, lets just cut to the chase and start paying unemployment to the 13,000 people now.
By that logic, perhaps we should ban hiring across the state, we would save billions in unemployment years down the road.
With reguards to roads and bridges. The argument is silly. Your still going to have the same 13,000 people driving somewhere, reguardless if they work here or if they eventually find a job at walmart for much less pay.
Lastly 53k is damn good money for allot of people.
1) Jobs are dead. "it's jobs stupid" might have been everything in the past but now jobs are becoming stupid. There will not be enough jobs and we already have a massive shortage of meaningful or purposeful jobs (in the USA, but more so globally.) Automation will illustrate this as it advances and capital uncontrollably pushes it forward.
2) Corporations are not job creators. Demand creates markets, it fuels black markets despite huge obstacles. Being hard on corporations does not put them out of business if there is demand... their product does not have to be addicting... the real threat is:
3) Free trade is an economic war crime. Tariffs. A flat world only works with 1 world government... otherwise it's exploitation at scales beyond comprehension. Fascism thrives in such an environment... You can't beat the efficiency of Fascism + inhumane behavior.
4) TAX corporations MORE! That is actually forward thinking!!
REASON: We tax production in many ways, where shifting the burden to workers is a never ending debate. As the number of workers shrinks it makes more sense to shift the burden to corporations and idiotic to shift it towards a shrinking revenue source. Taxes (the fuel of civilization) needs to come from the economic system we have; how much is just splitting hairs while missing the bigger picture.
5) The few workers there are get no taxes and everybody lives on a base income just for being alive. Everybody benefits from productivity; those who do work to increase it get extra benefits-- there will always be such people. In fact, the creative, innovative types who are responsible for most our progress were not motivated by money. Not forgetting those who are great at maximizing production who are usually motivated by money, there will be no shortage of them.
6) Cap individual incomes. Governments last longer when they separate powers and if you do not address individual power (and the hybrid of person+gov=corp ) then non-government entities will overpower and corrupt government. Functionally, this has already happened in the USA to the point it is no longer a working democracy.
Democracy Now! - uncensored, anti-establishment news
Sounds just like the Huge Facebook Data Center put in New Mexico. With the tax breaks they will break even in 2090 if everything goes well. The 1000 jobs, well that turns out to be about 100 maximum. It gets worse, the skills needed for those 100 jobs are specialized which means that most of the positions will be hired out of state or worse out of country. Worst decision ever!!!!
Roads, schools and police exist to serve the people, the people don't exist to serve the roads, schools, and police.
Cool, thanks for reading the PDF.
"First they came for the slanderers and i said nothing."
I'm forced to concur with AC; where do you think consumers spend their money?
It's a symbiotic relationship. Consumers have the power, ultimately, but it's businesses which create wealth.
Mod me down with all of your hatred and your journey towards the dark side will be complete!
First off. I also agree that the 16th amendment should never have happened. Ideally we should probably just repeal it and have all tax collection fall back to the state (or even local) level, and let it "trickle" up -- but I don't see that happening anytime soon.
On those figures though: most retail shops aim for 50% (known as keystone) markup on the sale price. If you're bringing in $1M in stock each month, you should have receipts of $2M, or more, since most businesses these days provide value-added services that increase their margins beyond pure product sales.
Oh, and food? (A very low-margin business.) Shouldn't be taxed (or subsidized) at all, but I digress.
Anyway, You wouldn't have to pay your employees as much, and would get to keep more of your profits as salary if there were no personal income tax.
Broken/stolen stock is a write off.
I'm not sure if a tax purely on gross corporate income is the way to go or not, to replace the personal income tax, but something like that would probably work better than what we have now. Clearly any such scheme would have to be designed so that businesses could still exist, and the owners and employees would have to be able to earn a living. It's somewhat nonsensical to suggest that a (hypothetical) taxation scheme would fail to recognize that it would shutter 100% of all businesses. Humans are stupid, but not *THAT* stupid. At least taken in aggregate.
In any event, businesses would treat this tax essentially like a sales tax (which it essentially would be) and pass it on to the consumer anyway, but if it were designed properly, It would keep more wealth in circulation (i.e. use) than the current system.
Eliminating the personal income tax and taxing wealth earned (and held) by corporations is (IMO) one of the few things that could reverse the trend of increasing wealth concentration, where literally (yes, really literally!) a few people have as much wealth as half the world. It's an untenable situation.
Perhaps counter-intuitively, it could also spur efficient economic activity, since if people have more money to spend, businesses would have higher revenue. Businesses also wouldn't have to deal with the bureaucracy of payroll taxes. It would also discourage corporations from hoarding cash, rather than reinvesting wealth in the broader economy. On the government side, instead of keeping track of what 300M Americans make, The IRS could just keep track of what a few million or so businesses make, which it already does anyway, so *poof* there goes a huge bureaucratic machine.
In that area of Wisconsin, average floor factory wage is around $20/hour, or $40K, and factories already can't find enough people at that range. Toss in a few HR types, managers, engineers and the like and you get to $54K pretty quickly.
Also noticed that this report assumed that wages will remain flat for the next 20-30 years, and that there's no inflation working against state payments. (Fixed payments are worth more the later you pay them - look up "time value of money".) Adjust a few numbers in that report for reality and you'll end up with a "break-even" in about a decade.
I get it, you're a fucking idiot.
A business can make anything it wants, but unless a consumer buys it, the business will be nothing. Business isn't about what a business wants to do or sell, it's about what consumers want. Take a minute or two to think that over.
Fascism: An authoritarian and nationalistic right-wing system of government and social organization. See also: NAZI's
A business can make anything it wants, but unless a consumer buys it, the business will be nothing. Business isn't about what a business wants to do or sell, it's about what consumers want. Take a minute or two to think that over. It's a symbiotic relationship ONLY as long as the business is providing what the consumer wants... once it fails to do that, it's dead.
Trickle-down economics DOES NOT WORK, AND NEVER HAS.... no matter how much you want to defend it. Take a look at Kansas.
Fascism: An authoritarian and nationalistic right-wing system of government and social organization. See also: NAZI's
Eliminate corporate taxes on businesses with HQs and/or manufacturing plants located in the US and simply tax any income an individual makes.
I'm generally quite a bit left of center, and I actually agree with this idea, at least in general. I would be fine with eliminating corporate taxes and replacing them with increased taxes on wealthy individuals. There are definitely some loopholes that would need to be closed (such as executives having their company pay for most of their food, housing, travel, etc. and claim them as "business expenses"), but if the math can be worked out so that total tax revenue is the same and the individual increases are only for the upper class, I would be fine with it.
The article's logic assumes that there is some sort of opportunity cost on this tax break - that is, that Wisconsin is somehow transferring money to Foxconn and by doing so, giving up other investments ie. infrastructure, health, etc. the obvious alternative to not giving a tax break is not getting an investment from Foxconn. any investment benefit should be seen as a net positive, and the taxation in the long run as gravy on the top. There is no transfer of money from the state to private hands, it's a subsidy that would be commonplace anywhere in the world
You don't trade in a tax credit for cash. You use a tax credit to negate someone the taxes you would have paid. If the plant wasn't built they wouldn't have paid taxes anyway. So no worse off. The article is just stupid.
I doubt Foxconn will keep the factory operational for 20 years. We're moving into an era of robotic automation, and those 3000 jobs will not last 30 years.
Remember kids, if you're not paying for the service, YOU ARE THE PRODUCT THAT IS BEING SOLD.
The State will also get taxes, indirectly. Those 13,000 jobs that average $54,000 a year will each pay about $2700 in State income tax. So that's about $35 million a year right there. And the State share of sales tax is 5%, so assuming 25% of that income is taxable when spent, that's another ~$9 million a year in taxes. So the State will make about $44 million a year just from the jobs alone. That should cover a fair amount of extra costs...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Not sure I understand the connection you're trying to draw. Are you saying that because people want to buy what they want, and if you don't sell what people want to buy, then leaving more money in the hands of people will crash the economy?
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
You're assuming the need for houses is a need for new ones, and then also saying it will reduce unemployment. It won't be both to the fullest extent, but a mix, or people simply moving jobs. Thus the demand for housing is likely to be rather less, and even less than that in Wisconsin if some workers commute from Illinois.
One of the effects of an influx of well paying jobs to an area can be raising prices such that young people starting out in that area cannot afford them and move away, although that may simply displace demand for new housing unless there is excess elsewhere.
1) The state did not outlay any cash. 2) The state gets thousands of new jobs, not including the thousands of secondary jobs that will benefit from the hundreads of millions in salaries/expenses provided by foxconn. 3) Thousands of people with decent jobs, means less draw on public funds. 4) Income tax revenue to the federal goverment coming from everyone involved as opposed to nothing if they left the country.
They alternative, they dont setup shop and none of the above happens. This is an amazing deal for the state.
I was tempted to post one of my "Donald is that you?" quips as a response to your post but then I noticed that the coherence of your sentence structuring as well as your spelling and grammar, while not perfect, are on a level that is way above anything Donald Trump will ever master. Still, extra credit is awarded for the very Donald-esque use of the word 'amazing'.
Show me a "break-even" without TVM, and I'll show you a marketing graduate. :)
...and you'll see it's a "sensitive" model that changes quickly when you apply real-world inflation.
More seriously, take a look at the original numbers on page 17 of the study:
http://docs.legis.wisconsin.gov/misc/lfb/bill_summaries/2017_19/0001_ss_ab_1_foxconn_fiserv_legislation_8_8_17.pdf
If you apply an inflation rate of 2% (bringing down the impact of future costs) and a wage growth rate of 3% (evening out to 1% over inflation, reasonable since labor markets are tight) your break-even becomes 2036 (a six-year difference) and there's a billion extra in the coffers in another five years. Run the same model with inflation at 3.5% (likelier if the economy continues to heat up) and wage growth at 4.5% (still only 1% above inflation) and the break-even drops to 2034. Etc.
The state is paying $270,769 each to purchase jobs that will pay its citizens an average of $54,000 each. Math 3,000,000,000 divided by 13000 is 270,769. If you presume that the citizens don't immediately flee the state in terror the payback to the state (not the state government) is 4.27 years, less if you assume that the businesses that they spend their money at turn around and also spend their money in state or that the original 10 Billion is actually spent in state. Now we face a typical political question do governments exist to make the state richer or to make the state GOVERNMENT richer? Would you pay $270,769 to get your kids an extra average of $54,000 per year? Sounds a lot like college doesn't it? What if I doubled it and made it $541,538 to make an extra $108,000 per year? Now it sounds like Medical school. Are parents suckers for putting their kids in Medical school?
Wisconsin doesn't want the Foxconn plant? No problem, I think Foxconn is happy to put it somewhere else.
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.
The primary two refundable tax credits, which are capped at 1.5 and 1.35 billion, are based on percentages of payroll within Wisconsin and expenditures to Wisconsin Vendors:
"The bill would create two refundable tax credits related to the Foxconn incentive package--a
credit based on 17% of the company's EITM zone payroll, and a credit of up to 15% of the
company's capital expenditures in the zone."
So Foxconn will only get those credits if they employee enough people in Wisconsin and/or purchase enough things from Wisconsin Vendors.
Then jist parole the meth heads and give them the cash. They'll create jobs for strippers and bartenders. Then they all overdose creating jobs for morticians. Win Win win, except for meth heads, and fsck them anyway.
It's easier for a singular company if it has to pay less taxes. But you eliminate taxes altogether, or lower them in massive amounts you start to lose key infrastructure and services critical for the operation of the whole economy, which in turn is detrimental for both the corporations and the consumers within an economy. If the US would do this for every company there'd be a massive downgrade in the standard of living.
Opposing any given tax is possible on the basis that it's 'bad for business', but that's essentially leaving out everything that's being bought by the government with the taxes to help the population. My own government collects higher taxes than in the US, but because of that I graduated without student debt, and if I manage to grow our small company to the point that we can hire full-time employees (haven't quit my day job yet but we're not in a hurry), I don't have to worry about getting them - or myself - medical insurance,
In fact it's a quite well known fact that the cost of (private) medical insurance in the US is massively higher than the per citizen cost of government funded health care here in Europe and elsewhere, which is just common sense when you realize that for the government that's 'insuring' us all, health care is a cost, so the point is to treat people effectively and with the lowest possible cost. Whereas in the US, where health is a private enterprise and one of the most rapidly growing sectors in the economy, the purpose of the hospitals is to treat the patients while also extracting as much money in the process as they can. Back before I graduated and moved to the IT side of our health care sector, I worked in hospital billing and we had to often deal with medical invoices of Finnish citizens that were treated in the US (they were often sent to us if the person lacked medical insurance as many here do) and we used to actually collect copies of them just for the ludicrous amount of overhead on them. I've seen 4 dollar aspirin pills, I've seen a simple X-ray and some stiches priced at like 1400 dollars which is equal to the price of 2-3 days of intensive care here (which the patient himself obviously doesn't pay, there's a flat fee of around 20 euros or so per day spent in hospital, the rest is covered by us). This was way before the ACA though, I do not know how that has affected it, but it is my understanding ACA deals mostly with insurers and does not set pricing rules for hospitals. Now granted it's not all because of greed, the US system is far less centralized for many reasons which also raises costs and the salaries of clinical staff tend to be higher as well (partially because doctors/nurses have such a high amount of debt when they start working that the starting salaries have to be higher for them to afford the same standard of living as someone in here coming through med school), but even with all those factors there's a lot air in the prices.
So the small (but extremely vocal) right-wing libertarian segment of my fellow countrymen who keep copypasting this 'down with the public health care system, the Free Market is the life and the way, it's better for business' mantra from the US are in fact totally wrong. It's a known fact that the alternative cost of a privatized medical system is much higher overall and ends up being paid for by either corporations directly (employer-provided insurance) or by the individuals themselves. In either case the end result is people and corporations have less disposable income, not more.
So no, it's unequivocally not true that less taxes always means 'better for business'. Of course this all hinges on what you actually do with the taxes that are collected.
"It is the business of the future to be dangerous" -Alfred North Whitehead
So, $44m/year, for a tax break of $3bn, which works out at 68 years to break even. The calculations that came up with two decades must have included that and around double that from other sources.
I am TheRaven on Soylent News
The primary two refundable tax credits, which are capped at 1.5 and 1.35 billion, are based on percentages of payroll within Wisconsin and expenditures to Wisconsin Vendors:
It's not clear to me that capital expenditures have to go to Wisconsin vendors. For example, if they bought $10 million in concrete from outside the state to be used within the state, by my reading that's still a capital expenditure within the state, and they would receive a tax credit.
Wisconsin is applying the same form of governmental logic that motivates cities to build expensive stadiums to give away to sports franchises. Taxpayers have to hope that Foxconn innovates enough, such as by making robotic assembly better and cheaper than the slave assembly the company has been famous for at home, to make the deal pay off sooner.
An average wage of $54000 for factory workers? That's a good one! I've got this bridge you might want to buy,,,
Translation: Thee executives each earn $40M and 3000 workers each earn $14.5K.
Also, what make a vendor a 'wisconsin vendor'? As an IT example, if Wipro had an office in Wisconsin, would they be considered a Wisconsin vendor in this case? I'm honestly not sure, tried to google it but haven't found much of use yet but if so, you can bet the jobs that get created aren't going to citizens of Wisconsin...
That is ridiculous. Of course the state will incur extra costs because of this plant. To suggest otherwise is disingenuous.
How much? If you have numbers, please present them. That would be good info and a strong argument.
FWIW, the infrastructure required to support the plant will almost certainly have to be built or upgraded from what exists today. Roads, water, sewer, public safety, etc. I think the project is almost certainly a net win for Wisconsin but I agree with the OP that saying the state will not incur costs because of the plant is indeed disingenuous.
What part of "shall not be infringed" is so hard to understand?
Sounds much like installing solar panels on your roof — barely even after decades with governmental subsidy, ruinously expensive in a free market.
In Soviet Washington the swamp drains you.
There's still far more money coming into the State then the State government is refunding. While the government worries about when it breaks even, the people are getting good jobs and tons of compounding economic activity is going on.
So, they can get a credit equal to 17% of their payroll each year until it reaches a total of $1.5b. They can get a credit for 15% of their annual capital expenditures up to $1.35 billion. The remaining $.25b is a preexisting manufacturing credit.
So long as corporations claim to be people, they should be taxed identically to people.
A big long comment that shows your private school and parents failed you. And you failed Catholicism, hehe.
"Old man yells at systemd"
Mainly that Foxconn has a history of bailing out and it's highly likely they will bail if not before even starting, not too long down the road. Also, even if not bailing out, it means robots in here instead of overseas. Getting all excited about this as the glorious return of mfg to the US is crazy,
But people act like tax breaks are giving them money, rather than electing not to take as much money. So the claim about 'breaking even' really only applies if there was some other company was going to spend 10 billion dollars, pay the full tax rate, *and* were somehow unwilling or unable to do so because of the Foxconn deal.
I don't know what the ultimate tax bill is, but let's say it's 100 million dollars to have something to speak to. The government could have had 1% of 10 billion, or 30% of 0 dollars. It's doubtful that such a plant would represent 3 billion dollars of govermnent spend burden (e.g. lots of new roads or such). It's more likely that $10 billion is just well in excess of usual spend, so a 30%+ rrepresents better the increased government costs for smaller investments and it doesn't scale up linearly.
XML is like violence. If it doesn't solve the problem, use more.
That's a good point. I'd also be quite happy for corporations to not be people.
wish I had mod points right now
A 21st century issue: the irony of technologies of abundance in the hands of those still thinking in terms of scarcity.
FTFY: "There's an entirely plausible future out there where Americans struggle with terrible pollution as Chinese-owned robots in America make cheap junk for wealthy Chinese."
A 21st century issue: the irony of technologies of abundance in the hands of those still thinking in terms of scarcity.
You can spend money on permanent jobs (Foxcon), Temp make work projects, or welfare.
Foxcon is a better deal for Wisconsin that it seems.
Why is it so hard to only have politicians for a few years, then have them go away?
I live in a high-tax state, and places like North Carolina, Texas, Florida and others are constantly begging large companies to move some or all of their operations there. Sometimes it works, and the usual method for doing it is these big tax deals. The problem I've seen is that state governments are easily swayed by companies promising large amounts of high-quality jobs...only to find that someone like Amazon, Apple or Microsoft is just building an unmanned data center in the middle of nowhere. Or, the company does the absolute bare minimum to comply with the agreement, then shuts everything down and moves to the next jurisdiction they're able to convince. An autonomous data center for AWS or Azure probably needs a handful of people - security guards, one or two higher-level engineers on site, and a couple of "equipment pullers" installing and replacing hardware.
I question whether Foxconn is actually going to employ workers at these factories long-term, or if they're just going to say "sorry, we're automating our operations and laying everyone off" a couple of years in. The problem is that for these tax deals to work out for the states giving them, they have to make back the money they're losing on tax waivers, free power and infrastructure, etc. - and the way they do that is through payroll and property taxes. This is what New York is doing to try to get companies to locate here -- they're betting that by waiving direct corporate taxes for a few years, they'll get companies to hire people who will pay people, who will pay into the system through taxes.
The state economies in the US vary significantly. High-tax states like New York, California and a lot of New England fund their education systems to a much higher degree than low-tax states. Some states have way more infrastructure to maintain than others. Some have to remove snow in the winter and fix potholes. The long-term problem is that companies are much more mobile than they were, and need fewer workers. A large employer will think nothing of moving 1000 workers to a different state if the tax deal they get is right, and that seems to be a change that's happened in the last 30 years or so. I'm assuming they feel they're doing workers a favor by not offshoring the work.
Let's see... $54/hour average wage.
Call it $10/hour as a minimum wage, that's $44/hour/worker. Time approximately 3000 workers is $132,000/hour. With a year at ~2000 hours, that's about 260 million / year for the CEO of the Wisconsin Foxconn plant. Who can telecommute from China.
Trim about off to give the managers $15 to $20/hour and it's still a nice take-home.
How and why did I fail? Your short comment proves nothing, it only makes a claim. Did you not learn how to make an argument at public school?
I am armed because I am free. I am free because I am armed.
What this report fails to point out is that there will be a big associated economic boom because of Foxconn. Lots of related businesses will open up shop in the area and lots of supporting businesses e.g. retail will open up because those employees have to buy stuff somewhere. And there will be infrastructure work too. Stuff like this doesn't happen in a bubble. You take a look at a major economic event like discovery of gold in the Yukon. Fortunes were made supporting the gold mining. Levi's jeans exists because of it, for example. The smart play is to invest in the companies that will be needed to support Foxconn's operations there.
Wasn't that obvious? The per-job cost of the Foxconn bribe is insanely high. There's no possible way that the state or its people can come out ahead on the deal.
Would it be better to just let them stay in China then,and remove those potential manufacturing jobs from the US? Isn't that what democrats complained about whenever the 2nd Bush administration cited growing jobs, that none of them were in manufacturing?
Look back up at my post, now look back down, you're on the Internet. Now look back up. I'm a signature.
I don't know why governments want to promise big dollars up front. Why can't they negotiate a $ amount for each new job created and at the end of the tax year the company (FoxConn) provides proof of full time employment for X number of workers and they can get their credit. No job creation, no credit. I understand there may need to be some credit up front to help cover capital expenditures, but you can't take all of the risk out of it for the company. They need some skin in it too.
A corporation out-negotiates a bunch of stupid politicians.
Jeesuz, why is this even news ? It would be news if politicians out-negotiated Foxconn. Call me when that happens.
Company brings jobs, SJWs lose their shit.
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
It's a symbiotic relationship ONLY as long as the business is providing what the consumer wants... once it fails to do that, it's dead.
Well yes, that is how it works. Hence "symbiotic".
Note: I never said anything about "trickle down" anything. I was merely responding to your notion that businesses don't drive the economy, which is utterly false. Businesses and consumers drive the economy, they are fully integrated in this regard. Think about it; you can't really talk about one without implicitly referencing the other. Where do consumers get their wealth? Where do business sell their product?
Mod me down with all of your hatred and your journey towards the dark side will be complete!
Perhaps they should plant something different? E.g. weed?
Or go even a step further and try Poppy or Coca?
Cost free eBook I read (by iBook/Kobo/Amazon/ObookO/Gutenberg etc.): "The Green Odyssey" by Philip Jose Farmer.
Think of all the other jobs that it would create supporting the local community, restaurants, stores, etc. There's more the it than just State Tax revenue. It' also dumb because the state wouldn't me making anything if Foxcon didn't move there. It's not lost revenue. MAN.
6 months ago everyone in the media was decrying the LIES Trump was telling about how businesses will come back to the US.
A lot of people (including my friends) said, "Micah, those jobs are gone FOREVER!".
Well, like a lot of industries recently, the jobs start coming back and the columnist mills are apoplectic about it. This wasn't supposed to happen! Things weren't supposed to be better under Trump! Jobs are bad! We are supposed to be building a post-jobs economy. That's what Nancy Pelosi basically said when she mentioned some people would be removed from the burden of working after the ACA.
My guess is voters will forget in the mid terms they wanted this and not really notice this campaign promise was basically delivered, unlike others.
"Governments don't exist to make a profit..."
Right, they exist so businesses connected with the President make a profit. Just like a certain former Vice-President did with no-bid military contracts.
Care killed the cat, but satisfaction brought it back.
If that's the case, then just reduce taxes for everybody. Having states and municipalities compete with tax breaks is corrupt and inefficient and not doing the right thing.
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.
So here's a perfect example of liberal vs conservative.
Liberals GIVE solar companies billions of dollars as "investment" and the companies go out of business one after the other because the business was formed by liberals specifically to get government money and once they have all they can get they close up shop.
Here is an example where the government gives the company NOTHING, but says they'll tax them less for a number of years if they put their plant in their state. Liberals go bonkers that the company is taking money from the State, but the state still gets all of the future benefits of having a plant in their state. Idiots is the best word I can use to describe the liberal reaction.
In terms of the Earned Income Tax Credit it comes in the form of a tax refund even if you didn't pay any taxes.
So for Trumper's good PR, Wisconsin taxpayers get to pay Foxcomm's $3 billion tax bill.
Once again, taxpayers get duped, big business takes a walk on taxes.
After all, Trump has lots of experience doing this with his own taxes (for which that asshat lied about releasing the records).
But that's just fine because like Obama getting the Nobel Peace Prize before he actually did anything,
Trumper gets credit for fake jobs when big business was sitting on tons of cash and withholding jobs, waiting for Obama to get out of office, just to keep from giving a black president any credit.
(Yes, I'm saying they were playing the race card during Obama's entire two terms!)
More smoke and mirrors, same political garbage. Nothing new. Politicians are still corrupt, lying sacks of cow dung and voters are still incredibly stupid: dumber than a box of jello hammers!
Ah, but USA is still the best country in the world for a dumb-ass to blend in. Fucking idiots!
PlaynBass
Two decades from now, the company will threaten to move the facility out of state unless tax breaks continue. Even without ordinary corruption (bribes, etc), this sort of thing is awful. Businesses too small or too hard to move end up getting stuck with taxes, instead.
But it does illustrate that tax rates matter, which some dolts have a hard time understanding.
There's no time like the present. Well, the past used to be.