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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."
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?
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.
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!
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.
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
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.
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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.