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Wisconsin Lawmakers Vote To Pay Foxconn $3 Billion To Get New Factory (arstechnica.com)
An anonymous reader quotes a report from Ars Technica: The Wisconsin Assembly voted 59-30 on Thursday to approve a bill to give incentives worth $3 billion to Taiwan-based Foxconn so that the company would open its first U.S. plant in the state. Foxconn, best known for supplying parts of Apple's iPhones, will open the $10 billion liquid-crystal display plant in 2020, according to Reuters. The bill still has to be approved by a joint finance committee and the state Senate. Both houses of Wisconsin's legislature are controlled by Republicans, and the deal is supported by Wisconsin Governor Scott Walker, a Republican who negotiated the deal. The vote was largely, but not entirely, along party lines. Three Democrats joined 56 Republicans in supporting the deal. Two Republicans and 28 Democrats voted against it. Opponents said the deal wasn't a good use of taxpayer funds. The $3 billion incentives package includes about $2.85 billion in cash payments from taxpayers and tax breaks valued at about $150 million. The state is also waiving certain environmental rules.
he $3 billion incentives package includes about $2.85 billion in cash payments from taxpayers and tax breaks valued at about $150 million.
You'll recoup that in like what? A hundred years or so?
Get that? "Cash payments". Not tax cuts. Straight up baksheesh.
We were told how GOP government in Wisconsin was going to create this great economic boom by "unleashing" the free market. Now they're just trying to prop up a Potemkin president by using corporate welfare.
You are welcome on my lawn.
you think a few thousand factory jobs are going to pay $50k-$70k.. hahahaa
They'll start around $35k and probably top out around $55k. The white collar workers might be in the $50k-$70k range... but that might be a few dozen vs a few thousand people.
"Action without philosophy is a lethal weapon; philosophy without action is worthless."
From the article:
$2.85 billion in cash payments from taxpayers and tax breaks valued at about $150 million
How is a cash payment a deference of paying taxes? Is the wording in the article incorrect? It appears the deference you're talking about only looks like $150 million dollars.
It states the average salary will be 53k a year in the article. As long as the low end worker doesn't fall below 30k a year, they will get about 10 million in tax revenue from income tax alone. With that said, it will take some time for that 10 million in revenue to compensate for the substantially large cash payments.
It's not tax credits. It's cash fucking payments.
You are welcome on my lawn.
Only the Republican party crony capitalists should pick winners and losers using tax payer funds.
Poor American down with medical bills due to some high way accident? Shit happens. deal with it.
Taiwanese investors asking for 5 million dollars per job created? Here are the keys to the treasury.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
I'm all for American manufacturing but these high price tag incentives geared at foreign companies for a small number of jobs many of which are temporary looks like a bad idea. There are a supposed 3000 jobs for a 3B price tag or about 1 million dollars per job. It could take as much as 20 years to break even given the tax breaks. Quite frankly I'd be surprised if most of those jobs weren't in building the automated factory, to be discarded after 2-3 years just like the pipeline deals. The manufacturing jobs aren't coming back to the American people unless we count assembly line robots as citizens along with large corporations and actual humans.
Perhaps (and I know I'm absolutely insane), just perhaps, it would be better for Wisconsin to take that 3 billion dollars and start a universal basic income project instead. Instead of 3000 jobs (many of which are low wage and then dissapear) you could support 10,000 people at 21k a year forever at 7% interest.
They were going to get bought off. The best part? It's $500k per job. It's an enormous waste. Basically more socialism for the wealthy and dog eat dog capitalism for the working class.
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Apparently that's what the voters want for their state. We can go on and on about "corporate welfare", etc, but it won't make a difference. This is the "wisdom" of the crowd in action. Reason is extremely feeble when pitted against instinct and emotion. Evolution will determine our fate.
“He’s not deformed, he’s just drunk!”
I thought this was exactly the kind of thing Trump campaigned AGAINST.
Wisconsin is already spending other states' tax money, because it cannot keep itself afloat. Now it's going to hand that money to China.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
. . . to find out what's in it?
Most of the things you mentioned are taxes or will at some point (eg. pensions) become taxable. What's your point?
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Ummm. No? Do people in government really believe this is a good idea? The government shouldn't be doing things like this. Foxconn could be out of business before they even see a profit.
Anyone else remember when Republicans were "The Party of Fiscal Responsibility"?
I guess I just don't understand where making 2.5 billion dollars in cash payments to a foreign company is fiscally responsible.
But what do I know, I'm just another dumb ass liberal.
Given they need to spend $10B in the next 3 years to build the plant, the state gets $560M in sales taxes alone from the construction and another $3-400M as the construction companies pay their workers.
Plus it's incentives, not an outright cash donation.
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Nothing like the smell of pure capitalism in the morning. John Galt (a native of Milwaukee) would be proud!
The article also says that Foxconn is going to spend $10 billion to build the plant. How much of that ends up as tax revenue? If it's over $2.85 billion, the taxpayers come out ahead.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
It states the average salary will be 53k a year in the article.
The only way that will be true is if the total number of employees is very, very low. They would have to fill that building with robots, and only a handful of humans. Assembly line jobs will otherwise be the majority of jobs in the facility, and most of them are going to pay much less than $26.50/hour.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
"Not a good use of public funds" is irrelevant. What's relevant is expansion of corporate welfare and extension of corporate power.
Go Corps!
And as is also stated in the summary, Foxconn will be spending at least 2x that just to build the place. You can bet there are all kinds of 'buy American' clauses in the contract for the construction materials, and the labor will be sourced locally. All of that will be taxed, and all of the economic activity that results from that will be taxed.
I'm not saying it all pencils out even (or even close), but it's not as dire as some people are screaming about. This is why economists are usually rather smart, and take their time before they weigh in on things - it's a complex system.
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this has a very long payback, and my first question is, why would we think that a factory making a single electronic component would have any use ten, fifteen, or twenty years from now? What is the plan, or could it even be repurposed if the technology changes, I.e. OLED screens vs LED screens.
Are we looking at another Solyndra?
Does this project have the smell of wrongness that followed the Pfizer at New London project from the beginning?
Oh great. I huge communist company right in my state. I wonder if they'll use their awesome financial power to influence government? Considering they're already getting waivers on so many regulations I would say they don't have to. They already own us.
The state is also waiving certain environmental rules.
Because, who gives a shit about the environment, right ? Certainly not the tax-payer.
What company wouldn't want to build a billion dollar high tech factory in a state where people walk around with blocks of cheese on their heads?
Yay corporate welfare! Fuck the taxpayers! Rich get richer, debt gets deeper. Yay capitalism!
How about we just pay those people $40,000 a year to dig holes in the ground periodically, and then have a long vacation? It would be cheaper and probably just as economically long lasting.
The lawmakers I mean.
The only sense in which any taxpayers come out ahead in these bidding games is that if they don't bribe a company then another city/state will. There needs to be national law preventing cities/states from competing with each other in bribes that clearly make a worse deal for the nation as a whole.
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It is common for European and Chinese states to put money to fund large private projects the big difference with the U.S is that they demand and receive equity or stock on what is essentially a joint venture instead of just hoping that someday their investment will be recouped thru taxes
But there are at least two important points to consider. 1. The $3 billion wouldn’t be a gift, as One Wisconsin Now calls it. That’s the maximum amount the state would pay Foxconn, and only if the company spends roughly $18 billion -- about $9 billion for payroll and $9 billion in capital investments.
Last time this came up, I saw this comment posted:
Is this the Foxconn plant in Wisconsin that's been on the drawing board since 2010?
and I see a prior article talking about a FoxConn plant in Pennsylvania, that I think never was built.
Much like some of the comments on previous articles, I'll believe it when I see it. FoxConn probably gets tons of subsidies from the Chinese government. So they are probably shopping to see if they can get that here. Heck, maybe Trump can build the plant with his own money!
It states the average salary will be 53k a year in the article.
If you have a handful of bosses making millions, that pulls the average up quite a bit. Median would be more interesting.
But $53k a year isn't all that much in modern factories, where each worker is responsible for several high tech processes. The ratio of unskilled to skilled workers is relatively low these days. Sure, there are going to be a need for cleaning crews, cafeteria workers, mail handling and much more, but the traditional floor worker isn't just doing a repetitive job any more. Robots do those, and the floor workers have to handle anything that can go wrong, program and troubleshoot, create test fixtures and procedures and not just be Charlie Chaplin in Modern Times.
$53k/year might be decent pay for Wisconsin right now, but if it becomes the success they hope, that will change living costs too.
Oh my. Are you saying that Foxconn is going to have to spend money to build their own goddamn factory? What is the world coming to when a corporation has to actually invest? Is this even America any more when companies are now expected to do something to make money instead of just rent-seeking?
This is truly the last stage of capitalism when someone rationalizes giving a company $3 billion in cash by saying, "Well, they're gonna spend some of their own money, too!"
You are welcome on my lawn.
From searching online the Ars article is the only one that says they are actually paying real dollars. The are also the only one I can find that says they are changing environmental laws for the plant. All others I have found say there are "environmental concerns". Even the Reuters article referenced in the doesn't mention any of this. Not saying it's one way or the other, just odd that Ars is the only one I could find saying that.
from the taxpayer and giving it to people who don't do any work. What gives you the right to tax me and make me pay so you don't have to work? That's just theft, plain and simple. But these foxconn guys? They're creating jobs. This isn't a handout, it's an investment.
Or so the argument goes. The folks who actually make it to the polls to vote might actually believe that. The folks that don't believe that horseshit generally have their vote suppressed. During the last election there were reports of 10 hour waits to vote in working class districts. Or any district that might go against the pro-corporate, pro-right wing party.
Basically we're a pretend Democracy. No different than North Korea really except we've got enough money to throw around that the worst of the poverty is kept at bay.
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Obviously.
We suffer more in our imagination than in reality. - Seneca
thanks to a combination of the Southern Strategy, voter suppression, good marketing and the Democrat's own right wing preventing the party from taking a stand on any economic issue that matters.
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Most of the machinery is probably built by other Foxconn departments and paid for with a very large markup so that Foxconn US can post a big loss (and therefore not pay any tax) and another Foxconn division can post a large profit.
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Why are the GOP happy to give 3 billion subsidy to Chinese companies, but then scream about a .5 B loan to Tesla?
I prefer the "u" in honour as it seems to be missing these days.
Yeah, it's $230K per job if you calculate $3billion for the 13,000 proposed jobs created.
If they are going to invest $3 billion in a $10 billion venture, then they should receive 30% equity stake there as well. This will both be fair, and probably a reasonable investment that will bring long term capital to the state.
However given the history of "socialized loss, capitalized gains" of state - enterprise relations, I'm not keeping my hopes us. Look at what happened then feds bankrolled failing financial institutions during the last crisis. They gave them loans at reasonable rates, sometimes just huge rebates, however the public received nothing in return for taking the risk in these bailouts. We're still on the hook for the huge trillion dollars bill, while the financial institutions recovered.
We'll see how long the plant lasts.
Here are several problems with the whole thing: Foxconn can get better qualified and cheaper labor in several of the other countries they currently already have factories at. It's pretty uncertain if Wisconsin will have a workforce to cover for those jobs - it's not about numbers or people looking for jobs, but specialization. An LCD plant is nothing by itself... so either Foxconn is planning for an assembly plant to come next, or they'll just ship most of the production back to China so that those screens are used in actual products. Either way, infrastructure will have major influence there - if it gets too expensive to transport those things, eventually they'll decide it isn't worth it.
And weirdly enough, LCDs are being replaced by AMOLED panels in recent smartphones and other electronics. Not sure if there's any flexibility in these production lines to switch the types of panels they produce - technology is substantially different.
So yeah, it's a pretty big bet. These factories are pretty much unsustainable without government incentives and money, so you can expect that the government will be paying for a long time to keep production there. It's just the nature of the beast.
Foxconn has factories in Brazil, Mexico, Malaysia, India, Hungary, Slovakia, Turkey, Czech Republic, South Korea, China of course, and it acquired former Sharp plants in Japan.
In China, just last year, one of their plants fired 60,000 workers because they automated part of the production line.
One can only hope that this thing isn't being rushed, that Wisconsin is drafting the contract in a way not to get screwed if the whole thing goes sour, and that it really brings jobs to the state. But honestly, the balance tips towards Foxconn in almost every front. I imagine there's almost no advantage in having a factory in the US for the company aside from having physical presence there. It's a PR and marketing move that only makes sense if the US government pays for part of the losses that the company will take in comparison of building that plant in any of the other countries they already have a presence at.
No way are the jobs going to be anywhere near 53K a year, try like 32-40K. Probably no benefits or worthless ones.
In 5 years this goes bust, at those salary rates most people can't buy what they are putting together after they pay rent, taxes, food and Obamasteel My Dough care.
I would write down every single name that voted for this and when it does go bust in 5 years string them from a tree.
Secondly, you know, I wanna start a storage company. I have been working on various storage ideas for a new multilevel file storage system for LINUX which I think would have a lot of commercial potential. Not going to see the light of day because I can't negotiate these sorts of contracts with these companies to legally graft money from the locals.
No offense, but I will keep my file system code to myself, and everyone who voted for that can go F themselves.
Got Geometrodynamics? Awe, too hard to figure out? Too bad.
Its fucking TAX CREDITS fucking idiot. http://www.kttc.com/story/3597...
Tax credits are transfer payments, bucky. Cash money payments.
Google "Earned income tax credits".
You're mistaking tax credits with tax abatements or exemptions (which Foxconn is getting, too). That means other companies will have to pay to make up the difference. It's the government picking winners and losers.
Why do you hate free markets?
You are welcome on my lawn.
...the poor and middle class will be taxed more to make up the difference. Republicans fucking over people for corporations yet again.
Fascism: An authoritarian and nationalistic right-wing system of government and social organization. See also: NAZI's
So that's a half dozen managers each making $500k+, and a few thousand workers barely scraping past the poverty line. But hey the average is high right? Winning!
At 53K per year, you're in the 25% tax bracket. Let's see what happens if a majority portion of the workers earn $35K instead of $53K to allow for some few dozen padded executive salaries.
2900 @ 35,000 is 101 million, plus 100 million for 100 million dollar packages. 101 million @ .25 ($25 million) and 100 million @ .396 ($39.6 Million) for a total tax income burden of $64.6 million; versus 53,000 * 3000 for 159 million @ .25 for a total income tax burden of $39,750,000.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
... Malthus was right -- for a civilization without machines, automatic factories, hydroponics and food synthesis, nuclear breeder plants, ocean-mining for metals and minerals... ...
And a vastly increasing supply of labor...
And architecture that rose high in the air and dug deep in the ground and floated far out on the water on piers and pontoons... architecture that could be poured one day and lived in the next...
And robots.
Above all, robots... robots to burrow and haul and smelt and fabricate, to build and farm and weave and sew.
What the land lacked in wealth, the sea was made to yield and the laboratory invented the rest... and the factories became a pipeline of plenty, churning out enough to feed and clothe and house a dozen worlds.
Limitless discovery, infinite power in the atom, tireless labor of humanity and robots, mechanization that drove jungle and swamp and ice off the Earth, and put up office buildings and manufacturing centers and rocket ports in their place...
The pipeline of production spewed out riches that no king in the time of Malthus could have known.
But a pipeline has two ends. The invention and power and labor pouring in at one end must somehow be drained out at the other...
Lucky Morey, blessed economic-consuming unit, drowning in the pipeline's flood, striving manfully to eat and drink and wear and wear out his share of the ceaseless tide of wealth.
Morey felt far from blessed, for the blessings of the poor are always best appreciated from afar.
A 21st century issue: the irony of technologies of abundance in the hands of those still thinking in terms of scarcity.
not this handout that abdicates local responsibility for making Wisconsin a better place.
A 21st century issue: the irony of technologies of abundance in the hands of those still thinking in terms of scarcity.
North Korea needs to oppress their population more because they don't have enough food. So there's a very real chance somebody might rouse the rabble and overthrow the government. You're not going to rouse the US rabble. You're lucky if you can get 20 neo-Nazis to show up to a rally outside the deep south. And even then you've only got as many in the south because the rampant poverty.
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Tax credits are transfer payments. They are not the same as tax exemptions.
They're cash money.
You are welcome on my lawn.
The part where you deleted the rest of the sentence about tax incentives, which from what some others are saying is really all it is.
Just another day in Paradise
First of all, there is no cash handout...this is 3 Billion dollars in tax incentives. If Foxconn does nothing, they get $0 in taxes, so, where is the harm?
Also:
State payouts are contingent on Foxconn's performance at multiple levels...but even if that weren't the case, Foxconn will have to make good on their commitment to spend $8-10 Billion on the construction of the plant, which will employ 10,000 construction workers for several years. There is already talk of Corning building a $1 Billion glass factory nearby to support operations (with another 400 employees), and a conservative estimate of 100 Wisconsin suppliers will also benefit from the manufacturing. This doesn't take into account housing development, payroll taxes, or any number of other tangible benefits.
I get that $3 Billion is a lot of money, but an analysis focused only on Foxconn misses the point entirely.
At what point did I rationalize anything?
Did you read where I said I'm not saying it all pencils out even (or even close)? How is that rationalizing?
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