Measuring Foxconn’s Impact

This.

DOA estimates a total of 22,000 indirect jobs and those secondary positions (suppliers) supporting Foxconn’s operations will be created, with combined annual wages of $1.1 billion per year beginning in 2021.

“The way to judge this project is not by government revenues, not by government figures. It’s what it means to our overall economy,” said state Rep. Adam Neylon (R-Pewaukee), chairman of the Assembly’s Jobs and Economy committee. The committee held a hearing on the bill last week.

Foxconn “will grow our GDP, it will have a tremendous impact on our economic activity in the state. A lot of people will benefit because of this incentives package. We have a situation where we will be attracting talent instead of losing it,” Neylon added. “It’s a mistake to think that government revenue is the end goal. The ultimate goal is economic benefit, not how much more state government can take in and spend.”

There are a couple of things driving me crazy about this whole debate about the Foxconn deal.

First, as a small government guy, I share my fellow conservatives’ repulsion at government having to cut deals with companies to move here. I would much prefer that the government create an environment of low taxes, reasonable regulations, and good public infrastructure that makes Wisconsin attractive to all businesses. But that is not the world we live in. And as a pragmatist, the positive impact of having Foxconn in Wisconsin is worth a pragmatic incentive package to lure them here.

Second, what is it that people don’t get about tax credits? The vast majority of the incentive package negotiated by Walker and team is to give Foxconn tax credits in exchange for creating jobs. If Foxconn doesn’t move to Wisconsin, there will not be any taxes from them to credit. To call tax credits “handouts” or “government expenditures” is to assume that it was the government’s money to begin with. It is not. It is Foxconn’s money that the government is choosing to not tax for a period of time. And in this case, if Foxconn doesn’t live up to their end of the bargain, there won’t be any credits. Of course, if they don’t live up to their end of the bargain, there likely won’t be anything to tax anyway.

All things considered, tax credits are a no-brainer and a very easy way to provide incentives with no out-of-pocket expenses from the taxpayers. The only gripe I have about them is that I wish that everyone could pay less in taxes.

Third, I really wish the legislators would stop messing around with the deal. They all seem to want to have their own twist included. That’s exactly why the Obamacare repeal failed. And why Congress can’t seem to get anything substantial done. The legislature should treat this like a treaty at the federal level. Take the deal as proposed by Walker and vote up or down on it. The legislature still gets its say and has the ultimate power.

Making Foxconn negotiate the deal again, taking months, and larding the deal up with petty priorities is a recipe to kill it. That is the attitude that has been retarding economic growth in Wisconsin for decades. Is this a new era or not? Are these Republicans really interested in attracting businesses and jobs to Wisconsin or not? Their actions are speaking far louder than their empty BS rhetoric right now.

Get. It. Done.

14 Responses to Measuring Foxconn’s Impact

  1. dad29 says:

    What would improve this is for Fitzgerald and Vos to take it outside like men, and whoever remains standing gets their way.  That way they’re not holding up 99 + 33 leggies and the whole damn State.

  2. billphoto says:

    What’s holding this up is a common shortcoming among many holding political office.  Lots of mouth but no balls.

  3. Le Roi du Nord says:

    Just a couple points to ponder, and maybe folks can add some clarification:

    Many sources have said that if the deal goes through all the way as proposed the state (you and me) will be paying ~$230,000 per job.   The national average incentive is ~$2500.

    It appears that the average wage promised in the deal has been inflated and misrepresented.  I’ll bet a paycheck that a line worker isn’t going to be making $25+/hour.

    It will take 25+ years to get any ROI on the state subsidies.

    The tax credits seem like a direct handout, as there are practically no taxes on manufacturing.

    Local governments are starting to see that they will get the short end of the stick because of all the waivers on local and sales taxes.  Somebody needs to pay for the infrastructure needed to support a big operation like Foxconn.

    Waiving many of the environmental regulations will be in direct conflict with the Public trust Doctrine in the WI Constitution.  And just because WI waives those regulations doesn’t mean the Feds will.  EPA and COE still have the final say.  Just look how G-Tac turned out when walker ignored federal regulations.

    Having said all that I hope Foxconn works as promised, but without bankrupting the state and locals due to all the money being thrown around.  The past record of walker WEDC and Foxconn should make all of us very cautious when proceeded with this deal.

  4. Paul says:

    The above post was plagiarized.

  5. billphoto says:

    Back by popular demand, my previous Foxconn post.
    Why stop at $230K per employee?  Bloomberg Business Week says it will be $1,000,000 per job.  The official sounding Wisconsin Budget Office says $587K per job.  And don’t forget all the environmental damage!  Certainly, they will begin killing endangered grey wolves soon after ground breaking.
    Or, one might look at this realistically rather than quote some biased news source. publications like the Milwaukee Journal, CNN, Huffington Post, Washington Post, New York Time, CBS, NBS, ABC and MSNBC (to name a few).   Right Wisconsin debunks Tony Evers  new math with $15,834 per job.  Personally, I have done some research but I not done the math.  It is obvious I am not the only one.
    or, as the French would say of the previous post: “C’est de la merde” or, and I apologize to Paul for being presumptive, “you got owned.”

  6. billphoto says:

    I examined Right Wisconsin’s math a little closer and their calculations are closer to reality.

  7. Le Roi du Nord says:

    bill:

    Why not use a neutral source rather than Right WI or MJS??  If Right WI is correct than the Foxconn deal is still 5-6 times the national average for incentives.  Is that still a reasonable amount to pay?  How about the rest of the externalized costs (infrastructure, environment) that is more difficult to quantify?

    Like I said previously, I hope this turns out as promised, but I don’t want my kids and grand kids paying for another one of walkers political campaigns.

  8. 3rd Way says:

    There is no way of knowing what the reality is behind these numbers. It’s all conjecture and projections from people who have well documented histories of using inflated projections and conjecture.

    I hope this happens if we get a good deal. I don’t trust that the people making this deal are putting the interests of the state ahead of their interest in reelection.

  9. dad29 says:

    What’s the cost of Miller Park/job?

  10. Le Roi du Nord says:

    3rd:

    My feelings as well.

  11. 9606 says:

    Bucks arena per job?
    Better yet, per $ wage.

  12. billphoto says:

    Telling is the statement by the Legislative Fiscal Bureau review of the Foxconn proposal: “however, since it is highly unlikely that Foxconn would locate in the state without the incentives …”

    No one has ever evaluated an investment this large before and it appears the LFB and DOA are doing their best but it is obvious they just don’t know.  Using words like “highly speculative” to describe cash flow analysis and assumptions like, on one hand, 40%-50% of the jobs would be filled by Illinois residents while another assumption is only 10%, demonstrates the difficulty.

    Le Crotte du Nord posts “my kids and grand kids paying for another one of walkers political campaigns”  is just more liberal rhetoric.  One thing is sure.  Foxconn coming to the Wisconsin is transformative to our State, the Midwest, the US and our image on the world stage. THAT value will be priceless if our Legislature stops being neanderthals trying to use Foxconn to extract budget concessions and gets on the job.

  13. Le Roi du Nord says:

    “Foxconn coming to the Wisconsin is transformative to our State”

    Maybe, maybe not.  Depends on how the deal works out.  It could also be a big taxpayer expense without much ROI.  Nothing is for sure yet.

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