Foxconn Could Be Getting $3 Billion in Incentives for Wisconsin Factory

Megalith

Megalith

24-bit/48kHz
Joined
Aug 20, 2006
Messages
13,000
While the plan still requires committee approval, the majority of Wisconsin lawmakers have voted for a bill that paves the way for a $3 billion incentives package for a proposed liquid-crystal display plant by Foxconn. The full amount will only be awarded if the company manages to create 13,000 jobs, but regardless of this goal, Foxconn will still get $1.35 billion for building the plant. Some estimate that taxpayers could end up paying $500,000 worth of incentives per job.

The 20-million-square-foot LCD plant would initially employ 3,000 people, but Walker and Foxconn said the company could ultimately employ 13,000 at the site. "We look forward to continuing to work with them to transform Wisconsin's economy and make it a center of worldwide high-tech manufacturing," Foxconn said in a statement, referring to the legislature. Proponents have touted the project's investment potential and job creation, including an expected 22,000 ancillary and 10,000 construction jobs.
 
robble said:
I'll believe it when I see it. Foxconn has a history of crapping out.

How long for the state to get a positive ROI? $500,000 per job is pretty damn steep.
Click to expand...

Considering that Wisconsin is earning ZERO tax revenue from Foxconn or Foxconn employees at present (and are actually already PAYING some percentage of potential employees UI, SNAP and healthcare at present), a 25 year ROI isn't horrible, were it an industry that could be expected to stay around.

But banking on LCD displays even being a viable, in-demand product over the course of 25 years is a gamble.
 
What a great deal for Wisconsin and for the thousands of people who will be employed.
 
This is NOT the way to create jobs. Giving huge handouts to chosen industries rarely results in a positive net benefit.
 
Hey, whatever it takes to expand the size of the suicide nets in China.
 
robble said:
I'll believe it when I see it. Foxconn has a history of crapping out.
How long for the state to get a positive ROI? $500,000 per job is pretty damn steep.
Click to expand...

I think I read it'd take 20 (or was it 30?) years. I'm not an economist, so I did a very rough estimate assuming that the average wage will be 50k and that everyone will fall in that tax bracket both for state and federal taxes. I assumed they all bought a house that was the median home price and paid 2.6% property tax and that every time they had left over was spent and sales tax was applied. Using that in 30 years, they'd get back roughly 3.6 billion. However, I don't think my assumptions are accurate, but I also think you have to include other taxes generated from businesses where things were purchased.

Nevertheless, I think it'll take a long LONG time to get hte money back and depending on when most of the money is given, inflation may mean they aren't close to getting it back after 30 years (even if my numbers were accurate).
 
Yeah, I don't have confidence that Foxconn will stick around that long(~25 years) before the state makes money from them. I'm sure they will have good accountants to cook the books about number of jobs created. I hope there is a stipulation that the 13,000 people have to be living and current working employees of Foxconn and not contractors or temp workers or some other category of worker.
 
OldGator said:
A big giant scam similar to stadiums.
Click to expand...
Difference is that most stadiums are voted on by the people paying for it and the good people of Arlington TX are more than willing to throw money away on stadiums, never see any ROI. I'm pretty sure Foxconn requires no vote buy the citizens of WI.
 
Jim Kim said:
What a great deal for Wisconsin and for the thousands of people who will be employed.
Click to expand...

You must not be paying attention... This corporate welfare handout is going to cost the citizens of Wisconsin more than they're going to get out of it. Only the 1% make anything off of this.

ymer said:
When will it be my turn to get free money from the government to grow my business to make even more money for me?
Click to expand...

Citizens like you and I will only get what belongs to us when the economy isn't rigged, and the government works for the people instead of for the corporations and those that own them. Sadly with failed Reaganomics being pushed again by the White House and some states, we're going to have to wait a bit longer. There is some hope though, Kansas failed experiment has started to awaken those that previously pushed for Reaganomics to realize the destruction it has inflicted on America.
 
Semantics said:
And as soon as the incentives dry up pack up shop and leave to fleece the next sucker
Click to expand...
That is usually very true. The trick is to make sure the ROI is there for the government and the populous. Like most first world countries, our employees are not wage competitive with those in 3rd world countries, and our relatively strict, tax, health, safety, and environmental laws are not competitive either. Those are not bad things, (I like clean water and decent wages), it just means you have to sweeten the pot to make it worth it for a company to want to manufacture here. I think the ROI is there for this one. If not in direct tax dollars, in wages from direct employees, as well as any support industry job it creates.


Edit: LOL, maybe I should have read the rest of the thread b4 replying to you. I am not blaming you, but this one has already headed into the shitter.
 
I feel like dropping 3.5 billion into municipal fiber would create more than that many high tech jobs in their state, not to mention make them extremely attractive to tech companies and prospective residents.
 
Chunder said:
You must not be paying attention... This corporate welfare handout is going to cost the citizens of Wisconsin more than they're going to get out of it. Only the 1% make anything off of this.



Citizens like you and I will only get what belongs to us when the economy isn't rigged, and the government works for the people instead of for the corporations and those that own them. Sadly with failed Reaganomics being pushed again by the White House and some states, we're going to have to wait a bit longer. There is some hope though, Kansas failed experiment has started to awaken those that previously pushed for Reaganomics to realize the destruction it has inflicted on America.
Click to expand...
I don't know, I think the only thing politicians are learning from Kansas is just do the same thing over and over everywhere, and then just back off when it utterly collapses, then rinse and repeat.
 
Chaos Machine said:
I feel like dropping 3.5 billion into municipal fiber would create more than that many high tech jobs in their state, not to mention make them extremely attractive to tech companies and prospective residents.
Click to expand...
I'm afraid that can't be done because doing that actually makes sense and making sense is not allowed anymore ...
 
I'm not a big fan of corporate welfare but there is an economic arguement about incentivising to boost the skills available in market, not having an industry becomes self fulfilling, can't start because no skills, so no skills get developed.

That becomes a loop and at a macroeconomic level becomes a problem because you don't build an ecosystem of competence in an area. Boot strapping it can help.

Simplistic example would be a country that wants nuclear submarines, if it hasn't got a nuclear industry it won't have the skills to build and maintain them ( Australia just had that exact problem)

Unfortunately America has been horrifically deskilled in modern manufacturing (it's sad) and it's enormously difficult to fix that, the people have moved on.

There's also the problem that aerospace and military industries have absolutely stuffed what you do have as they're too used to being expensive. If I put a bid out for contract manufacturing in the US, what you get back is expensive, they're slow to respond and generally has a 'cba' feel to it. It'll generally be very good quality though. If I do it in China then I'm inundated and it'll be a third of the price. QA might be shit but that's a different matter and where relationships (and a Chinese speaker) help.

This is just pork though.
 
Chunder said:
Sadly with failed Reaganomics being pushed again by the White House and some states, we're going to have to wait a bit longer. There is some hope though, Kansas failed experiment has started to awaken those that previously pushed for Reaganomics to realize the destruction it has inflicted on America.
Click to expand...

You evidently don't understand Reaganomics. I suppose you prefer the corrupt crony capitalism & excessive handouts of the previous administration.
 
Gotta love bad reporting, or lack of understanding on a topic. They are not paying Foxconn, the potential 3 billion is a 3 billion tax credit, meaning they are just allowing Foxconn to keep the money they made. The tax credit is also tied to jobs, meaning if they do not make the 30,000 jobs claimed, they don't get that $3b in tax credits, the jobs also have to pay $30,000 a year minimal to be counted to that tax credit as well.
 
BlueFireIce said:
Gotta love bad reporting, or lack of understanding on a topic. They are not paying Foxconn, the potential 3 billion is a 3 billion tax credit, meaning they are just allowing Foxconn to keep the money they made. The tax credit is also tied to jobs, meaning if they do not make the 30,000 jobs claimed, they don't get that $3b in tax credits, the jobs also have to pay $30,000 a year minimal to be counted to that tax credit as well.
Click to expand...

That's great and everything but we forsee foxconn leaving early after they kept enough of their money. Even 1/2 of that tax credit may make that ROI tempting enough to leave those workers high and dry. The odds are against foxconn staying the full duration, and I would surmise that even half the duration is asking alot.
 
Oh someone finally found the joke of the deal. If all the stars align and they hire max people at max wage its paid back in 2043. Good luck still having a TV plant in 2043 and even more so one that isn't reduced to 50 workers.
 
Jim Kim said:
What a great deal for Wisconsin and for the thousands of people who will be employed.
Click to expand...

There are already a wack load of unfilled manufacturing jobs in Wisconsin. Companies are fighting for talent at this point.

That money would have been better spent helping to re-educate their workforce to meet the needs of modern manufacturers.
 
Well this is certainly politics as usual -- optics over reality.

Obama did it (think alt-energy bankruptcies), and Trump is doing it in many ways it along with lots of governors. Often states end up bidding against one another benefiting only the company shareholders.

I just hope that when the plant is done the city code only allows 1 story building so the jumpers only get disability pay rather than a funeral.
 
viscountalpha said:
That's great and everything but we forsee foxconn leaving early after they kept enough of their money. Even 1/2 of that tax credit may make that ROI tempting enough to leave those workers high and dry. The odds are against foxconn staying the full duration, and I would surmise that even half the duration is asking alot.
Click to expand...

So, at the cost of nothing, outside of letting them keep their money, you are saying the 10 billion they spend in materials and construction jobs for the local economy, and the 13,000 long term is something you don't want? That is about as ignorant as I can imagine. Remember, if the jobs are not created, they don't get the tax credits, which Foxconn even states will take years. Since the state is just not collecting extra tax dollars, rather than paying out, the jobs are free. To spend $10b to build a plant for MAYBE up to $3b in tax credits only to leave early makes no financial sense to a business.

Shintai said:
Oh someone finally found the joke of the deal. If all the stars align and they hire max people at max wage its paid back in 2043. Good luck still having a TV plant in 2043 and even more so one that isn't reduced to 50 workers.
Click to expand...

Nothing is paid back, as the state is not "paying" anything out. They are just not collecting extra money in taxes, that they would never get if the plant is not built anyway. As it is all in the form of tax credits.

NeoNemesis said:
There are already a wack load of unfilled manufacturing jobs in Wisconsin. Companies are fighting for talent at this point.

That money would have been better spent helping to re-educate their workforce to meet the needs of modern manufacturers.
Click to expand...

Part of the agreement was that part of the $3b will go straight to the states workforce commission for job training.

RealBeast said:
Well this is certainly politics as usual -- optics over reality.

Obama did it (think alt-energy bankruptcies), and Trump is doing it in many ways it along with lots of governors. Often states end up bidding against one another benefiting only the company shareholders.

I just hope that when the plant is done the city code only allows 1 story building so the jumpers only get disability pay rather than a funeral.
Click to expand...

The "alt-energy" companies got government grants and funding, Foxconn is not getting that, they are only getting tax credits.
 
Last edited by a moderator:
BlueFireIce said:
So, at the cost of nothing, outside of letting them keep their money, you are saying the 10 billion they spend in materials and construction jobs for the local economy, and the 13,000 long term is something you don't want? That is about as ignorant as I can imagine. Remember, if the jobs are not created, they don't get the tax credits, which Foxconn even states will take years. Since the state is just not collecting extra tax dollars, rather than paying out, the jobs are free. To spend $10b to build a plant for MAYBE up to $3b in tax credits only to leave early makes no financial sense to a business.



Nothing is paid back, as the state is not "paying" anything out. They are just not collecting extra money in taxes, that they would never get if the plant is not built anyway. As it is all in the form of tax credits.



Part of the agreement was that part of the $3b will go straight to the states workforce commission for job training.



The "alt-energy" companies got government grants and funding, Foxconn is not getting that, they are only getting tax credits.
Click to expand...


Where did you get 10 billion number from? Intel, world wide, spent 6 on fabs and fab upgrades. Your numbers don't make sense.
 
BlueFireIce said:
So, at the cost of nothing, outside of letting them keep their money, you are saying the 10 billion they spend in materials and construction jobs for the local economy, and the 13,000 long term is something you don't want? That is about as ignorant as I can imagine. Remember, if the jobs are not created, they don't get the tax credits, which Foxconn even states will take years. Since the state is just not collecting extra tax dollars, rather than paying out, the jobs are free. To spend $10b to build a plant for MAYBE up to $3b in tax credits only to leave early makes no financial sense to a business.



Nothing is paid back, as the state is not "paying" anything out. They are just not collecting extra money in taxes, that they would never get if the plant is not built anyway. As it is all in the form of tax credits.



Part of the agreement was that part of the $3b will go straight to the states workforce commission for job training.



The "alt-energy" companies got government grants and funding, Foxconn is not getting that, they are only getting tax credits.
Click to expand...

They are not just getting tax credits. The article states: "Walker ordered the legislature into special session on Aug. 1 to consider the incentives package, which would award Foxconn $3 billion over 15 years in mostly cash incentives."

That reads cash incentives, not tax breaks only. Let me help you with the details of this deal. Namely:

"As a result of the already very generous tax breaks for corporations like Foxconn, the new tax credits would have very little to do with the state tax code. Instead, they would simply be large checks written each year by the Department of Revenue to Foxconn – totaling up to $2.85 billion over the next 10 or 15 years" http://www.wisconsinbudgetproject.org/wp-content/uploads/2017/08/Foxconn-payments-for-jobs.pdf

And let's not get into the cost for the infrastructure to support this facility and the risk that the workers will live in Illinois and commute to Wisconsin negating income tax revenue.
 
I'm going to say this Flat Panels are not as once popular as they were say 5-10 years ago because everyone has one already.
except in Smart phone device which are alot smaller and cheaper to produce.
I would rather seem them produce landfills consoles like the X-box one.
 
I have seen the aeronautical industry pull this same bs by threatening to leave the state. The company cries, the state cries, the state shells out money, the company stays for another three years, the cycle repeats.
 
viscountalpha said:
Where did you get 10 billion number from? Intel, world wide, spent 6 on fabs and fab upgrades. Your numbers don't make sense.
Click to expand...

If Intel was the bigger company, that might make some sort of sense in a comparison, however Foxconn dwarfs Intel. It is also stated by Foxconn, and everey single news page that talks about this, including the linked article in the OP, but I guess people don't read anymore.

Dishpan said:
They are not just getting tax credits. The article states: "Walker ordered the legislature into special session on Aug. 1 to consider the incentives package, which would award Foxconn $3 billion over 15 years in mostly cash incentives."

That reads cash incentives, not tax breaks only. Let me help you with the details of this deal. Namely:

"As a result of the already very generous tax breaks for corporations like Foxconn, the new tax credits would have very little to do with the state tax code. Instead, they would simply be large checks written each year by the Department of Revenue to Foxconn – totaling up to $2.85 billion over the next 10 or 15 years" http://www.wisconsinbudgetproject.org/wp-content/uploads/2017/08/Foxconn-payments-for-jobs.pdf

And let's not get into the cost for the infrastructure to support this facility and the risk that the workers will live in Illinois and commute to Wisconsin negating income tax revenue.
Click to expand...

People can say whatever they like, all that money is in tax credits, if you don't understand that even your own pdf states it, they just ASSUME Foxconn will not owe any money in taxes to begin with, which is a hell of an assumption. It also assumes they will get all of the tax credits every year.

They also state in your own pdf that: "For Foxconn to receive the maximum amount of new tax credits, it would need to spend more than $8.8 billion for payroll and at least $9 billion for capital investments in its new facilities."

Again, if someone is going to report on something, they need to get it right, it is tax credits, not grants or loans.
 
nutzo said:
You evidently don't understand Reaganomics. I suppose you prefer the corrupt crony capitalism & excessive handouts of the previous administration.
Click to expand...
I'm not sure what you're driving at, but from a percent increase of the debt, Reagan went from 998 Billion on 9/30/1981 to 2.86 Trillion (so it increased 2.865x over 8 years). We don't have the final numbers for Obama till the fall, but it will be less than double.

If you go with debt to GDP, Obama and Reagan are about the same (but I think Reagan has a narrow edge...but again, we don't have final numbers till the fall, so it could get worse for Obama or it could flip...but either way they'll be very similar).
 
Dishpan said:
They are not just getting tax credits. The article states: "Walker ordered the legislature into special session on Aug. 1 to consider the incentives package, which would award Foxconn $3 billion over 15 years in mostly cash incentives."

That reads cash incentives, not tax breaks only. Let me help you with the details of this deal. Namely:

"As a result of the already very generous tax breaks for corporations like Foxconn, the new tax credits would have very little to do with the state tax code. Instead, they would simply be large checks written each year by the Department of Revenue to Foxconn – totaling up to $2.85 billion over the next 10 or 15 years" http://www.wisconsinbudgetproject.org/wp-content/uploads/2017/08/Foxconn-payments-for-jobs.pdf

And let's not get into the cost for the infrastructure to support this facility and the risk that the workers will live in Illinois and commute to Wisconsin negating income tax revenue.
Click to expand...
Is that how it works? Unless something has changed, if you commute to NY from NJ to work, you pay NY income tax. But even if they operate like NY, they'd still lose out on sales taxes and property taxes, and that's not insignificant.
Regardless, it sounds like they're building multiple factories and it's undecided where they'll be, so it's possible that most of the jobs will be sufficiently far from IL to negate the issue of out of state workers.
 
You must log in or register to reply here.
Back
Top