5 ms·

Luckily Wisconsin figured out the solution to this problem... Make the corporate welfare deals an order of magnitude larger and give 3 billion to Foxconn instea

by quasse 9y ago

Luckily Wisconsin figured out the solution to this problem... Make the corporate welfare deals an order of magnitude larger and give 3 billion to Foxconn instead of a piddly tenth of that. Even in the best case for "jobs created" (10,000) pushed by our politicians the state might as well just give 10,000 people $30,000 a year for 10 years. Realistic estimates are saying the new jobs might be more in the range of 3,000, which is an astonishing cost of $1,000,000 per job.

jonlucc 9y ago
Indiana also has it figured out. We gave a ton of state money to a company to save face for a national political campaign so that they could automate the jobs away faster.
MattSteelblade 9y ago
This hits home as a Wisconsin resident. Best case scenario, we're looking at 2042 to turn a profit[1]. [1] http://docs.legis.wisconsin.gov/misc/lfb/bill_summaries/2017_19/0001_ss_ab_1_foxconn_fiserv_legislation_8_8_17.pdf http://docs.legis.wisconsin.gov/misc/lfb/bill_summaries/2017...
- gtCameron 9y ago
  What year would Wisconsin turn a profit off of Foxconn if it didn’t build a factory there at all?
  - throwaway2048 9y ago
    This is very much a prisoner's dilemma race to the bottom situation. What if nobody was willing to pander to foxconn at all? How much tax would they be paying then?
    - deleted 9y ago
      [deleted]
  - wavefunction 9y ago
    Presumably this year, if they paid each person as outlined above because they'd be getting income tax back from the individuals. They could even pay those people $30,000 a year for ten years to work on civic projects and achieve even more 'profit' or return on investment.
    - esmi 9y ago
      I am confused. Who is "they" in these sentences: Foxconn, WI, or an employer other than Foxconn? It can't be Foxconn because the parent statement requires Foxconn doesn't come to WI. WI getting back in tax a portion of what they paid out in full can't be a net income gain because the employee gets to keep some. If it's an employer other than Foxconn, which doesn't get any deal, then I agree that would be best for WI. But which employer is that?
- dahdum 9y ago
  Maybe I'm reading that wrong, but it's not an actual loss at any point is it? The refundable tax credits just pay back what the state collected, which isn't really a "loss".
  - MattSteelblade 9y ago
    It's a combination of cash payments and tax exemptions. http://www.jsonline.com/story/news/politics/2017/08/16/how-would-wisconsin-foxconn-deal-work-here-some-answers/572186001/ http://www.jsonline.com/story/news/politics/2017/08/16/how-w...
    - dahdum 9y ago
      But the cash is a refund of employee payroll taxes and other benefits derived from Foxconn's investment isn't it? It's a sweet deal for Foxconn but I still don't see where the rest of the state actually pays out. I could be reading it wrong of course, but that was the impression of the EITM zone I had.
      - deleted 9y ago
        [deleted]
- r00fus 9y ago
  By then Foxconn would almost certainly have moved on.
diddid 9y ago
Nobody is giving anyone money, they are just not charging them tax. It's an important distinction I don't understand how people keep glossing over it. If it creates 10,000 local jobs, those 10,000 jobs are still going to get taxed. So the locale is going to get money, just not from the corporate tax. So it's not a great deal but it's not a horrible deal. I'd prefer nobody made them but once on place does they all have to in order to compete. But if they built overseas they'd get no corporate tax either... so some slice of the pie is better than none.
- colek42 9y ago
  Thank you. It would be like saying Wal-Mart is giving a customer $5 because DVD is $15 there vs. $20 at Best Buy. Yes, if nobody gave tax breaks companies would have to pay more taxes, but that will never happen, Congress likely does not have the power to force states or municipalities to do so either. edited, spelling.
  - geofft 9y ago
    But what is Wal-Mart's cost of buying the DVD? If they get it from their wholesaler at $19.99 and Best Buy is turning the tiniest profit, Wal-Mart selling it for $15 is effectively giving the customer $5. Sure, they can do it if they want to, but that would raise immediate and valid questions about whether the money would be better used in some other way (giving customers $5 without making them buy a DVD), whether this is the sort of anti-competitive behavior that a long-term-productive capitalist society should regulate, and whether there's something shady going on between Wal-Mart and the DVD supplier.
- kartan 9y ago
  > so some slice of the pie is better than none. That's a run to the bottom. Where's the limit? The USA is already lacking in education, health care, and infrastructure. This is only going to make the problem worse. > If it creates 10,000 local jobs, those 10,000 jobs are still going to get taxed. So the locale is going to get money, just not from the corporate tax. If those jobs have been created in another state without the tax cut they would have gotten the corporate tax and the local jobs taxes (both of them). So you can see it as one state stealing the job taxes from another state at the cost of giving back the corporate tax. One state loses, another wins. The USA as a country just loses because what one loses is bigger than the other wins (being the difference the corporate tax). Only the corporation gets a positive outcome. The country is now in a worse situation.
kgwgk 9y ago
Giving 10,000 people $30,000 a year for 10 years requires $3 bn of actual spending. “Giving” $3bn in tax credits is “free”. It doesn’t work “just as well”.

by quasse 9y ago

jonlucc 9y ago

Indiana also has it figured out. We gave a ton of state money to a company to save face for a national political campaign so that they could automate the jobs away faster.

MattSteelblade 9y ago

This hits home as a Wisconsin resident. Best case scenario, we're looking at 2042 to turn a profit[1]. [1] http://docs.legis.wisconsin.gov/misc/lfb/bill_summaries/2017_19/0001_ss_ab_1_foxconn_fiserv_legislation_8_8_17.pdf http://docs.legis.wisconsin.gov/misc/lfb/bill_summaries/2017...

gtCameron 9y ago
What year would Wisconsin turn a profit off of Foxconn if it didn’t build a factory there at all?
- throwaway2048 9y ago
  This is very much a prisoner's dilemma race to the bottom situation. What if nobody was willing to pander to foxconn at all? How much tax would they be paying then?
  - deleted 9y ago
    [deleted]
- wavefunction 9y ago
  Presumably this year, if they paid each person as outlined above because they'd be getting income tax back from the individuals. They could even pay those people $30,000 a year for ten years to work on civic projects and achieve even more 'profit' or return on investment.
  - esmi 9y ago
    I am confused. Who is "they" in these sentences: Foxconn, WI, or an employer other than Foxconn? It can't be Foxconn because the parent statement requires Foxconn doesn't come to WI. WI getting back in tax a portion of what they paid out in full can't be a net income gain because the employee gets to keep some. If it's an employer other than Foxconn, which doesn't get any deal, then I agree that would be best for WI. But which employer is that?
dahdum 9y ago
Maybe I'm reading that wrong, but it's not an actual loss at any point is it? The refundable tax credits just pay back what the state collected, which isn't really a "loss".
- MattSteelblade 9y ago
  It's a combination of cash payments and tax exemptions. http://www.jsonline.com/story/news/politics/2017/08/16/how-would-wisconsin-foxconn-deal-work-here-some-answers/572186001/ http://www.jsonline.com/story/news/politics/2017/08/16/how-w...
  - dahdum 9y ago
    But the cash is a refund of employee payroll taxes and other benefits derived from Foxconn's investment isn't it? It's a sweet deal for Foxconn but I still don't see where the rest of the state actually pays out. I could be reading it wrong of course, but that was the impression of the EITM zone I had.
    - deleted 9y ago
      [deleted]
r00fus 9y ago
By then Foxconn would almost certainly have moved on.

diddid 9y ago

Nobody is giving anyone money, they are just not charging them tax. It's an important distinction I don't understand how people keep glossing over it. If it creates 10,000 local jobs, those 10,000 jobs are still going to get taxed. So the locale is going to get money, just not from the corporate tax. So it's not a great deal but it's not a horrible deal. I'd prefer nobody made them but once on place does they all have to in order to compete. But if they built overseas they'd get no corporate tax either... so some slice of the pie is better than none.

colek42 9y ago
Thank you. It would be like saying Wal-Mart is giving a customer $5 because DVD is $15 there vs. $20 at Best Buy. Yes, if nobody gave tax breaks companies would have to pay more taxes, but that will never happen, Congress likely does not have the power to force states or municipalities to do so either. edited, spelling.
- geofft 9y ago
  But what is Wal-Mart's cost of buying the DVD? If they get it from their wholesaler at $19.99 and Best Buy is turning the tiniest profit, Wal-Mart selling it for $15 is effectively giving the customer $5. Sure, they can do it if they want to, but that would raise immediate and valid questions about whether the money would be better used in some other way (giving customers $5 without making them buy a DVD), whether this is the sort of anti-competitive behavior that a long-term-productive capitalist society should regulate, and whether there's something shady going on between Wal-Mart and the DVD supplier.
kartan 9y ago
> so some slice of the pie is better than none. That's a run to the bottom. Where's the limit? The USA is already lacking in education, health care, and infrastructure. This is only going to make the problem worse. > If it creates 10,000 local jobs, those 10,000 jobs are still going to get taxed. So the locale is going to get money, just not from the corporate tax. If those jobs have been created in another state without the tax cut they would have gotten the corporate tax and the local jobs taxes (both of them). So you can see it as one state stealing the job taxes from another state at the cost of giving back the corporate tax. One state loses, another wins. The USA as a country just loses because what one loses is bigger than the other wins (being the difference the corporate tax). Only the corporation gets a positive outcome. The country is now in a worse situation.

kgwgk 9y ago

Giving 10,000 people $30,000 a year for 10 years requires $3 bn of actual spending. “Giving” $3bn in tax credits is “free”. It doesn’t work “just as well”.