MADISON, WI - Last
month, President Trump announced plans for the Taiwanese electronics company Foxconn, a major producer of iPhone screens and dozens of other highly demanded products, to open a factory in Southeastern Wisconsin.
Foxconn has yet to open a plant in the United States, and because of this, many are quick to approve the recent proposal to open one in Wisconsin. Being that it would be the first of its kind in America, alongside promises of job creation, has made the potential factory an easy sell. On Thursday, the Wisconsin state assembly voted 59-30 on a bill to successfully move forward with the proposal. Despite the legislative approval, critics have pointed out that the process is being rushed without consideration of potential drawbacks—and there are many.
Perhaps the most alarming drawback is that this bill, LRB 4050, will give Foxconn $3 billion worth of incentives in the form of cash and tax breaks. The cash, of course, would be nothing short of corporate welfare coming out the pockets of taxpayers. Foxconn will only receive the payments in full if it creates 13,000 jobs. It is estimated by the Legislative Fiscal Bureau that the state will not “break even” on this deal until 2042 and that each job is expected to cost roughly $230,000. This is enough to be deemed by tax expert Greg Leroy as “a transfer of wealth from Wisconsin taxpayers to Foxconn shareholders.” Additionally, the factory is set to be built in Southeastern Wisconsin within close range of the Illinois border. This means Foxconn could be employing a large number of Illinois residents while Wisconsin taxpayers are footing the bill. The bill would also allow Foxconn to bypass a number of state-enforced environmental regulations.
In order for LRB 4050 to become law, it still has to pass through the joint finance committee and the Wisconsin state senate before landing on Governor Scott Walker’s desk for signing. Since Walker proudly stood alongside President Trump at the proposal’s announcement and gave it his blessing, it is clear he will sign the bill if given the chance. When deciding if they want to support this move to invite Foxconn to Wisconsin, residents must now consider whether or not it is worth their tax dollars. Should it pass, it isn’t expected they will reap the benefits within the next 25 years. Anyone with a basic understanding of free-market economics knows that deals of this nature will create winners and losers. Based on the facts, it looks like this deal cut with Foxconn will be another loss for the taxpayer.