Wisconsin Lawmakers Vote To Pay Foxconn $3 Billion To Get New Factory (arstechnica.com) 245
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.
That ain't hay (Score:5, Informative)
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.
Re:That ain't hay (Score:5, Interesting)
I went to the Reuters version for more clarity.
which would award Foxconn $3 billion over 15 years in mostly cash incentives.
This only holds true if they end up creating 13k jobs. Otherwise they get about 1.35 billion according to the Ars Technica article.. It's still a tough pill to swallow considering that job creation numbers from this deal are all over the place and it's quite difficult to see how much income tax revenue is generated from this. We also have to consider how much sales tax revenue will be generated from people having jobs, and how many other businesses in the area will be created from people having more money to spend.
It's all really speculative at this point and those large numbers seem damning due to the amount of unknowns. I don't disagree it looks bad.
Re:That ain't hay (Score:5, Insightful)
The math is crazy. They could pay 13,000 people $15,384 per year for 15 years for $3 billion. Which I know doesn't make any sense, especially considering the $3 billion in cash isn't a pre-existing sum and probably represents some kind of long term payroll tax refund, which is why its tied to the employment and projected wage numbers.
You would think, though, that if they were willing to lay out that kind of money as an incentive it would be better in some kind of startup fund or small business capital expansion program. The same $3 billion could provide $1 million per year to 207 small businesses or startups for 15 years.
The latter seems like it would be more likely to create a stronger and more diverse economy, especially if the money helps grow established small businesses.
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I've always hated seeing the money going to the companies going to build their plants like in this article. Especially the auto manufacturers because you know that in a few years they are going to back with their hands out asking for more. All they are doing is going around and playing the various states and provinces off of one another to get the best deal.
I've thought similar yourself. I'd like the government to tell the company to get lost and, if it's an already existing firm, to make 2/3s or 3/4s of th
Re:That ain't hay (Score:5, Insightful)
The US government does this all the time. Talk badly about "socialism" when the topic is poor people, healthcare etc, but take money from those people to pay billionaires and wealthy corporations and banks so that they can continue to profit.
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Canada has its own fair share of corporate welfare. Plenty of governments all over the world play these games with taxpayer money. Here in BC we're building a huge new hydroelectric project (the Site C Dam) in part to provide power for LNG production facilities, none of which are now likely to ever happen due to low energy prices and intense competition.
A scheme like this in the 21st century is idiotic, though. With increasing automation, even if this plant stays open for 30 years, by the end of it the empl
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Ontario and the Federal government are always giving money to the auto manufacturers. Of course when the last fruit canning factory in Ontario needed help the Ontario government said no and as a result a lot of orchards in Southern Ontario were ripped up as there were canning facilities to process them. But shortly after that the automakers came along and the cheque book was opened up. Now all our canned fruit comes from China.
Bombardier just got assistance from the province of Quebec ($1B I think) and they
We had to vote for this deal . . . (Score:2, Funny)
. . . to find out what's in it?
And they'll still win the next election (Score:2)
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I would have agreed with you up until the last month or so.
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They've also mastered the art of distraction.
Current American politics works thus:
"I have here a detailed economic analy - "
"LOOK! CROSS DRESSING MEN WANT TO RAPE YOUR CHILD IN THE SCHOOL RESTROOM! Probably immigrants, too."
"I really think that we need to consider -"
"WHAT, DO YOU WANT TO SEE OUR DAUGHTERS RAPED? DO YOU NOT CARE ABOUT THEIR PRIVACY?"
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Tax credits are cash payments, like the Earned Income Credit (EIC). That means Wisconsin writes Foxconn a check.
From your link:
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Back in the day when I had Really Nice Corporate Medical Benefits I ran the risk of being forced to either change doctors every two years when corporate renegotiated the reinsu
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Everyone who doesn't work for a top-tier tech company has had their health benefits cut proportionally, so although my post started "back in the day" everyone not working for a top-tier firm today is still proportionally worse off. Freedom!
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Whatabouterry.
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>"Of course, the real point is that neither political party in the US is any good actually doing what they say."
Absolutely.
And this further illustrates that there isn't this nice left vs. right thing most people think there is. More government spending = more government and more taxes and more debt and more corruption and more waste; doesn't matter WHAT it is spent on, it is still government spending. The right likes it just as much as the left. Apparently the only ones who don't want more spending/ta
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Is the wisconsin government republican
Do they run on promises of lower taxes and fewer government handouts?
Is blatant (and stupid) hypocrisy worse than merely being wrong about your projections?
Especially when, unexpectedly, a dozen states do everything they can to sabotage health care for their own citizens, raising the costs and lowering the savings?
And did this conversation have *anything* to do with the ACA (which 84% of americans preferred over every single proposal the republicans came up with).
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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.
We were also told that the Affordable Care Act would result in an average savings of $2500 per family per year
Savings in premiums, or total health care costs?
What would premiums be without the ACA? From what I've read, they'd be considerably higher than they are now. Health care expenses have being increasing dramatically for well over a decade.
If it's total health care costs, I can easily see the average cost going down because of all of the families that now have insurance coverage instead of paying all of their health care costs themselves.
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Wisconsin -- butter. I see what you did there.
Kudos.
What happened to ... (Score:4, Insightful)
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.
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>"Government should not pick winners and losers. Only the Republican party crony capitalists should pick winners and losers using tax payer funds. "
Yeah right.... only the Democrat party crony socialists should pick winners and losers using tax payer funds.
Doesn't that sound just as silly? BOTH PARTIES spend and tax and regulate more all the time. They do it somewhat differently, but they both want bigger government with more power and end up spending more, creating more debt, and making the governmen
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First thing we need is people like to to start saying one side does it with vengeance and vehemence. Then we can reform the elections. As long as you give the most egregious behavior an out, without calling it, we would have destroyed the whole nation before
Re:What happened to ... (Score:5, Insightful)
Democrats -- though plenty corrupt themselves -- very consistently show a less extreme desire to turn government into nothing but way of funneling money to companies. Some of their spending is on things the public actually gets to own and reap the rewards of, rather than spending tax dollars purely to privatize the profits to companies.
Just because both groups are bad does not mean there's an equivalence. It's easy to see the differences, and easy to see that it doesn't entirely boil down to opposing each other "just because".
As good a deal as a stadium (Score:4, Interesting)
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.
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Who pays 7% interest with zero risk?
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It's cash incentives, apparently tied to whether they meet the employment goals. You could read the bill and sound like you know what you're talking about.
Not that it makes a huge difference, its still a lot of money. But your argument falls flat when you're off by more than an order of magnitude.
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America became a victim of its own success, in a way. Cost of living has been driving very high by economic success, until it reached a point where they were no longer competitive in a global manufacturing market - it's just cheaper to build things in China, where not only is labor cheap but environmental laws are also very lax.
China is going the same way now - their manufacturing industry is booming, but growth is not what it was, and their serious pollution issues mean environmental protection is becoming
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It's too much money (Score:2, Insightful)
Kickback City (Score:2)
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.
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This is why propaganda, I mean marketing, is such a great investment for the capitalist.
And the rest of us are paying for it (Score:5, Informative)
Wisconsin is already spending other states' tax money [wallethub.com], because it cannot keep itself afloat. Now it's going to hand that money to China.
Re:And the rest of us are paying for it (Score:4, Informative)
Taiwan != China
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Taiwan != China
That depends on who you ask, but it's irrelevant to the point; the majority of Foxconn's investment is in China.
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China disagrees. The issue is rather contentious in Taiwan - though nominally semi-independent, China routinely attempts to exercise influence and stifle dissent. The Chinese government puts a great deal of value in national unity, and are not pleased about tolerating what they regard as a breakaway province.
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Not really? According to your link, it's 16th in federal-spending-to-income-tax-dollars and 38th in federal funding as a percentage of state revenue. Mississippi, Alabama, Kentucky, and Tennessee seem to be the worst off there; to a first approximation it sort of seems like Texas is the only red state with a functioning economy. Probably the more relevant thing to note is that WI seems to have a couple-three billion dollar budget deficit, apparently depending on whether or not you're using Generally Accepte
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to a first approximation it sort of seems like Texas is the only red state with a functioning economy.
I really think that makes my point for me, right? It surely does not detract from it in any way.
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38th is better than average, and 16th isn't in the worst offenders. I think that combined with the budget deficit it paints a dismal picture, but by itself your link isn't strongly supportive. In the sense that "functioning economy" implies "high GSP" I don't really want to hold rural states accountable for not having the same productivity as urban ones. That the tech centers are going off the deep end of per capita productivity and agricultural regions are not is not exactly a surprising result.
If it were
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How is this even possible? (Score:3)
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.
"The Party of Fiscal Responsibility" (Score:5, Interesting)
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.
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Nobody is old enough to remember that.
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Don't you mean "claimed to be the party of fiscal responsibility"? There actions have always been otherwise, at least long term.
The car analogy is saving money by not doing the needed tuneup or buying the needed tyres while investing in a nice seat cover and using the car as a truck to haul large amounts of plywood. Hey they saved all that money on tyres and a tuneup and are getting better value from that car, fiscally responsible. Especially when the car falls apart after the election so they can blame the
It's $3B on a $10B purchase (Score:4, Informative)
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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1. And what percentage of that $10B stays within the state? I'm sure lots of that is electronic parts, foreign steel, shipping, etc.
2. The articles state "The $3 billion incentives package includes about $2.85 billion in cash payments from taxpayers." But I'm not sure I understand that $2.85 billion in cash payments. I have never heard ofa city giving a cash payment like this, especially to a foreign company. That's ridiculous. Tax breaks alone are debatable, but cash??? I really hope I am misunderst
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Try reading the article dipshit. Or even the summary.
It's up to $2.85 in cash payments from the state to Foxconn.
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Given they need to spend $10B in the next 3 years to build the plant
The flaw in that logic is that $10B will go to the state. I can guarantee you that not all of it does. If we look at just materials cost alone, steel will most likely come from China as it is cheaper. Cement will come from other states and possibly overseas. Also it is guaranteed that some of the construction jobs will go to out-of-state and out-of-country workers.
the state gets $560M in sales taxes alone from the construction and another $3-400M as the construction companies pay their workers.
Again not all of that money goes to people in the state. Construction projects of this size will be awarded to a large number of subcontractors,
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Yes, you don't have to pay sales tax in the US on items you will use to produce something or resell but you in turn have to charge sales tax to the entity you sell to. Even if I buy items in China, as a manufacturer, I don't have to pay sales tax on that value (which you should pay if you're using it directly, even if it were purchased out-of-state), but if I resell the item, I have to charge (and in turn pay) the sales tax for the full value I resold it for and in addition, I need to pay income taxes on my
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Are you sure that new buildings or services attract sales tax in Wisconsin?
Nothing like the smell of pure capitalism (Score:3)
Nothing like the smell of pure capitalism in the morning. John Galt (a native of Milwaukee) would be proud!
Priorities (Score:3)
Go Corps!
so many questions (Score:5, Insightful)
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?
financial power (Score:2)
Solid Business Plan (Score:4, Funny)
better idea (Score:2)
The lawmakers I mean.
Stupid Europeans (Score:2)
Agreeing to pay $3 for each $18 is a good deal (Score:3)
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.
Is it for real this time? (Score:2)
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? [slashdot.org]
and I see a prior article talking about a FoxConn plant in Pennsylvania [slashdot.org], 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!
Any other sources? (Score:2)
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Somebody has been greased with nice wads of cash. (Score:2)
Obviously.
Interesting and weird (Score:2)
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Sounds fair (Score:2)
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
We'll see... (Score:2)
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 b
And (Score:2)
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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.
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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.
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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
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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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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.
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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's not tax credits. It's cash fucking payments.
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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,
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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 sa
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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?
Re:Suckers. (Score:5, Informative)
Democratic opponents of the deal have pointed out that paying $3 billion to get 3,000 jobs means the state subsidy amounts to around $1 million per job.
That is just north of $66K for each of the projected 3000 jobs for the nrext 15 years. The jobs are reported to average just over $53K in salary. The full value ($3 billion) only kicks in if Foxconn eventually employs 13,000 workers, but:
Even if the plant never expands beyond 3,000 jobs, though, Foxconn will get $1.35 billion for building the plant. Assuming even the beginning stages of the deal come together, Wisconsin will be paying $500,000 worth of incentives per job.
Re:Suckers. (Score:5, Interesting)
If your state is facing such desperate unemployment levels that you have to pay the full salaries of Foxconn's employees for decades to create the jobs... then why not just hire people into government jobs where the public reaps the benefits of the work? Create the nation's shortest DMV lines, fully-staffed parks, cleanest sidewalks, etc. Doing so might actually bring in more employers.
Because that would be stealing money (Score:4, Insightful)
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.
Re:Suckers. (Score:4, Informative)
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Except the first linked article mentions cash payouts. Why use the words, "cash payouts" if that's not what is going on? It even separates out cash payouts and tax incentives.
Because if we use the verboten words, it doesn't sound like we are winning.
We have to call this freedom incentives or some such.
Re: Suckers. (Score:5, Informative)
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It's "tax rebates" paid in hand and which you do not have to pay back if you never end up with the required amount of tax liability.
In other words, it's cash payments + a bunch of lies so they can deny it.
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the state is giving three billion dollars to a Chinese company.
Foxconn is not a Chinese company.
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You may try to make a distinction by saying Taiwanese, but it is a distinction without a difference.
The majority of people in Taiwan are ethnically Chinese and speak Mandarin, but saying Foxconn is a "Chinese" company makes about as much sense as saying Apple is British.
The GPP was apparently implying that taxpayer subsidies are bad in this case because the recipient is "Chinese". That would make some sense since China is a geo-political rival of America. But Foxconn is Taiwanese, and Taiwan is an ally of America.
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The tax revenue from Foxconn is being suspended, and exchanged for a much smaller tax revenue from the people that Foxconn will employ. It's around a 5 cents on the dollar exchange by my estimate, which I suppose is better than 0 cents, but it still seems like a bad deal for the state.
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The jobs are reported to average just over $53K in salary.
Okay, so what's the median salary?
There's a difference between 3000 people earning $53K each and a few people earning $1M+ with everyone else getting minimum wage, even if both scenarios result in an "average" of $53K.
=Smidge=
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From a tax revenue perspective it would be ideal if they all made $53K. But if you have a bunch making $20k and a few making $1M, that's going to result in almost no tax revenue.
It would have been easier to burn the state treasury down.
Check the maths (Score:3)
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 53,00
Re:Suckers. (Score:5, Insightful)
repudiatable (Score:4, Interesting)
Yay corporate welfare! Fuck the taxpayers! Rich get richer, debt gets deeper. Yay capitalism!
Re: repudiatable (Score:2)
Duuuuuude, it's this really dank shit called "reality".
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Capitalism is just investing capital in various projects, often businesses, to grow your capital. Combined with a market to create competition, the most efficient are rewarded.
It's much more efficient to invest a bit of capital in growing the government and transferring tax money to the capitalist then trying to build more efficient factories and such. It is also more efficient to invest a bit of capital in growing the government and using it to socialize the risks in various businesses. Throw in using a bi
Re: Suckers. (Score:2)
Better them than us.
--North Carolina