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United States Businesses The Almighty Buck Technology

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.
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Wisconsin Lawmakers Vote To Pay Foxconn $3 Billion To Get New Factory

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  • That ain't hay (Score:5, Informative)

    by PopeRatzo ( 965947 ) on Saturday August 19, 2017 @09:07AM (#55047523) Journal

    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.

    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)

      by Kneo24 ( 688412 ) on Saturday August 19, 2017 @09:27AM (#55047615)

      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)

        by swb ( 14022 ) on Saturday August 19, 2017 @09:51AM (#55047705)

        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.

        • 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)

      by Threni ( 635302 ) on Saturday August 19, 2017 @09:27AM (#55047617)

      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.

    • . . . to find out what's in it?

    • thanks to a combination of the Southern Strategy, voter suppression, good marketing and the Democrat's own right wing preventing the party from taking a stand on any economic issue that matters.
      • I would have agreed with you up until the last month or so.

      • 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?"

    • by bongey ( 974911 )
      Nope it is tax incentives, which means ZERO dollars are actually being lost. If the factory is never built, there would be exactly ZERO dollars collected. But sure keep up the fake news trying to make it look like there paying for the jobs to come. http://www.kttc.com/story/3597... [kttc.com]
      • Nope it is tax incentives, which means ZERO dollars are actually being lost.

        Tax credits are cash payments, like the Earned Income Credit (EIC). That means Wisconsin writes Foxconn a check.

        From your link:

        That includes up to $1.5 billion in state income tax credits for job creation. up to $1.35 billion in state income tax credits for capital investment, and up to $150 million for the sales and use tax exemption. In all, Foxconn is eligible to earn $3 billion in tax credits over 15 years.

  • by 140Mandak262Jamuna ( 970587 ) on Saturday August 19, 2017 @09:23AM (#55047585) Journal
    Government should not pick winners and losers.

    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.

    • >"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

      • Oh, yeah. Bothsidism. When it comes to diverting tax payer funds to private corporations there is no equal to the Republicans. Democrats. they too go for spending. But mostly on social things, giving hand outs to poor people. Not wealthy corporations.

        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

  • by burtosis ( 1124179 ) on Saturday August 19, 2017 @09:33AM (#55047643)
    I'm all for American manufacturing but these high price tag incentives geared at foreign companies for a small number of jobs many of which are temporary looks like a bad idea. There are a supposed 3000 jobs for a 3B price tag or about 1 million dollars per job. It could take as much as 20 years to break even given the tax breaks. Quite frankly I'd be surprised if most of those jobs weren't in building the automated factory, to be discarded after 2-3 years just like the pipeline deals. The manufacturing jobs aren't coming back to the American people unless we count assembly line robots as citizens along with large corporations and actual humans.

    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.
    • Who pays 7% interest with zero risk?

    • 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.

    • 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

  • They were going to get bought off. The best part? It's $500k per job. It's an enormous waste. Basically more socialism for the wealthy and dog eat dog capitalism for the working class.
  • 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.

    • by dryeo ( 100693 )

      This is why propaganda, I mean marketing, is such a great investment for the capitalist.

  • by drinkypoo ( 153816 ) <martin.espinoza@gmail.com> on Saturday August 19, 2017 @09:52AM (#55047711) Homepage Journal

    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.

    • by Anonymous Coward on Saturday August 19, 2017 @10:23AM (#55047825)

      Taiwan != China

      • Taiwan != China

        That depends on who you ask, but it's irrelevant to the point; the majority of Foxconn's investment is in China.

      • 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.

    • 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

      • 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.

        • 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

    • by bongey ( 974911 )
      Suddenly since Trump every liberal paper is calling them tax payments when they were tax credits the previous 8 years. WFT It is fucking TAX CREDITS god dammit. ZERO dollars would be collected if the factory was never built. Suddently http://www.kttc.com/story/3597... [kttc.com]
  • by 0x537461746943 ( 781157 ) on Saturday August 19, 2017 @09:59AM (#55047735)

    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.

  • by Jahoda ( 2715225 ) on Saturday August 19, 2017 @10:01AM (#55047739) Homepage
    Anyone else remember when Republicans were "The Party of Fiscal Responsibility"?

    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.
    • Nobody is old enough to remember that.

    • by dryeo ( 100693 )

      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

  • by guruevi ( 827432 ) <<moc.stiucricve> <ta> <ive>> on Saturday August 19, 2017 @10:03AM (#55047747) Homepage

    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.

    • by MobyDisk ( 75490 )

      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

    • Try reading the article dipshit. Or even the summary.

      It's up to $2.85 in cash payments from the state to Foxconn.

    • 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,

    • by bongey ( 974911 )
      It's tax credits , not payments http://www.kttc.com/story/3597... [kttc.com]
  • by sphealey ( 2855 ) on Saturday August 19, 2017 @10:04AM (#55047749)

    Nothing like the smell of pure capitalism in the morning. John Galt (a native of Milwaukee) would be proud!

  • by seven of five ( 578993 ) on Saturday August 19, 2017 @10:20AM (#55047815)
    "Not a good use of public funds" is irrelevant. What's relevant is expansion of corporate welfare and extension of corporate power.

    Go Corps!
  • so many questions (Score:5, Insightful)

    by clovis ( 4684 ) on Saturday August 19, 2017 @10:29AM (#55047843)

    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?

  • Oh great. I huge communist company right in my state. I wonder if they'll use their awesome financial power to influence government? Considering they're already getting waivers on so many regulations I would say they don't have to. They already own us.
  • by boudie2 ( 1134233 ) on Saturday August 19, 2017 @10:33AM (#55047859)
    What company wouldn't want to build a billion dollar high tech factory in a state where people walk around with blocks of cheese on their heads?
  • How about we just pay those people $40,000 a year to dig holes in the ground periodically, and then have a long vacation? It would be cheaper and probably just as economically long lasting.

    The lawmakers I mean.
  • It is common for European and Chinese states to put money to fund large private projects the big difference with the U.S is that they demand and receive equity or stock on what is essentially a joint venture instead of just hoping that someday their investment will be recouped thru taxes
  • by boley1 ( 2001576 ) on Saturday August 19, 2017 @11:14AM (#55048001)
    From Ponitfact:

    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.

  • 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!

  • From searching online the Ars article is the only one that says they are actually paying real dollars. The are also the only one I can find that says they are changing environmental laws for the plant. All others I have found say there are "environmental concerns". Even the Reuters article referenced in the doesn't mention any of this. Not saying it's one way or the other, just odd that Ars is the only one I could find saying that.
  • Why are the GOP happy to give 3 billion subsidy to Chinese companies, but then scream about a .5 B loan to Tesla?
  • 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 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

  • by meglon ( 1001833 )
    ...the poor and middle class will be taxed more to make up the difference. Republicans fucking over people for corporations yet again.

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