Tuesday, December 17, 2019

Foxconn's per-job subsidy dwarfs deals with Milwaukee Tool

We have a new local standard by which to measure the Foxconn subsidy bloat promised by Walker's Wasteful Caucus.

Hold your breath, and your wallets.

Long-time area employer Milwaukee Tool is adding hundreds of new jobs, bringing the total of company jobs to 1,812 which are eligible for a total of $46 million in state tax credits, reports The Journal Sentinel's Tom Daykin.

That's about $25,400 in state tax dollars per Milwaukee Tool job.

On the other hand, The Verge recently reported that Foxconn could be paid tax credits of $172,000 per job if all 13,000 promised jobs were created.

That's almost 7 times more money per job created than what the state will pay to Milwaukee Tool.

But wait, The Verge explains: Per-job payments from taxpayers to Foxconn's already-shrinking project could skyrocket to as much as 25 times what the Milwaukee Tool's per-job expansion is worth:
If Foxconn actually hired the 13,000 people it promised, that subsidy would come out to $172,000 per job, according to a study requested by the Evers administration this year. For comparison, the same study estimated that Virginia paid between $10,000 and $13,000 per job for Amazon’s second headquarters...
The shrinking factory was bad news for the state. Because of the way the incentives are paid out in the contract, if Foxconn built expensive facilities that employed few people, Wisconsin could end up paying $290,000 per job and certain scenarios could take that number above $500,000. 
Regrettably, the distortion was been reported almost two years ago
Walker's lavish public spending on Foxconn explained
Into my my cumulative archive about Walker and his case of Foxconn fever I will definitely place this above-the-fold Monday Journal Sentinel headline story
Foxconn package cost Wisconsin eight times as much per job as similar 2017 state jobs deals
You can see why it has been predicted that the Foxconn deal could smother development in the state for years.

Granted the Foxconn construction and Milwaukee Tool's various expansion plans are not identical, though there is production capacity and so-called 'campus' elements in both.

But look at how the Foxconn subsidies measure up against what states Virginia offered Amazon for a new facility, according to a report commissioned by the State of Wisconsin:
The report, which was conducted by Tim Bartik of the Upjohn Institute for Employment Research, finds that the smaller [Foxconn] facility raises the already unusually high cost per job even further. 
If the subsidy levels in the current contract are kept, each Foxconn job would cost taxpayers about $290,000, Bartik found, compared to $172,000 if Foxconn built the original $10 billion, 13,000-job facility. 
For comparison, Bartik estimated the subsidies Virginia offered Amazon for its second headquarters amounted to between $10,000 and $13,000 per job.
While Foxconn to date has not received a dime of tax credits because its hiring so far has not met state criteria, the Milwaukee Tool calculation shows just how overblown is Foxconn deal's.

Note also that the Foxconn per-job public subsidy does not include the publicly-financed highway work near the project site, or the local and county contributions basically required by the state which push the entire public commitment to Foxconn well beyond $4 billion.

The history of the Foxconn debacle engineered by Donald Trump, Scott Walker, the GOP-led Legislature and various allies in the state business community is in a 30-month-long archived post, here.

From NBC Nightly News, 7/21/19

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