The Significant Risk of Never Breaking Even on Foxconn Subsidies

Wednesday, August 16, 2017 at 5:35 PM by

When the Legislative Fiscal Bureau wrote last week that it would take until at least 2043 for Wisconsin to break even on the Foxconn subsidies, they were summarizing a Department of Administration analysis that used the “best case” assumptions. Using the same methodology and most of the same assumptions, a new Wisconsin Budget Project analysis calculates that other scenarios within the range described by Foxconn could mean that the cost of the state subsidies would not be recovered until 2050 or 2058.

Of course, the DOA analysis and our alternative scenarios all raise the question of whether we can ever expect to break even on the state’s investment and local costs. As many people have pointed out, tech companies aren’t the most stable employers, and Foxconn’s own record illustrates that point. With that in mind, our new analysis calculates how much Wisconsin would be in the hole if Foxconn pulled out of Wisconsin 25 years from now or, alternatively, if they pull out of Wisconsin in 2034 when the annual subsidy payments would end. Read more

Under Deal, State Could Reward Foxconn for Creating Jobs that Pay Near-Poverty Wages

Thursday, August 10, 2017 at 2:09 PM by

With the state offering enormous subsidies to lure Foxconn to Wisconsin, lawmakers should at the very minimum build in requirements that the new jobs pay family-supporting wages. But the $3 billion proposed deal could result in the state cutting checks to Foxconn to pay for the creation of new jobs that pay as little as little as $23,000 per year, an income level that would put a family of four below the poverty line.

The deal would give Foxconn up to $1.5 billion of state tax money over 15 years in tax credits to subsidize the creation of new jobs at the facility and up to $1.35 billion in subsidies for the facility itself. The state would pay 17% of the salary of jobs that meet certain standards.

The problem is that the salary standards for the new jobs are exceedingly low. The proposal puts forth two possibilities:

  • The state would subsidize Foxconn jobs that pay at least $10.88 an hour, or an annual equivalent of about $23,000; or
  • The state would subsidize jobs that pay at least $30,000 per year.
Read more

Foxconn Deal Keeps Looking Worse

Wednesday, August 9, 2017 at 4:56 PM by

The massive subsides for Foxconn proposed by the Governor keep looking worse as we learn more. The most recent sobering information came this week when the Legislative Fiscal Bureau (LFB) issued a new analysis of the proposed subsidies. The figures in that August 8th analysis reinforce why a number of commentators and editors for business publications, including the editors of Bloomberg, have been extremely critical of the proposal.

Here are some of the key points in the new LFB review of the Foxconn bill: Read more

Growing Gap between Rich and Everyone Else Thwarts Economic Opportunity

Tuesday, August 8, 2017 at 4:13 PM by

It turns out that a rising tide doesn’t lift all boats.

As the economy has expanded over the past decades, prosperity has not been broadly shared. Income gains have been directed into the pockets of those who already have very high incomes, while incomes of the rest have stagnated. The result is that workers in Wisconsin and across the country are missing out on reaping the rewards of their increased productivity, while the incomes of the top 1% soar.

The incomes of the very richest have increased dramatically, while the incomes of everyone else have stagnated. Since the late 1970s, the income of the top 1% in Wisconsin has increased by more than 130%, while the income of the remaining 99% has increased just 9%. The share of all income that is captured by the top 1% has more than doubled since the 1970s, to the point where $1 out of every $6 in Wisconsin now goes to the top 1% of earners. Read more

Reviewing the Foxconn Costs and Risks (without the Rose-colored Glasses)

Wednesday, August 2, 2017 at 5:31 PM by

Different Assumptions about Foxconn Job Creation Yield Much Higher Estimates of the Cost of Jobs

The cost of the proposed new tax credits for the tentative deal with Foxconn could be far larger per job created than some people have suggested. Those costs will vary greatly depending on the ratio of spending for payroll versus the capital expenditures.

The more that Foxconn invests in its facilities and state-of-the-art automation, rather than payroll, the more the proposed deal will cost state taxpayers per job created. A new Wisconsin Budget Project report examines the potential tax credit costs based on four scenarios that make different assumptions about the number of new jobs, the duration of the project, and the amount of Foxconn spending for capital improvements. Read more

President Trump’s Budget Would Make it Harder for Wisconsin to Strengthen its Workforce

Monday, June 19, 2017 at 10:49 AM by

President Trump visited the Milwaukee area last week, tweeting that he was “heading to the Great State of Wisconsin to talk about “JOBS, JOBS, JOBS!” Expanding opportunities for workers and developing the state’s workforce should be a top priority for policymakers at both the state and federal levels, but President Trump’s rhetoric doesn’t match his actions on this issue. His proposed budget makes deep cuts to the federal resources that Wisconsin uses to develop the state’s skilled and work-ready labor force.

Trump jobs tweet

In his visit to Waukesha County Technical College, President Trump emphasized the importance of developing a skilled workforce, declaring that “America must not only teach, but celebrate skilled labor.” But the 2018 budget he proposed would deeply cut federal funding for programs and services that states deliver that are critical for the development of a healthy, well-educated workforce – programs like Medicaid, which helps people with low incomes see a doctor when they need one, and SNAP (previously known as food stamps), which helps people with low incomes put food on the table. Read more

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Wisconsin Left with Little to Show for Nearly Eliminating Requirement that Manufacturers Pay Income Tax

Wednesday, May 3, 2017 at 7:40 AM by

The number of manufacturing jobs in Wisconsin has grown more slowly than the national average, despite a major new tax break that nearly wipes out income taxes for manufacturers.

The number of manufacturing jobs in Wisconsin grew by 1.4% between September 2013 and September 2016, less than the national rate of 2.1%. These figures are based on the Quarterly Census of Employment and Wages, the “gold standard” measure of jobs figures. September 2016 is the most recent month for which jobs figures are available from the QCEW; that month’s figures are preliminary. The manufacturing tax break started with tax year 2013 and was phased in over a four-year period.

Manuf-jobs

The slow growth of manufacturing jobs in Wisconsin is notable because over that same period Wisconsin gave manufacturers a tax break worth $457 million, through a tax credit that nearly wipes out income tax liability for manufacturers and some other businesses. But lawmakers didn’t require manufacturers to create any jobs to receive the tax break – in fact, even manufacturers that are laying off employees or sending Wisconsin jobs overseas can receive the tax cut. Read more

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Blueprint Lays Framework to Help all Communities in Wisconsin Thrive

Thursday, January 19, 2017 at 6:15 PM by
In order for Wisconsin remain an attractive place to live and work, the state needs to make investments in a skilled workforce, a strong public education system, and a healthy citizenry. A broad-based coalition has set out a plan for how we can invest to help Wisconsin communities thrive – and it starts by recouping millions of dollars lost to tax loopholes that benefit a small number of people.
Categories: 2017-19 biennial budget, Blog, capital gains, corporate tax, economic development, In Focus State Budget, taxes | Comments Off on Blueprint Lays Framework to Help all Communities in Wisconsin Thrive

Judge’s Decision Puts Scope of Overtime Protections in Trump’s Hands

Wednesday, December 7, 2016 at 1:04 PM by

Suspended Rule Change Would Benefit Nearly 1 in 4 Salaried Workers in Wisconsin

Low-wage workers who are required to work long hours deserve the protection of federal overtime laws. Unfortunately, a long-awaited federal rule change that would have extended overtime benefits to almost one fourth of salaried Wisconsin workers has been blocked and its fate is now in the hands of the incoming Trump administration.

The new overtime rule approved by the Labor Department was scheduled to take effect on December 1, but a November 22nd ruling by a district court judge in Texas put the rule in limbo. The judge’s injunction might enable the new president to kill the rule simply by not appealing that decision, rather than going through the lengthy rulemaking process that would otherwise be required to reverse or change the new rule.

The judge’s ruling maintains the current policy that says employers don’t have to pay overtime to salaried workers earning more than $23,660 per year ($455 per week) if they are classified in any of these three categories: executives, administrators, or professionals. Read more

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Strong Income Gains in 2015, but Hold the Champagne

Thursday, September 15, 2016 at 5:12 PM by

Poverty Remains Well above Pre-recession Level, and Extreme Disparities Continue

In many respects, the national and Wisconsin data released today by the Census Bureau is much better than I dared hope for, but that doesn’t mean I’ll be popping any champagne corks today. A closer analysis of the data reveals that most Wisconsinites are still making less than they did before the Great Recession, and our state continues to have extreme economic disparities based on race. Read more

Categories: Blog, economy, income, poverty | Comments Off on Strong Income Gains in 2015, but Hold the Champagne