Five Reasons the Foxconn Deal Would be Bad for Wisconsin

Monday, August 21, 2017 at 4:44 PM by

Governor Walker has proposed an unprecedented package of businesses incentives aimed at encouraging Foxconn to build a manufacturing facility in southeast Wisconsin. The deal could result in the state paying Foxconn nearly $3 billion in state money over the next 15 years, in exchange for Foxconn spending $10 billion to construct a facility in Wisconsin and creating up to 13,000 jobs.

Here are five reasons why the proposed deal is a poor use of public resources:

1. The state would likely pay Foxconn a lavish $200,000 to $600,000 for each new job, depending on how many jobs are ultimately created.

There’s a lot we don’t know about the Foxconn deal, including the number of jobs that would ultimately be created at the new facility. The agreement between Governor Walker’s administration and Foxconn indicates that the company will create “up to” 13,000 jobs — but that leaves open the possibility that the number could be considerably less than that. Read more

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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

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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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Uneven Progress for Wisconsin Workers

Monday, September 5, 2016 at 8:26 PM by

The latest annual State of Working Wisconsin report has some positive findings about recent trends for Wisconsin workers; however, it also shines a light on some ongoing challenges, and it concludes that Wisconsinites “all need stronger policy to support broadly shared prosperity.”

COWS (formerly known as the Center on Wisconsin Strategy) issues this report every Labor Day weekend. Because it’s an illuminating report, and Labor Day is an important holiday, I want to share the major findings – while minimizing my own labor this weekend. In that spirit, I am passing along several excerpts from the COWS press release.

On the plus side of the ledger, the report describes the positive effects in Wisconsin of the national economy’s gradual rebound from the Great Recession:

“The state has more jobs than ever before, unemployment rates have fallen to pre-recession levels, and workers that want full-time work are having an easier time finding it.

Read more
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Wisconsin’s Electorate and Economy: What the National Media Should Know

Tuesday, March 29, 2016 at 10:28 AM by

National attention has turned to Wisconsin because our presidential primary on April 5th is the only one in the next week. It’s also a significant primary because the percentage turnout is likely to be higher than in any other state since the New Hampshire primary.

For reporters and others who are trying to understand some of the demographic, economic and political context for the April 5th election, we’ve pulled together a variety of facts about Wisconsin and how it compares to other states.  Here are a few highlights from that data: Read more

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Paying for Job Reductions: The Unreported Story of a Ballooning Tax Credit

Tuesday, December 8, 2015 at 8:44 PM by
An uncapped Wisconsin corporate tax credit is expected to balloon to $279 million in the next fiscal year, more than twice the original cost projection.
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The State of Working Wisconsin 2015

Monday, September 7, 2015 at 9:00 AM by

A new report issued in conjunction with the Labor Day weekend by COWS provides a thorough examination of Wisconsin job numbers, wages, poverty, and job quality, and it provides a sobering assessment of how working people in Wisconsin are doing:

Wisconsin faces slow growth, extreme racial disparity in unemployment, long-term stagnation in wages, and one-fourth of workers struggling in poverty-wage jobs.” 

The new COWS report – The State of Working Wisconsin 2015 – illustrates that as the national economy has gradually rebounded following the Great Recession, Wisconsin’s job growth has lagged behind.  COWS’ analysis concludes that “if Wisconsin had enjoyed the same rate of job growth as the rest of the nation across the course of the recovery, the state would have 90,000 more jobs today.”  The national growth rate from January 2011 through June of this year was 60% faster than the job growth Wisconsin experienced during that time..  Read more

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Tax Cuts Haven’t Done Much to Boost Job Growth in Wisconsin or Other Tax-Cutting States

Tuesday, June 9, 2015 at 9:50 AM by

More evidence is piling up that states that made big tax cuts in recent years – including Wisconsin – are failing to keep up with the rest of the country when it comes to job growth. Read more

Rein in Tax Breaks that Aren’t Tied to Job Creation

Tuesday, May 26, 2015 at 7:29 PM by

There’s been a lot of talk in Wisconsin over the last couple of weeks about the need to ensure that tax breaks and loans awarded by Wisconsin’s economic development agency are limited to businesses that are creating jobs and fulfill their job growth commitments.  Yet almost no attention has been paid to the fact that the state’s largest tax credit for corporations is ballooning in cost and is distributed to businesses operating in Wisconsin regardless of whether they are expanding or slashing their workforce in our state. Read more

“Right to Work” Bill Would Suppress Wisconsin’s Already Anemic Wages

Monday, February 23, 2015 at 7:32 PM by

Though researchers disagree on the effects of “right to work” legislation on the number of jobs, what is quite clear is that such laws suppress wages.  Now that legislative leaders have suddenly put a so-called “right to work” (RTW) bill on a very fast track, I hope legislators will take a careful look at a couple of recent studies that examine the economic effects and warn against following the path of the states that have approved RTW laws

A recent report by Dr. Abdur Chowdhury, who teaches economics at Marquette, reached the following conclusion about the effects on Wisconsin income and state taxes:  

The potential net loss in direct income to Wisconsin workers and their families due to a RTW legislation is between $3.89 and $4.82 billion annually. Using a conservative estimate of an impact multiplier of 1.5, the total direct and induced loss of a RTW legislation is estimated between $5.84 and $7.23 billion annually. Read more

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