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

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

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

Misplaced Senate Priorities for Public Assistance Reform

Sunday, March 6, 2016 at 4:00 PM by

Proposed Changes Will Hurt the Elderly, Blind and Disabled, while Corporate Fraud Goes Unpunished

The Wisconsin Senate moved a step closer last week to passing a bill that has been described as combatting fraud or abuse in the FoodShare program, but which will do little, if anything, in that regard. In contrast to the progress of that legislation, as each day passes it looks less likely that the Senate will approve a bipartisan bill (AB 669) that could accomplish a great deal to halt benefit fraud by businesses.

AB 669, which was approved by a voice vote in the Assembly, would make it a felony to fraudulently obtain an economic development benefit from the Wisconsin Economic Development Corporation (WEDC). It would also allow WEDC to bring a civil action to recover damages for fraudulently obtained benefits. Although the lead Assembly author of the bill is a Republican (Rep. Kerkman), and it enjoyed broad support in the Assembly, AB 669 hasn’t even been given a public hearing in the Senate. Read more

Categories: Blog, economic development, food stamps, tax expenditures | Comments Off on Misplaced Senate Priorities for Public Assistance Reform

Database Offers New Insights into Wisconsin Business Subsidy Spending

Monday, December 21, 2015 at 8:39 PM by

Good Jobs First (GJF) announced today that Wisconsin taxpayers can now access nine years of economic development subsidy data in the organization’s searchable Subsidy Tracker database.  The enhanced and expanded database developed by GJF now includes information about nearly 2,200 state and local subsidies for businesses in Wisconsin, totaling more than $1.8 billion. 

The updated database adds nearly 30,000 new entries across the U.S. from 160 state and local programs, and 138 federal ones. Access to the database is free and unrestricted at: goodjobsfirst.org/subsidy-trackerRead more

Categories: Blog, corporate tax, economic development, JOBS & THE ECONOMY, tax expenditures | Comments Off on Database Offers New Insights into Wisconsin Business Subsidy Spending

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.
Categories: Blog, corporate tax, economic development, jobs, JOBS & THE ECONOMY, tax expenditures, taxes | Comments Off on Paying for Job Reductions: The Unreported Story of a Ballooning Tax Credit

A National Victory for Transparency in State and Local Budgeting

Friday, August 14, 2015 at 5:35 PM by
New standards will substantially improve public access to important information about budget choices made at the state and local level. Because of the historic changes in accounting standards, state and local governments will soon have to report how much revenue they lose to corporate tax breaks given for economic development.
Categories: Blog, economic development, tax expenditures | Comments Off on A National Victory for Transparency in State and Local Budgeting

Corporations to ALEC: Stop Us before We Extort Again

Monday, August 11, 2014 at 6:00 AM by

Conservatives Critique “Tax Cronyism,” and Progressives Critique the ALEC Report

I was pleasantly surprised to learn recently that the American Legislative Exchange Council (ALEC) has issued a report calling on policymakers to end the wasteful subsidies given to corporations by state and local governments.  Their report titled The Unseen Costs of Tax Cronyism: Favoritism and Foregone Growth criticizes special tax breaks for certain companies, which it points out tend to increase the tax burden on other companies and put them at a competitive disadvantage.

Corporations are very good at extorting costly subsidies from state and local officials, but some of those corporations and a growing number of policymakers are realizing that these incentives aren’t an effective way to promote economic growth.  As WCCF intern Jelicia Diggs wrote in a recent WI Budget Project blog post, a number of businesses in the Kansas City area have prevailed on Missouri legislators to call a ceasefire to the use of incentives for pirating corporations across the border with Kansas.  Read more

Categories: Blog, corporate tax, economic development, jobs, JOBS & THE ECONOMY, STATE TAXES, tax expenditures | Comments Off on Corporations to ALEC: Stop Us before We Extort Again

New Tool for Visualizing Federal Income Tax Breaks

Monday, September 16, 2013 at 6:36 PM by

 A new interactive tool created by the National Priorities Project (NPP) provides a very interesting way to visualize the major federal income tax breaks.  The data tool allows you to see the size of the 10 major federal income tax breaks, and the results might surprise you. 

The combined cost of the ten largest tax breaks is more than $750 billion this year, and the top two account for nearly half of the total.  This web page compares those amounts, and the interactive tool allows you to also see who benefits from each and how the costs have changed over time.  As you move your mouse over the bars in the graph on the left, the charts on the right-hand side will change to show information about a specific tax break. 

While you’re on the NPP website, take a couple of minutes to explore some of the other interesting and useful information sources there.   Read more

Categories: Blog, FEDERAL BUDGET & TAXES, federal issues, tax expenditures | Comments Off on New Tool for Visualizing Federal Income Tax Breaks

Does Wisconsin Need More Incentives for Venture Capital Investments?

Monday, January 28, 2013 at 5:51 PM by

As Early Investment Capital Falls Nationally, It Jumps 31% in Wisconsin  

Bruce Murhpy’s latest commentary at UrbanMilwaukee.com ventures where few people (especially “angel investors”) dare to tread – by challenging the perception that Wisconsin lags in availability of venture capital for entrepreneurs and should allocate state funding to create more incentives for boosting the amount of such capital.    His analysis was triggered by a January 17 Milwaukee Journal Sentinel (MJS) article, which reported that Wisconsin enjoyed strong growth in early investment capital in 2012 – with a 31% increase last year, even though the national venture capital pie contracted by 10%.  

Murphy’s column critiques the MJS article and contends that it painted a “glass half empty” picture of venture capital in Wisconsin, but I think he concedes that the Milwaukee paper has accurately reported the statistics.  He notes that a PolitiFact column in the Journal Sentinel reported that Wisconsin ranked 25th among the states in the amount of venture capital raised in the first three quarters of 2011 – which I think is better than many people seem to believe.   Read more

Categories: 2013-15 biennial budget, Blog, economic development, JOBS & THE ECONOMY, STATE TAXES, tax expenditures | Comments Off on Does Wisconsin Need More Incentives for Venture Capital Investments?