Wisconsin Republicans are hoping a $3 billion tax break deal with Foxconn Technology Group can stimulate a manufacturing revival in Middle America. If the proposal is approved in the Senate, the Taiwan-based company gets the green light to build a $10 billion factory that could create jobs for thousands of workers. Although President Donald Trump has voiced support for the deal's economic potential, opponents believe taxpayers have the most to lose.
On August 17, 2017, the Wisconsin Assembly approved an incentive package allowing Foxconn to receive tax breaks for building a 20 million-square-foot LCD panel factory in the state. Foxconn, which supplies medical equipment, TV, car, computer and phone displays for companies such as Apple, plans to start building in 2020. The deal is projected to create 3,000 jobs when the plant opens and up to 13,000 within the 15-year tax-break period.
The goal of bringing back manufacturing jobs was a core Republican campaign promise of the 2016 elections, so it's understandable that Wisconsin politicians want to attract lucrative manufacturers. However, opponents of the bill see the steep tax breaks as a gamble. Based on an analysis from the nonpartisan Legislative Fiscal Bureau, critics expect it to take 25 years for the state and taxpayers to break even on the investment.
Critics are concerned that Wisconsin politicians are ignoring the disadvantages to local taxpayers to push the deal along. For example, the current bill grants Foxconn exemptions on environmental regulations and doesn't include a provision to monitor job creation at fixed intervals. As Wisconsin Representative Gordon Hintz points out, Foxconn made a similar manufacturing deal in Brazil and only created 10,000 of the 100,000 proposed jobs before halting development.
After hearing extensive testimony before the Joint Finance Committee, advocates firmly agree the economic gain Foxconn can bring to local suppliers and job seekers far outweighs the cost of a tax break. Foxconn intends to pay production workers a median salary around $54,000. The company is also projected to annually spend $1.4 billion on supplies from Wisconsin businesses, says Mark Hogan, CEO of Wisconsin Economic Development Corp. In turn, increased production could add between 19,000 and 26,000 jobs in related industries.
For the pending Senate vote, critics of the bill seek a compromise to hold Foxconn accountable for job creation, protect wetlands affected by development and require the company to repay tax credits for breaking the contract. Overall, Wisconsin legislators, economists and business owners are positive about the deal and simply want to reach favorable conditions that ensure a strong economic future for the state.
Whether legislators agree or disagree on tax breaks, many worry that Wisconsin can't fulfill the demand for a high-tech workforce. Foxconn is likely to create jobs for skilled workers with advanced training, many of whom may come from out of state. To achieve the dream of a U.S. manufacturing haven, Wisconsin legislators must be willing to support educational initiatives that prepare workers for skilled trades and technology sectors.
Photo courtesy of Ken Marshall at Flickr.com
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