MADISON - To lure Foxconn Technology Group to Wisconsin, state residents will have to do more than just forgo taxes from the Taiwanese electronics giant. They will have to pay cash ? writing checks for up to $200 million a year.
The subsidies for the deal would amount to nearly 50 times the previous record paid by Wisconsin taxpayers to secure a manufacturing plant in the state. Instead of getting the previous state standard of 7 cents in tax credits for every $1 in qualifying payroll checks to workers, Foxconn would get 17 cents in credits ? a change that will have to be approved in special session legislation Gov. Scott Walker released Friday.
And because Wisconsin already waives almost all taxes on manufacturing profits in the state, these incentives represent not a lost opportunity at collecting revenue but an obligation to pay cash to Foxconn out of the state treasury for up to 15 years. When including a $150 million sales tax break for buying construction material, the incentive package could total up to $3 billion, according to the bill that lawmakers could vote on as soon as Tuesday.
That figure doesn't account for the still undisclosed additional incentives that local governments will have to provide. The bill would increase caps on those local subsidies, ease environmental regulations on Foxconn and provide $252 million in state additional borrowing for rebuilding I-94 south of Milwaukee, a key corridor for the Foxconn plant being slated for Racine or Kenosha counties.
Supporters of the record jobs deal say Wisconsin would win a keystone manufacturer that would bring world-leading technology and attract suppliers that would create their own jobs. Detractors say it amounts to a multibillion-dollar bet on a company that makes screens ? a product subject to constant market-disrupting competition and innovation.
David J. Ward, an economist who has studied foreign investment in Wisconsin, backs the deal and says the state is lucky to have the chance to accept it.
"It is a good problem when you have opportunity," said Ward, who sees Foxconn as too attractive to pass up.