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Study: Foxconn deal could depress state economy

A new study by The Mercatus Center at Washington’s George Mason University claims economic development subsidies, especially Wisconsin’s pledge of $3.6 billion in incentives to the Foxconn Technology Group, could do more harm than good — a lot more harm.

The study, titled the “Economics of a Targeted Economic Development Subsidy” study, says the Foxconn subsidies could depress state economic activity by tens of billions of dollars over the next 15 years.

As part of a 2017 deal brokered by former governor Scott Walker, Wisconsin promised nearly $4 billion in state and local tax incentives to Foxconn, a Taiwanese electronics manufacturer, if it invested $10 billion here and created 13,000 jobs over 15 years.

The largest part of the deal represents about $2.85 billion in refundable tax credits. According to an article in the Wisconsin State Journal, the study describes the credits as an “outright cash subsidy” because Wisconsin already provides manufacturers with a corporate income tax exemption.

"Using Wisconsin’s Foxconn subsidies as an example, we have shown that under most plausible scenarios, the taxes funding the subsidies will discourage more economic activity than will be encouraged by the subsidies themselves," the report says. "In short, the net effect of targeted economic development subsidies is likely to be negative."

Foxconn originally planned to build a 20-million-square-foot campus in the Racine County village of Mount Pleasant, but it has since scaled back those plans.

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Dec 3, 2019 11:17 am
 Posted by  Anonymous

Nonsense. The ripple effect to other businesses and individuals makes this a no lose deal. Econ 101 taught me that.

Dec 7, 2019 09:24 am
 Posted by  Anonymous

This is nothing more than liberal 'think tank' anti-conservative propaganda. Give us some fact/figure projections for the next few years so we can ALL see how profoundly inaccurate and misleading these "STUDIES" actually are and see them as just more fake news in the future. What a bunch of nonsense. Anybody with any economic sense or knowledge would disprove this tripe in 10 seconds. "Study" - what a joke.

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