Even Fixing Wisconsin’s Foxconn Deal Won’t Fix It, Says State-Requested Report

The Wisconsin Department of Administration is requesting a reassessment of the costs and benefits of the LCD factory Foxconn is building in the state. Since Wisconsin offered Foxconn a record-breaking subsidy in 2017 to build the facility, the Taipei-based company has significantly scaled back its plans and delayed the project. The Verge reports: The report, which was conducted by Tim Bartik of the Upjohn Institute for Employment Research, finds that the smaller facility raises the already unusually high cost per job even further. If the subsidy levels in the current contract are kept, each Foxconn job would cost taxpayers about $290,000, Bartik found, compared to $172,000 if Foxconn built the original $10 billion, 13,000-job facility. For comparison, Bartik estimated the subsidies Virginia offered Amazon for its second headquarters amounted to between $10,000 and $13,000 per job. “The most important conclusion of this analysis is that it is difficult to come up with plausible assumptions under which a revised Foxconn incentive contract, which offers similar credit rates to the original contract, has benefits exceeding costs,” Bartik wrote. “The incentives are so costly per job that it is hard to see how likely benefits will offset these costs.”

While Bartik produced the memo in response to a request from the Wisconsin Department of Administration, he notes that it was produced independently and that its conclusions do not necessarily reflect the views of the department or the Upjohn Institute. He doesn’t know whether Gov. Tony Evers has been briefed on his report, but he says he shared it with Mark Hogan, the head of the Wisconsin Economic Development Corporation, who objected to its conclusions. Hogan, who served under Evers’ predecessor Scott Walker, said in a statement that the current contract protects Wisconsin taxpayers. “This study makes assumptions that could not occur under the existing ‘performance-based’ contract between WEDC and Foxconn. The plain fact is the company would not be able to retain any incentives if, by the year 2023, it had only created either the 1,500 or 1,800 jobs the study is based on,” Hogan wrote in a statement. Bartik says he doesn’t find a persuasive defense in the idea that the project has a reasonable cost per job if it goes into default, all clawbacks are promptly paid, and Foxconn still keeps 1,500 jobs in the state.

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