Foxconn sign
Patrick Tuohey

President Trump is heralding the news that a Taiwanese high-tech manufacturer is building a factory in Wisconsin. For him, it suggests that his successful deal-making is reaping rewards for Americans and reviving our manufacturing industry. But the cost to federal, state and local taxpayers is significant.

According to Reid Wilson at The Hill,

The incentive package passed by Wisconsin’s GOP-controlled legislature, during a special session last August, will offer the company $1.5 billion to offset payroll costs and another $1.35 billion for capital expenditures. The state will give Foxconn $150 million in sales tax exemptions on construction materials, and it plans to spend a quarter of a billion dollars on road improvements near the new factory.

The town of Mount Pleasant, where the factory will be located, will offer $763 million to help pay for the project, and Racine County gave the company $50 million to acquire the land.

In total, Wisconsin, Racine County and Mount Pleasant gave the company nearly $4.8 billion in tax breaks, incentives and taxpayer dollars for improvements. If Foxconn delivers all 13,000 jobs it has promised, that works out to about $370,000 per job.

This is reminiscent of a similar deal for Carrier manufacturing plant for Indiana, of which my colleague Patrick Ishmael wrote in 2016,

I certainly hope the Carrier "deal" doesn't presage future deals the President Elect will be cutting over the next four years. The reason is straightforward. In return for not following through on its threat to move, Carrier will receive $700,000 per year from the state of Indiana, for at least 10 years. If that kind of cronyistic deal sounds familiar to you, it should; the Carrier agreement is like many of the "deals" to "save or create jobs" that have been made, and that we have criticized for years, here in Missouri.

Across the country, those hungry for increased economic activity seem to understand that taxes are too high to spur development. Whether it is Foxconn in Wisconsin, Carrier in Indiana, Boeing in Missouri, or Amazon everywhere, legislatures are bending over backwards to give special treatment to those they deem worthy. Better public policy demands that government stop picking winners and instead lower taxes for everyone.

About the Author

Patrick Tuohey
Patrick Tuohey
Director of Municipal Policy

Patrick Tuohey is the Director of Municipal Policy at the Show-Me Institute.