A $4.5 billion Great Lakes sinkhole
Wisconsin’s deal to lure the electronics giant Foxconn with $4.5 billion in tax subsidies looks “like a politically motivated boondoggle,” said Noah Smith. Last year, the Taiwanese manufacturer promised a factory that would create 13,000 jobs. Now Foxconn has downsized to a plant that will employ only 3,000, at an average salary of $54,000. Even if all the originally promised jobs materialize—and there’s no guarantee they will—Wisconsin will pay $346,000 per worker, a staggering $1,800 from each taxpayer in the state. Because Wisconsin’s taxes are already low, much of this will come in cash, not tax credits. “The state could probably do better for its workers by simply employing them directly.” Heavily hyped by Wisconsin Gov. Scott Walker, the deal may have cost him re-election; now he avoids mentioning it. The Foxconn “fiasco” is a glaring example of corporate welfare, but other cities and states hand out rich incentives. The war for Amazon’s HQ2 is a prime case. Estimates of local corporate subsidies range from $45 billion to $90 billion a year. A better way to bring in business is with education and infrastructure. Cities and states could just stop playing the tax-break game. “If all cities and states could simply agree not to give any incentives, companies would still have to put their offices and factories somewhere,” wouldn’t they?