Foxconn Tax Incentives Clear Wisconsin Senate

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By Michael J. Bologna

Foxconn Technology Group’s bid for $3 billion worth of economic development incentives crossed a major threshold Sept. 12 when the Wisconsin Senate approved a bill creating one of the largest state tax credit programs in U.S. history.

Lawmakers approved Special Session A.B. 1 by a vote of 20-13. Voting on the measure split largely along party lines, with Republicans backing the Foxconn special legislation and Democrats opposing it. One Democrat, whose district in Southeastern Wisconsin would benefit from the proposed $10 billion Foxconn development, voted with Republicans. One Republican voted with Democrats.

A.B. 1 would grant $3 billion in tax credits, exemptions, and subsidies facilitating Foxconn’s plan to construct a 20 million-square-foot campus in southeastern Wisconsin for the production of liquid crystal display panels for televisions and electronic devices.

The measure now proceeds to the Assembly for a concurrence vote before heading to Gov. Scott Walker (R). Assembly support is widely expected after the chamber voted in favor of an earlier version of A.B. 1 on Aug. 17.

13,000 Jobs

Walker thanked the Senate for its support, saying the state is “opening the door to 13,000 good-paying, family-supporting jobs.”

Foxconn, the operating arm of Taiwan-based Hon Hai Precision Industry Co., issued a statement of appreciation as well.

“We thank lawmakers in the state Legislature for their endorsement of this project to bring our state-of-the-art advanced display manufacturing campus and thousands of jobs to Wisconsin,” the company said.

A.B. 1 authorizes the Wisconsin Economic Development Corporation to issue up to $2.85 billion in income and franchise tax credits to Foxconn. The bill specifies the manufacturer would have to meet certain job-creation and investment targets to claim the credits. The legislation also permits a $150 million sales and use tax exemption on purchases of building materials, supplies and equipment used for the construction project.

Expensive Giveaway

Democrats and several liberal advocacy groups criticized the bill as a reckless and expensive giveaway, offering few assurances that Foxconn will actually create the jobs it has promised. The progressive group One Wisconsin Now characterized A.B. 1 as the most costly state-funded tax credit package ever offered to a foreign corporation in U.S. history.

“The idea of guaranteeing cash payments of hundreds of millions of dollars each year of public funds to a foreign corporation at the expense of local businesses, workers and our communities is appalling. I can think of many better ways to use our limited state tax dollars,” Sen. Fred Risser (D) said in a statement released after the Senate vote.

Wisconsin’s Legislative Fiscal Bureau (LFB) bolstered some of the naysayers’ claims in an Aug. 8 report questioning the efficacy of Wisconsin’s proposed investment in Foxconn. LFB estimated the project’s “break-even point” in terms of state tax dollars wouldn’t occur until 2043. At that point, Wisconsin would begin to see positive tax collections from the project of $115 million per year.

Democratic lawmakers also criticized provisions in A.B. 1 loosening environmental standards applicable to the Foxconn development. Others objected to a recent amendment granting Foxconn special legal rights if it becomes the target of litigation during the development process. The amendment specifies that circuit court rulings pertaining to environmental and community-impact concerns could be stayed and appeals would proceed directly to the Wisconsin Supreme Court.

To contact the reporter on this story: Michael J. Bologna in Chicago at mbologna@bna.com

To contact the editor responsible for this story: Jennifer McLoughlin at jmcloughlin@bna.com

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