Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...
Wisconsin’s economic development agency plans to approve a contract Nov. 8 laying out the state’s legal duties and tax incentives to land a $10 billion Foxconn Technology Group campus, an agency spokesman told Bloomberg Tax Oct. 24.
This commitment by the Wisconsin Economic Development Corporation (WEDC) comes despite concerns from Democratic lawmakers that the contract contains a “nuclear bomb” that would leave taxpayers unprotected. Democrats and good government organizations have demanded WEDC employ a more transparent process for approving the deal, which will grant Foxconn $3 billion in tax credits, exemptions, and subsidies for a 20 million-square-foot campus in southeastern Wisconsin.
Mark Maley, communications director for WEDC, said the agency’s board of directors Oct. 18 approved the creation of an electronics and information technology manufacturing zone, as required under the authorizing legislation, 2017 Wisconsin Act 58.
Act 58 directs the state to grant $2.85 billion in income and franchise tax credits to Foxconn if the company meets certain job-creation and investment targets. 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. Foxconn is the operating arm of Taiwan-based Hon Hai Precision Industry Co.
Maley noted that WEDC had been scheduled to approve a “staff review” during a closed session of the same meeting, but the decision was postponed. The staff review lays out the essential duties of the parties, including financial commitments, underwriting, incentives, and other legal requirements. The staff review would also direct WEDC Secretary and CEO Mark Hogan to sign the final agreement with Foxconn on behalf of the state.
But Maley said WEDC ultimately elected to defer action on the staff review to address undisclosed concerns by some board members. He described the decision to postpone as an exercise in due diligence ahead of a landmark decision by the agency. Maley said final action on the staff review would likely come during a Nov. 8 meeting.
“There have been reports that there are ‘major issues,’ but really there has never been a deal like this in the history of Wisconsin,” Maley told Bloomberg Tax. “This is many times larger than our next largest project. So there are a lot of details that have to be worked out. We see this as part of the negotiation process. We are very confident and happy with the direction this is going, but as Hogan has said, we will keep working on this until we get it right.”
Sen. Tim Carpenter (D), a WEDC director, left the Oct. 18 meeting pointing to a “nuclear bomb” in the staff review. Carpenter wouldn’t describe the problem, but he said language in the staff review leaves the state vulnerable to potential abuses.
Carpenter and other lawmakers have called for a more transparent process permitting public scrutiny of the state’s final agreement with Foxconn. Carpenter accused Gov. Scott Walker (R) and the WEDC leadership of engaging in a flawed and irresponsible negotiating process.
“As a member of the WEDC board I find it the height of irresponsibility to be asked to vote on an unprecedented $3 billion dollar deal without first seeing the contract,” Carpenter said in a statement Oct. 23. “This will be the last opportunity to make sure Foxconn will be required to deliver on its promises. Wisconsin taxpayers must be protected before Gov. Walker’s WEDC turns on the spigot and the taxpayer dollars start to flow.”
WEDC released a statement Oct. 23 rejecting demands for the agency to modify its normal processes for approving economic development zones and state-administered incentive programs. The agency said the staff review and contract with Foxconn will become public after execution.
“The process for approving the Foxconn award and contract follows the same process as other Enterprise Zone awards approved by the WEDC Board,” WEDC said. “At some point, the board will vote to approve the staff review, which details the terms of the agreement, designates the zone, and authorizes WEDC staff to go forward with finalizing the contract.”
To contact the reporter on this story: Michael J. Bologna in Chicago at email@example.com
To contact the editor responsible for this story: Jennifer McLoughlin at firstname.lastname@example.org
Copyright © 2017 Tax Management Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)