Coverage of Wisconsin Foxconn deal is based on lies. (1 Viewer)

[JasperL]

There's nothing to pay off because there was nothing paid, no money lost. Your questions if build in a false premise. But to answer it...with the the zero dollars would be paid off with the very first payout of the very first contract.

That's false, actually, and you're the one making conclusions based on a false premise. http://fortune.com/2017/07/31/foxconn-wisconsin-plant-tax-breaks/

Under the legislation, Foxconn can receive up to $200 million per year in refundable tax credits, capped at $2.85 billion if meets capital and employment compensation targets. It can also avoid paying $150 million in sales taxes on building materials, equipment and supplies.

Although the state measures to attract Foxconn are labeled tax incentives, they largely would be paid in cash since the effective Wisconsin state tax rate is 0.4% on manufacturers.
...
The company is eligible for refundable tax credits equal to 17% of wages paid instead of the typical 7% and 15% of capital costs instead of 10%.

Refundable tax credits are just cash payments, cash subsidies, handouts, whatever you want to call it.

And even if the incentives were purely tax breaks (i.e. a reduction in taxes paid but not below zero), as opposed to cash incentives called "refundable tax credits," they still have a real cost to Wisconsin (they'll be using all kinds of infrastructure and state resources paid for by everyone else in the state for free, for many years) and giving the tax incentives to Foxconn and their 3,000-13,000 employees, but not giving the same deal to the existing employers in WI who employ 3 million is a form of crony capitalism, picking winners and losers, etc.

 

[JasperL]

Your questions is based on a false premise. How much future revenue is generated by zero new jobs? <----That's the proper question.

Yeah but that's a very wrongheaded way to look at government finances.

How much money does State A "lose" if e.g. a Boeing plant relocates to another state, and the $billion in various taxes that plant paid to the state goes to zero?

Your answer is $0.00 because State A pays nothing. Similarly, if your biggest client who makes up half your business drops you, that costs your firm nothing! Technically true, but nonsense in any real understanding of what we're talking about.

The other problem of course is a state's infrastructure, roads, courts, electric grid, cops, fire, the public school system, etc. are what allow Foxconn to do business in WI, and the idea of taxes is the people doing business in WI pay their share of the cost and upkeep. So in a very real way (forgetting the actual CASH payments WI will make to Foxconn), WI has said to the rest of the business community - we're going to RAISE your taxes for the next decade or two so Foxconn can freeload off you.

 

[SenorXm/Sirius]

Conservatives are all giving Multi-BILLION Corporations welfare. When it comes to individuals? Not so much. Let them starve.

 

[JasperL]

I guess you could say that.

I mean, Im all for tax breaks for encouraging people to buy electric vehicles.

While taxes are necessary, the idea that the money, by default belongs to the government is a flawed concept.

The idea that giving a tax incentive to someone is COSTING the government anything is also a flawed concept.

I'd agree with you as long as the incentives are across the board. But if Wisconsin passes legislation that gives you, a rich donor, a special tax break that cuts your taxes from $1 million to $0, then that $1 million in lost revenue has to be made up somehow. Either the rest of the taxpayers have to cough up an additional $1 million, or spending has to be cut $1 million. Either way there is a real cost to that foregone revenue. Not to mention it's a form of crony capitalism, picking winners and losers, etc.

If you lose your biggest client, you're not out of pocket a penny, but it will "cost" you plenty. It's the same concept. As is the idea that if you owe me $10 and I forgive that debt, it has no cost to me. Of course it does.

And even in the case of across the board tax cuts, there is a cost, which is whoever is on the short end of the spending cuts.

 

[JasperL]

That's a lie. There is no money being paid out. Zero. Zip. None.

You really ought to look at the actual deal before calling other people liars. The deal is to pay at least $hundreds of millions out - checks, from the Wisconsin treasury, to a private company.

 

[Critter7r]

Yeah but that's a very wrongheaded way to look at government finances.

How much money does State A "lose" if e.g. a Boeing plant relocates to another state, and the $billion in various taxes that plant paid to the state goes to zero?

Your answer is $0.00 because State A pays nothing. Similarly, if your biggest client who makes up half your business drops you, that costs your firm nothing! Technically true, but nonsense in any real understanding of what we're talking about.

Except that, unlike my client that is currently paying me or Boeing that is currently paying taxes in whatever state it's in, nobody is currently paying the taxes that Foxconn is going to skip out on. There's already nothing coming in from them.

The other problem of course is a state's infrastructure, roads, courts, electric grid, cops, fire, the public school system, etc. are what allow Foxconn to do business in WI, and the idea of taxes is the people doing business in WI pay their share of the cost and upkeep. So in a very real way (forgetting the actual CASH payments WI will make to Foxconn), WI has said to the rest of the business community - we're going to RAISE your taxes for the next decade or two so Foxconn can freeload off you.

This part we mostly agree on. Except that while the community as a whole may be paying more tax money to the gov't, the individuals within the community likely aren't. It's just that there will be a larger pool of individuals (and the resulting increase in transactions) paying into the tax coffers.

 

[Moon]

Conservatives are all giving Multi-BILLION Corporations welfare. When it comes to individuals? Not so much. Let them starve.

Do you think it's important and necessary for a state to invest in new jobs for its residents?

 

[SenorXm/Sirius]

Do you think it's important and necessary for a state to invest in new jobs for its residents?

Yes, but 3 bil in welfare in a state with 3% unemployment? No.

And I'm also talking in border terms. Tax breaks and goodies to oil companies making billions? That's welfare and NOT free market. The government shouldn't be in the business of propping up 1 business sector/model at the expense of others. Again, that is NOT the free market.

 

[Moon]

Yes, but 3 bil in welfare in a state with 3% unemployment? No.

And I'm also talking in border terms. Tax breaks and goodies to oil companies making billions? That's welfare and NOT free market. The government shouldn't be in the business of propping up 1 business sector/model at the expense of others. Again, that is NOT the free market.

So you're okay with the principle of what they're doing, but not the actual numbers?

 

[SenorXm/Sirius]

So you're okay with the principle of what they're doing, but not the actual numbers?

In small amounts 'locally' and if done fairly. Some locale wants to give x amount of local businesses tax breaks to build up their region and economy? I have no problems with it. I can see locales trying to prop up their economies. But on a national scale? Like the welfare given to oil companies, etc. And in this case in Wisconsin? Nope, that's unfair to other businesses in the State and country.and is NOT how the free market is suppose to work.

 

[JasperL]

Except that, unlike my client that is currently paying me or Boeing that is currently paying taxes in whatever state it's in, nobody is currently paying the taxes that Foxconn is going to skip out on. There's already nothing coming in from them.

OK, forgetting that Wisconsin will be paying Foxconn actual cash - direct subsidies. Even still there is a very real cost to foregone revenue, which you see clearly when you had it and lost it, but want to pretend doesn't work the other way. It costs real money to run Wisconsin, and someone has to pay for it, and WI decided that the shareholders of Foxconn will freeload off the rest of the taxpayers in WI. That's fine and it might work out better for the state as a whole, but you still have to acknowledge the real cost to that decision. If there is no real cost, then there can be no problem taking every business's tax rate to zero. Of course, that just means individuals in one way or another see their taxes go UP, or else spending is cut.

This part we mostly agree on. Except that while the community as a whole may be paying more tax money to the gov't, the individuals within the community likely aren't. It's just that there will be a larger pool of individuals (and the resulting increase in transactions) paying into the tax coffers.

But even if they pay nominally less, there is still a real transfer of wealth from the taxpaying entities in WI to Foxconn who pays nothing, $0.00 (and in fact will get cash subsidies) for the real value they get in all that state government provides the citizens of WI - roads, education, courts, etc..... The taxpayers in WI just ARE subsidizing one of the biggest companies in the world, including their mostly Chinese shareholders. That might be a good business decision and a good decision for WI, we just ought to be honest about what's going on here.

 

[JasperL]

Do you think it's important and necessary for a state to invest in new jobs for its residents?

Of course, but you're a conservative - don't you believe in free markets? Or are you now contending that crony capitalism is necessary to attract businesses, by offering a select few incentive packages not available to everyone else? It's a GOOD thing government picks winners and losers in the markets?

IMO, it's sometimes a good thing and might be a good thing here, but that will be fact specific, and we can't pretend that's not what's going on here if we want to have an honest debate.

The necessary "investment" to attract new jobs should be (in an ideal world) better infrastructure, world class education, quality of life, efficient government that keeps EVERYONE'S taxes as low as possible, not just low taxes in special deals for the plutocrats and the global behemoths, while the smaller businesses pay all the bills.

 

[Moon]

In small amounts 'locally' and if done fairly. Some locale wants to give x amount of local businesses tax breaks to build up their region and economy? I have no problems with it. I can see locales trying to prop up their economies. But on a national scale? Like the welfare given to oil companies, etc. And in this case in Wisconsin? Nope, that's unfair to other businesses in the State and country.and is NOT how the free market is suppose to work.

Each state can change its tax laws as they see fit, so I dont think there's a fairness component to this. Any other state interested in attracting Foxconn can present them with a sweeter deal, which certainly is in keeping with the principle of a free market.

 

[JasperL]

Each state can change its tax laws as they see fit, so I dont think there's a fairness component to this. Any other state interested in attracting Foxconn can present them with a sweeter deal, which certainly is in keeping with the principle of a free market.

But unless that state offers the same deal to every business, it's not a free market. It's the government picking winners and losers, crony capitalism, etc. Company A pays income taxes, etc. and because Company B is bigger and has more influence, Company B pays nothing and freeloads off the taxes paid by Company A and all others that didn't get a sweet deal. That market is not a "free" one.

 

[Moon]

But unless that state offers the same deal to every business, it's not a free market. It's the government picking winners and losers, crony capitalism, etc. Company A pays income taxes, etc. and because Company B is bigger and has more influence, Company B pays nothing and freeloads off the taxes paid by Company A and all others that didn't get a sweet deal. That market is not a "free" one.

Not every business brings the same potential number of jobs to the table. It's basic business. You don't give small clients the same rate you do your large clients because of the difference in potential revenue.

 

[ALiberalModerate]

Depends on what the economic benefit is. Is it going to create thousands of jobs?

Yes, 33,000 working for Tesla alone.

 

[Critter7r]

OK, forgetting that Wisconsin will be paying Foxconn actual cash - direct subsidies. Even still there is a very real cost to foregone revenue, which you see clearly when you had it and lost it, but want to pretend doesn't work the other way. It costs real money to run Wisconsin, and someone has to pay for it, and WI decided that the shareholders of Foxconn will freeload off the rest of the taxpayers in WI. That's fine and it might work out better for the state as a whole, but you still have to acknowledge the real cost to that decision. If there is no real cost, then there can be no problem taking every business's tax rate to zero. Of course, that just means individuals in one way or another see their taxes go UP, or else spending is cut.

Yes, glossing over the tax refunds, you still provided an example of a different situation, one where there had been money coming in and that money stopped coming in (Boeing leaving the state, or my client quitting me), as opposed to a situation where's there's no money coming in now and that money still isn't coming in later (having nothing to begin with and allowing Foxconn to come in for free).

Anyhow.

But even if they pay nominally less, there is still a real transfer of wealth from the taxpaying entities in WI to Foxconn who pays nothing, $0.00 (and in fact will get cash subsidies) for the real value they get in all that state government provides the citizens of WI - roads, education, courts, etc..... The taxpayers in WI just ARE subsidizing one of the biggest companies in the world, including their mostly Chinese shareholders. That might be a good business decision and a good decision for WI, we just ought to be honest about what's going on here.

Tax refunds to a multi-national, multi-billion dollar corporation is an unnecessary burden on the populace.

 

[SenorXm/Sirius]

Each state can change its tax laws as they see fit, so I dont think there's a fairness component to this. Any other state interested in attracting Foxconn can present them with a sweeter deal, which certainly is in keeping with the principle of a free market.

Jasper explained it perfectly. And how do we know Foxcomm( call them Corporation Y)isn't getting this sweet deal because they lobbied the right people, and lobbied with more money than Corporation X could. That's not the free market. You're shutting out the little guy. Even if the little guy has a better product and can make the product cheaper and hire more employees.

 

[Critter7r]

Each state can change its tax laws as they see fit, so I dont think there's a fairness component to this. Any other state interested in attracting Foxconn can present them with a sweeter deal, which certainly is in keeping with the principle of a free market.

That term ... I don't think it means what you think it means.

... a free market is a system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority ...

 

[Moon]

Jasper explained it perfectly. And how do we know Foxcomm( call them Corporation Y)isn't getting this sweet deal because they lobbied the right people, and lobbied with more money than Corporation X could. That's not the free market. You're shutting out the little guy. Even if the little guy has a better product and can make the product cheaper and hire more employees.

Actually, as you describe it, it is the free market. There are always intrinsic and extrinsic factors that go into awarding the business, fairness probably isn't going to be a factor.

 

[SenorXm/Sirius]

Actually, as you describe it, it is the free market. There are always intrinsic and extrinsic factors that go into awarding the business, fairness probably isn't going to be a factor.

Oh I disagree with that. Lining someone's pocket shouldn't be part of a 'free market'. It should be prices and competition. It's the product. Just because Corporation Y knows the governor or pays for his reelection, that isn't 'free market'. I know it goes on, but it's not free market. Foxconn is getting billions in welfare, while other companies not only get nothing but probably will have to pay more in taxes to make up for Foxconn's welfare. Why do many Cons think that's fair but then complain about them paying for individuals's welfare?

Corporate welfare not fair, and it certainly isn't 'free'.

 

[JasperL]

Not every business brings the same potential number of jobs to the table. It's basic business. You don't give small clients the same rate you do your large clients because of the difference in potential revenue.

That's a convenient justification for kissing the rear ends of the wealthy and powerful who buy influence, but no matter how you spin it that is NOT a 'free market.' If you're for crony capitalism and government picking winners and losers then just say that on the front end, and then we can all have an honest discussion about WHEN the government should pick winners and losers.

 

[Critter7r]

Actually, as you describe it, it is the free market. There are always intrinsic and extrinsic factors that go into awarding the business, fairness probably isn't going to be a factor.

The free market doesn't include govt "awarding" businesses.

Sent from my SM-G360V using Tapatalk

 

[JasperL]

Actually, as you describe it, it is the free market. There are always intrinsic and extrinsic factors that go into awarding the business, fairness probably isn't going to be a factor.

But where does this philosophy find an endpoint? It's OK that the government bailed out the banks because, being big, we had to and therefore we will bail them out again and again and again, and that's just the way "free markets" work?

More importantly, the OP is based on really two related lies. The first one is Wisconsin isn't out any money, when the state will be writing checks to Foxconn, paying out $hundreds of millions. So to keep the same level of government services, taxes have to go UP for everyone else in that state.

The second related lie is foregone revenue (the other part of Foxconn's deal) doesn't have a cost, but it clearly and obviously does. Foxconn is in every real sense freeloading off the rest of the employers who collectively employ 3 million Wisconsin residents to their 3-15K. The company will consume government resources in all kinds of forms and will pay nothing for those services for many years.

It might make sense for all residents in Wisconsin to pay out $billions in taxpayer subsidies to a big employer like Foxconn, but at a minimum we have to be honest that is what is happening and then we can have an informed public debate about it. As framed in the OP, it's not possible to have an informed debate because the cost of those subsidies is literally treated as $0, when the true cost just IS $billions. So let's agree that Foxconn is receiving those $billions and then we can discuss whether that makes sense for Wisconsin and for the country.

 

[Kushinator]

While taxes are necessary, the idea that the money, by default belongs to the government is a flawed concept.

The idea that giving a tax incentive to someone is COSTING the government anything is also a flawed concept.

It belongs to the taxpayers themselves! They will have to foot the bill while Foxconn uses state infrastructure, human capital, government resources, etc... without having to pay for them like the rest of the state.