Jimmy Quinn at NRO is upset about corporate welfare. We are too but he doesn’t do much to convince us that the Foxconn deal is a bad deal for Wisconsin. We would prefer that he gave us the details on Foxconn before discussing Amazon’s search and other issues. Here is what he says about the Wisconsin deal:
Here’s the bottom line: If the jobs target of 13,000 is met, Wisconsin taxpayers will pay $219,000 per job. If only 3,000 jobs are created, they will pay $587,000 per job in the form of a $1.7 billion tax credit. And these are conservative estimates, leaving out the additional tens of millions of dollars that will go toward the infrastructure improvements necessary to accommodate Foxconn’s new plant.
The second part of the paragraph is a distraction because infrastructure is going to be the responsibility of governments. We are supportive of the first part of the paragraph because we support what Jimmy identifies as the New Hampshire model: low taxes for every organization and no special privileges. There are two problems with Jimmy’s analysis.
First, what is the nature of the tax credit? Presumably, it is a special purpose tax credit that we would likely oppose. We want to know the details. Don’t worry, we will be doing some research in the future.
Second, there is a problem with the time frame. Jimmy says that the deal lasts until 2043 or 25 years. Thus, the large sum is over 25 years and the cost per job is for 25 years of jobs. A cost of $9,000 (roughly) per job year is much less scary.
Much more interesting is the possibility of federal tax reform. Jimmy says that the next push for tax reform will treat state incentives as income. It makes sense as the backbone of taxable income is all income from whatever source. We’re supportive of Jimmy’s opposition to corporate welfare but he needs to give us details and alternatives to evaluate Foxconn.
Corporations, sates, and municipalities should be free to act but they should do so in the sunshine. Voters should know what the deal is and if the corporate income should be properly accounted for.
Sidebar: For example, if the corporation was exempt from income tax on the state level there would be no need to adjust. The corporation would not get that deduction and pay federal taxes as appropriate. End Sidebar.
We are against corporate welfare but it is up to the voters. Educating those voters about the problems is tricky but if New Hampshire can do it then we can hold out hope. We need to do a better job than Jimmy.