Thursday, May 2, 2019

Take A Break

The absurdity of tax incentives has raised its ugly head this week.

Wisconsin the site of the most absurd expensive tax break of all time has now faced down the truth of a Democratic Governor - not going to happen maybe but not now maybe not ever
Foxconn: So, About That Factory in Wisconsin You Offered Us $4 Billion in Incentives to Build
Tom McKay

Taiwanese manufacturer Foxconn wants to reopen negotiations with Wisconsin officials over its heavily subsidized, troubled plans to build a massive facility in the state, CNBC reported on Tuesday, though the exact nature of what is up for discussion is not clear.

According to CNBC, the “disclosure comes in a letter from [Democratic Governor Tony Evers] to Foxconn executive Louis Woo, a special assistant to Chairman Terry Gou and the company’s point person on the project.” The letter itself states that it’s not Evers—who criticized the project, which was negotiated under Republican predecessor Scott Walker and heavily promoted by Donald Trump, as a “lousy deal” on the campaign trail—or the state that is seeking to alter the terms. Rather, it claims that Foxconn broached the topic in March 2019.

Foxconn scored over $4 billion in local and state tax credits and other incentives to build what it originally said would be a 20 million square foot, Gen 10.5 facility making large TV screens, which would create 13,000 new jobs. But it’s seemed hesitant to move forward with the project, which has stumbled, to say the least. Earlier this year, Foxconn briefly stated they wouldn’t be building a factory at all; they backtracked, but over the lifetime of the project it has scaled down its plans to a Gen 6 facility making smaller screens for phones.

Numerous projects announced in the state appear to have stalled out—the Verge recently reported that some Foxconn-run projects appear to be empty or understaffed, while other buildings were never actually purchased, and there did not seem to be any plan for making good on promised investments. Meanwhile, the Verge wrote, “Taxpayers have already spent more than $300 million on roadwork, infrastructure, and land acquisition related to the project.”

The grounds for the plant core to the deal have remained somewhat of a ghost town, with little activity beyond landscaping and some last-stage assembly work reported. Republicans have continually accused Evers of tanking the deal by trying to have it renegotiated, but the letter says it was Foxconn that first brought up its desire to change the terms of the deal with state officials in March.

Evers did call for the agreement to be revised last week, saying the 13,000 jobs figure “would be an unreal expectation when they’re downsizing the footprint of what they’re doing.” However, the Verge wrote that up until Tuesday, both Foxconn and state officials were insisting everything was just peachy:

“Foxconn remains committed to our contract,” the company said on Friday as it recommitted to opening an LCD plant. “We have a solid contract,” Wisconsin Economic Development Corporation (WEDC) CEO Mark Hogan assured reporters earlier today, according to The Associated Press.

According to the Wisconsin State Journal, Wisconsin Economic Development Corp. CEO Mark Hogan has insisted that the deal is “scalable” and a “solid contract,” since the amount of tax credits fluctuates with the number of people Foxconn actually ends up employing. He added that “there’s no need to renegotiate the contract” if the Gen 6 plant is built.

New Jersey (my future home) has also found that Chris the Bloated Gasbag Christie also agreed to absurd incentives that went nowhere in the promise of job creation, paying in fact 3 times the average salary of said job.

The New York Times found that these incentives are not just pork they are potential crimes and regardless of party it seems everyone does love some Bacon.

Here in Tennessee guess what? Same thing with incentives to Amazon, Alliance Bernstein and others not fully disclosed despite sunshine laws requiring such.  Well lying here is as sweet as the tea, bless you're heart!

 State officials and many corporate site selectors often depict incentives as tie-breakers between competing locations that a company is evaluating. Yet tax credits for businesses attract hardly any scrutiny, because the state shields what companies claim them and how much they receive, citing decades-old confidentiality laws. Three organizations are using the newly released tax-credit data to propel their push for more transparency and disclosure.

And they love to humble brag here but they fail to mention this stat:

For the size of its economy, Tennessee is very generous when it comes to business incentives.
The W.E. Upjohn Institute for Employment Research crunched the numbers from state and local governments and found that Tennessee provides more than $2.5 billion worth of incentives annually — property tax breaks, grants and other subsidies offered to companies.

That’s nearly 1 percent of the state’s private-sector gross domestic product, making Tennessee the fourth highest in the nation, according to the study's author, Timothy Bartik.

Bartik, a senior economist at the Michigan-based think tank, found that states with high levels of incentives don’t have significantly better economic performance than their neighbors.
“If incentives have an effect, it’s at best relatively modest,” he said.

Community college job-training programs, he added, have been shown to generate better and longer-lasting employment effects than other incentives, for the same cost.

States with highest and lowest levels of business incentives
(As a share of export-based economy, 33 selected states, 2015)

Highest 5:
1) New Mexico
2) New York
3) Louisiana
4) Tennessee
5) New Jersey

Lowest 5:
29) California
30) Maryland
31) Virginia
32) Nevada
33) Washington

I find it interesting that while New York lost Amazon and in turn Virginia kept them it appears that New York did not need to offer such a package as if you can make it there you can make it anywhere and clearly New Jersey shows how well it works out, or not.  

The shell game is the oldest con in the book and yet here we are still falling for it.  If you would like to read more about this I suggest this from Good Jobs First that outlines the 40 states that do not participate in these economic shenanigans that is a cross between extortion and bribery.

Meanwhile here in Nashville to tighten up .. that may be a football expression... the Seat Filler Mayor is outsourcing the Parking Meters to a company and it apparently is a done decision.  Mr. Mayor doesn't realize he just sold out a significant income generator but hey who does math here?  This has been a failed experiment in other cites as Chicago found out.   Atlanta too found themselves in a financial boondoggle and in turn went private, Indianapolis found it a success and we have New York moving to a whole new game plan - congestion fees for driving into the city at certain times; this modeled after London based plan to reduce traffic and fund transit. 

Ultimately revenue is an issue that has resulted in the discussion of selling city owned properties, eliminating running certain facilities and services and in turn states cutting taxes to businesses while still trying to offset raising taxes via income or property which cuts across the larger swath of population.    This is the problems facing many red states that have for years followed the trickle down economic theory that former Fed Reserve candidate Stephen Moore endorsed but in turn has proven like the toilet paper its written on is a piece of shit.  

The reality is that taxes need to be spread across the spectrum but in reality that means more money will move offshore to locales that hide the money in ways that enable businesses and individuals to live large and largely tax free.   Funny like most laws are written in America by Lobbyists, Lawyers  and other shell game groups know that these are the same individuals are the ones drafting the same laws for foreign entities to enable them to become tax shelters for the rich oligarchy.  So while you are dreaming of a vacation in Nevis you might take a look around to see who actually lives in Nevis and realize that the bankers are the king of the castle but the king lives outside of Nevis.   Money can't buy you class but it can buy you a nice tax free residency. 

I need a break.. problem is what kind?

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