Foxconn Won’t Get State Tax Credits

Foxconn won’t be awarded any tax credits unless it restructures its contract with the state, the company was informed in a letter by Missy Hughes, the CEO of the Wisconsin Economic Development Corporation, to Dr. Jay Lee, Vice Chairman of Foxconn Technology Group.

The Taiwanese-based company has signed a contract for the biggest subsidy ever promised a foreign-owned company by an American government in November 2017, when Republican Scott Walker was governor. But the contract stipulated that the company would be building a Gen 10.5 LCD facility, which has never materialized. The company has also gone gone back on its promise to invest $10 billion on its manufacturing plant and create 13,000 jobs, changing and down sizing its plans numerous times since then.

The company had provided data to the state claiming it hired 550 people in 2019, in excess of the 520 required under its contract, but the WEDC estimated only 281 would qualify under the contract. It did not say why, but employees could be ruled ineligible if they made less than $30,000 per year or were not based in Wisconsin.

Moreover, the letter from Hughes made it clear that no credits can be ever be awarded until a new contract is created.

“Over the course of the last year, the Wisconsin Economic Development Corporation (WEDC) and I have worked with you and Foxconn with a goal of crafting a new agreement that aligns with your company’s [current] plans for development,” the letter from Hughes noted.

“As you know, we have not reached such an agreement, and therefore the purpose of this letter is to inform you that Foxconn’s activities and investments in Wisconsin to date are not eligible for credit under the Electronics and Information Technology Manufacturing Zone Tax Credit Agreement dated November 10, 2017.

“When we met in early June, you personally shared with me Foxconn’s interest in a different type of incentive contract to support Foxconn’s plans in Wisconsin. We have worked with your team to explore those opportunities, and while our efforts have been unsuccessful to date, I want to be clear that my commitment to find a path forward remains steadfast. You and Brand Cheng have asked for our help, and WEDC’s door remains wide open to support your business expansion in Wisconsin.

“Once Foxconn is able to provide more accurate details of the proposed project, such as its size, scope, anticipated capital investment, and job creation, WEDC would be able to offer support for the project with tax incentives as it does for many large and small Wisconsin businesses. After touring the project two weeks ago, I can see that there are many avenues for Foxconn’s future success in Wisconsin, and I look forward to partnering with you in that success.”

President Donald Trump dubbed the Foxconn project the “eighth wonder of the world” and the total subsidy for the project, after a variety of costs were added, rose to $4.1 billion, or $1,774 per household in Wisconsin. But then the company began progressively down-sizing the project.

Republican legislative leaders, Assembly Speaker Robin Vos and Senate Majority Leader Scott Fitzgerald have in the past criticized the administration of Gov. Tony Evers for its push to rewrite the contract to fit what Foxconn will actually be manufacturing. They have not responded so far to requests for comment from Urban Milwaukee. Nor has Foxconn. We will update the story if they do.

Democratic state Rep. Gordon Hintz, who serves on the WEDC board and has long been skeptical of the project, released a statement entitled “Foxconn Cements Legacy Of Broken Promises” and charging that the letter from the state “cements Foxconn’s legacy in Wisconsin as one of broken promises, a lack of transparency and a complete failure to create the jobs and infrastructure the company touted in 2017.”

“Republicans should be held responsible for the fact that over $1 billion of public money has already been spent… on a project not compliant with the signed contract,” Hintz contended. “Desperately needed state funding to fix local roads instead went toward building a ‘driveway to Foxconn.'”