The cost of corporate welfare, Trump/Foxconn edition | Arkansas Blog

Monday, July 31, 2017

The cost of corporate welfare, Trump/Foxconn edition

Posted By on Mon, Jul 31, 2017 at 9:55 AM

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Donald Trump bragged that a Chinese company's decision to put a flat-screen TV plant in Wisconsin was a deal he swung. Some deal. Some tidbits about the Foxconn corporate welfare deal from an opinion piece in Huffington Post:

* Can Foxconn and Trump be trusted? In 2011, Foxconn announced plans to invest $12 billion in Brazil, creating 100,000 jobs. Brazil is still waiting. Closer to home, in 2013, Foxconn promised it would invest $30 million and hire 500 workers for a new high-tech factory in Pennsylvania. The factory was never built and the jobs never came. If the Wisconsin jobs ever materialize, basically Trump is stealing them from Pennsylvania workers, who also went heavily for Trump in the election.

* Trump’s Wisconsin deal with Foxconn comes with an outrageously heavy price tag that will be paid for by Wisconsin taxpayers. If the deal goes through, a big if, Foxconn will receive $3 billion in state tax credits that will have to be covered by increased taxes on everybody else. Economists estimate that in this deal Foxconn receives subsidies equal to between $15,000 to $19,000 per job every year. The tax subsidy on similar corporate deals in the past was less than $2,500 per job. Trump certainly negotiated a great deal, for Foxconn.

* The Trump-Foxconn deal should also come with a warning label. Foxconn is known for using robots to replace human workers wherever it can and it is also notorious for the treatment of its workforce. In 2015 it announced that it would automate 30 percent of its factories by 2020. At its huge iPhone factory in Longhua, China, there has been a wave of worker suicides.

* I keep saying “if” the deal is ever consummated because the market for flat-screen televisions has been saturated for years and been plagued by declining sales.
Arkansas has been busy handing out corporate welfare to Chinese investors, the largest handout to persuade a Chinese company that South Arkansas, with its abundance of relatively cheap pulp wood would be a good place to put a pulp mill, particularly with millions in taxpayer assistance at the county and state level. Arkansas has just upped the amount it's willing to corporate welfare it's willing to hand out in the name of economic development. Meanwhile, it is busy looking for ways to trim "welfare" such as health care coverage for people who work here.

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