MITCHELL SCHMIDT Lee Newspapers
MADISON — A new George Mason University study has found that economic development subsidies, specifically Wisconsin's incentives for the controversial Foxconn project, could cause more economic harm than good.
The Mercatus Center's "Economics of a Targeted Economic Development Subsidy" study, which looks at the economic case for and against targeted economic development subsidies, focused on Wisconsin's pledge of $3.6 billion in incentives to Taiwan-based electronics manufacturer Foxconn Technology Group.
"The weight of economic theory suggests that these subsidies do not work and may even depress economic activity," according to the study. "We show that under realistic scenarios, the subsidy may depress state economic activity by tens of billions of dollars over the next 15 years."
In 2017, Wisconsin promised nearly $4 billion in state and local tax incentives to Foxconn if it invested $10 billion and created 13,000 jobs over 15 years while building a 20-million-square-foot campus in Mount Pleasant.
The largest portion of that deal represents about $2.85 billion in refundable payroll and capital expenditures tax credits. The study describes the credits as an "outright cash subsidy," since the state already provides manufacturers with a corporate income tax exemption.
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