It was just a few months ago that Wisconsin Governor Scott Walker unveiled a massive deal that would give the Taiwanese manufacturing giant Foxconn $3 billion in tax subsidies to open a $10 billion LCD TV factory, promising to bring 13,000 jobs to southeastern Wisconsin.
That’s a public cost of $230,000 per job. Initial estimates found that the state wouldn’t break even on its investment until 2043. On top of the massive tax subsidies, Foxconn will benefit from a host of other goodies—lower electricity rates, state funding for road construction and worker training, exemptions from certain environmental regulations, and unprecedented special treatment in the state court systems.
In short, Walker handed a foreign corporation the keys to the government.
Now, with another major manufacturer threatening to cut hundreds of jobs in Wisconsin, Walker is doubling down on his corporate welfare program. Following the passage of the GOP tax cut, Kimberly-Clark (the company that makes Kleenex, Huggies diapers, and Cottonelle toilet paper) announced in January that it would deliver a dividend increase for its shareholders and a $2.3 billion share buyback. The company said it would then use the remainder of its tax cut savings to restructure its operations.
That apparently means cutting 5,000 jobs in the United States, including 600 positions from its operations in northeastern Wisconsin. The company turned a $3.3 billion profit in 2017.
In a last-ditch effort to save those jobs, Walker is falling back on his Foxconn playbook. On Monday, he proposed legislation that would give Kimberly-Clark the same deal as Foxconn: 17 percent tax credits on qualifying wages at the company’s two plants.
As the Milwaukee Journal-Sentinel points out, Wisconsin taxpayers would be on the hook for $8,500 in Kimberly-Clark tax credits for one $50,000 salaried job.
Walker is running for re-election in 2018 and he’s faced scrutiny over his failure to make good on a 2010 campaign promise to create 250,000 jobs in the state. He’s not only failed to meet that mark by nearly 65,000 jobs, but Wisconsin’s manufacturing industry has continued to wither away.
The conservative governor has failed to entice businesses to set up shop with his policies of union busting and deep budget cuts to everything from the public university system to infrastructure.
As Walker has attacked public welfare programs (he’s pushed for drug-testing requirements for state welfare recipients and work requirements for Medicaid beneficiaries), he’s unabashedly set up a generous corporate welfare program that flies in the face of the GOP’s purported vision of free-market capitalism.
After privatizing the state economic development agency in 2011, Walker has lavished companies with lucrative tax subsidies. In return, companies like Ashley Furniture have announced layoffs, offshored operations, or simply failed to meet job-creation promises.
The Foxconn deal may be the biggest, but, as Walker has shown, it will be far from the last. The governor has now invited any Wisconsin company to threaten to uproot unless it gets a sweet new tax subsidy.
Call it Foxconn-omics.