Aug 28, 2017
If you are a member of the left-liberal Clergy (see Bill’s Blogs, pp. 74, 78, 103) you probably can’t stand Donald Trump. If you also live in Wisconsin it’s probably a safe bet you don’t approve of the subsidies the state is planning to grant to the Taiwan company, Foxconn, in exchange for building a 10 billion dollar campus and creating close to 35,000 jobs.
As a conservative libertarian, I too am suspicious of this kind of subsidy to a private company. But let’s face it, there are subsidies and there are subsidies.
If you Google the word subsidies you will get a lot of info on ACA (aka: Obama Care). And then there are of course the very generous subsidies of the States and Federal Government to renewable energy! These two dwarf any subsidies Foxconn is going to get. The subsidies to renewable energy companies and to Obama care are all real subsidies because in many cases they are paid in cash, bond guarantees, or reduction of expenses.
(The solar company, Solyndra, ended up costing taxpayers 355 million for just 3000 jobs—over !00,000 per job. It went bankrupt in 2011). In the case of ACA millions of citizens get billions of dollars in reduced prices for health care.
And then there are the alleged subsidies for the fossil fuel industry and Foxconn. I write alleged because they are all really only tax credit subsidies. In other words the companies don’t actually get cash or loan guarantees; they get tax credits on their profits. Instead of paying taxes on profits that might not occur or simply reducing the tax bill on profits they do get credits on future profits. Foxconn does get a break since the credits are refundable even if profits are not earned! On the other hand they are paying their newworkers an average of $53,000 a year.
Libertarians like me think the corporate tax bill for job-creating corporations should not be the highest in the civilized world—but zero. That would be a big deal! It would also result in millions of new jobs! After all, it is profits, not taxes, that finance new jobs, increases in tax revenue, and a boom in national progress and wealth (GDP). More taxes simply encourage the government to create more programs, many of which are woefully inefficient in doing what they are supposed to do.
So no, I don’t consider tax credits like most subsidies that take from Pete to pay Paul. Tax credits are more like exemptions on religion and non-profit property, or interest exemptions on your income taxes. They are a subsidy but not that much of one.
The liberal press makes a big deal out of complaints that the lost revenue from the tax credits (theoretical revenue) will not surpass the actual tax revenue for up to 25 years! This is like saying your hoped for income next year may not equal your actual income! This mostly phony calculation doesn’t even count the income taxes of individual employees (the expected wage of the new 25,000 jobs—tax credit subsidized at nearly $16,000 per job—that will average $53,000 a year!) It also doesn’t count the increased income and sales taxes of construction workers and the income and sales taxes of the thousands of suppliers and merchants who sell goods and services to the new workers!
The Chicago Tribune published an editorial heaping fault on Illinois legislators for not doing enough to get Foxconn to build in Illinois instead of Wisconsin. Presumably the editorial writers, in this case, did do their homework.
The Green Clergy are also complaining about the environmental privileges Foxconn is getting to build in Wisconsin. Supposedly Foxconn can escape some of the stringent environmental regulations that Wisconsin enforces on other private individuals and companies to keep our water safe and plentiful, our wetlands wet, and our lakes and rivers clean and pristine.
This is the most serious charge against the deal. I am suspicious of exceptions to the law for any group or individual. But I am also suspicious of many environmental laws and regulations.
For instance, the powerful Green lobby has pushed legislators in all states, especially in Wisconsin as well as the federal government, to pass laws that relate more to power and control of individuals and companies than to the safety and protection of the public. State and federal bureaucrats have extended these laws into truly oppressive regulations that not only cost jobs but also cut tax revenues.
The biggest examples are and in the nuclear and fossil fuel energy.
Nuclear power plants are so strictly regulated that any advantages of cost, efficiency, reliable energy production, safety, and no carbon pollution are lost.
Fossil fuels are away and by far the biggest assets we have for getting energy, communication, transportation, health, comfort, pleasure, and wealth in this Modern Age. But you wouldn’t know this if you listen to the mainstream media—or indeed the advertising of some fossil fuel companies themselves!
All these worthies have fallen hook, line, and sinker for the Climate Change myth.
And the truth is most laws and regulations on food, farms, organics, water supplies, wetlands, welfare, recycling, and drugs are nearly as severe and ridiculous.
In the end, my reservations on making exceptions for Foxconn collide with my views on environmental and regulatory abuse and cancel each other out. Were I a Wisconsin legislator I would not hesitate to vote yes on the Foxconn deal. Potentially it will bring nearly 35,000 needed high-paying jobs to our state with a minimum of environmental damage if any. Despite the gloomy reports by liberal Democrats it will mean more money in the bank for individuals and for the state—and more progress for Wisconsin over the next 25 years.
Bill Stonebarger, Owner/President and sole employee of Hawkhill
P. S. For any who want to know more details on my life-long journey through the idea swamp from devout Catholic to left-liberal clergy to conservative libertarian, I suggest you buy, curl up on the couch, and read any of my recent books (they are all cheap in money)—Twilight or Dawn? A Traveler’s Guide to Free-Market Liberal Democracy, East Gilman Street, or Bill’s Blogs. Or view some of my ideas on science and society, streamed free on YouTube.