Foxconn is going to build a new factory in the U.S. Because we don’t have a crony capitalist system it is presumably coincidence that the factory will be within the Congressional district of Paul Ryan, House Speaker (i.e., the factory will be between Milwaukee and Chicago).
“Wisconsin’s Lavish Lure for Foxconn: $3 Billion in Tax Subsidies” (nytimes):
According to a presentation by the state, the incentive package consists of $1.5 billion in state income tax credits for job creation, $1.35 billion in state income tax breaks for capital investment, and up to $150 million for a sales tax exemption.
Over all, the subsidies for the Foxconn plant, which would produce flat-panel display screens for televisions and other consumer electronics, equal $15,000 to $19,000 per job annually. … The new Foxconn jobs are expected to have an annual salary of at least $53,000 plus benefits…
I’m not sure why Foxconn would have paid any Wisconsin (or U.S.) corporate income tax. Wouldn’t they set things up Apple-style so that the Wisconsin factory paid a huge annual license fee to an offshore corporate shell in either a tax-free or low-tax (Taiwan is at 17 percent) country? If that wouldn’t have worked, it seems that Foxconn could have gone to North Carolina and paid state income tax at half the rate of Wisconsin’s or to South Dakota or Wyoming and paid nothing (Tax Foundation).
Readers: Does this mean that big companies, except those based in SD or WY, should be expected to move every 10 years or so when their state corporate income tax exemption runs out? So that they can get new exemptions from a new state? Would it make sense to design factories in advance for modular shipping via rail?
Related:
- Wisconsin family law (unlimited child support makes it straightforward to collect $53,000 per year without working at Foxconn…)
It’s worth noting Foxconn rarely follows up on those promises to build factories after they get the tax breaks.
J: If the tax breaks are in the form of state corporate income tax exemptions, what is Foxconn getting by negotiating these and then not building a factory? If they don’t end up operating in the state where they have the tax breaks, they wouldn’t owe any tax regardless, right?
FACTORY COMING! = big news and political credit.
FACTORY NOT COMING = no story or crickets.
Rinse, repeat every election cycle.
Shipping entire factories in the fab business makes little sense, since their internal components/product lines have a mean lifetime of about 12 months, given Moore’s law. For a pure sci/engg pov I’m pumped that someone has commited to producing chips in the US (10nm? 7nm? 5nm? That’s crazy talk for anyone who grew up when sub 1um was scifi).
billg: Actually you raise an interesting question. As far as I know, Foxconn is not fabbing chips, but LCDs. Why does it now take $10 billion of capital equipment to make an LCD?
OLED is much superior to LCD， in terms of panel thickness, flexibility, brightness etc. It just makes little sense to build a $10B LCD factory. Smells fishy.
@mz. OLED also has the most true blacks. I am surprised Apple has not used it in it’s Iphones . My Samsung galaxy S from 2010 had the best display OLED display
True blacks on OLEDs only really matter when viewing in darkened rooms with blackwalls to avoid reflections.
@Andrea , I guess so, but after having an OLED phone for so long, to me the LCDs on other phones look ‘cheap’ to me. For example, it’s easy to see the border between the LCD and the black glass frame, where as with the OLED it is not so obvious. Also the viewing angle with OLED is superior to any LCD I’ve seen. But OK, it is just nitpicking.