Chasing development: give big tax breaks to Foxconn, then to Microsoft…

American municipalities want growth and jobs. Hence, they give tax breaks to corporations to locate there. In southern Wisconsin, they first gave big money to Foxconn. When that fell through, now they are giving money to Microsoft:

Photo by Jonathan Borba on

Taiwan-based Foxconn Technology Group forged an agreement in 2017 with former Gov. Scott Walker to manufacture LCD screens in Mount Pleasant, investing $10 billion and employing 13,000, in return for billions in subsidies. But the company, a top manufacturer of Apple’s iPhones, downsized its plans and created few jobs, forcing government officials to find other users.

Data centers process and store huge volumes of computer data, forming the backbone of the internet. Although these facilities typically don’t create large numbers of permanent jobs, local leaders and tech experts say Microsoft’s arrival signals the Foxconn land, along with infrastructure improvements already complete, won’t go to waste…

Residents on the land promised to Foxconn were displaced from their homes, but the company, blaming “unanticipated market fluctuations,” canceled the mega-factory. In 2021, it signed a new deal with Gov. Tony Evers, who beat Walker after criticizing the original agreement. Instead of up to $3 billion in subsidies, Foxconn agreed to collect $80 million for creating 1,454 jobs and investing $676 million in a set of smaller facilities by 2026.

Microsoft’s agreement with Mount Pleasant and Racine County requires it to launch construction by 2026. The company can recover 42% of its property taxes, but no more than $5 million per year. The local governments can also repurchase the land at the same price if Microsoft fails to hit the deadline.

The logic for this is provided in the story. Attracting big companies and jobs is viewed as important. If growth does not come here, it will go to other communities who will benefit. The deal with Foxconn fell through but having some deal and a few jobs is better than nothing. Growth must continue as must the tax breaks.

Do they really have to continue in this fashion? The final paragraphs hint at one of the possible motivating factors for these companies locating in southern Wisconsin: they are just over the Illinois border and can service the Chicagoland region. If Chicago area municipalities will not compete with each other in these same ways, just go over the border and find plenteous tax breaks. Another motivating factor seems to be a fixation on big companies and tech companies. What community would not want to boost they have a Microsoft facility (even if it is just a data center)?

I hope some people keep following up this story and similar ones to find out what communities and residents actually get out of these tax break deals. How much is spent per job? How does the business growth help the community? What does a data center contribute to a community? Years down the road, who benefits the most from these deals?

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