A new audit raises questions about some of the specifics of Wisconsin’s deal with Foxconn. 

The Legislative Audit Bureau on Tuesday released a Wisconsin Economic Development Corporation (WEDC) audit that looks primarily at how Foxconn can and will cash-in on nearly $3 billion in state tax breaks. 

“Statutes and WEDC’s contract require WEDC to award program tax credits for the wages paid to employees for services performed in Wisconsin,” the audit states. “WEDC’s written procedures continue to allow WEDC to award program tax credits for the wages paid to employees for services not performed in Wisconsin.”

The auditor say each job that Foxconn creates is worth about $200,000 in state tax subsidies. The audit takes issue with the possibility that Wisconsin taxpayers may be stuck with the cost for workers who are nowhere near the state of Wisconsin. 

“These written procedures do not reference [state law] which stipulates that WEDC may not certify Foxconn to claim program tax credits for services performed outside of Wisconsin,” the audit notes. “Instead, these written procedures reference provisions in statutes and administrative rules that define a corporation’s state payroll for income tax purposes to include all of the wages paid to certain individuals who perform a portion of their services outside of Wisconsin.”

The head of WEDC, which oversees the deal with Foxconn, said in a letter that WEDC policy “explicitly disqualified any employee who did not perform services in Wisconsin.”

WEDC CEO Melissa Hughes said state law gives her agency the discretion to award tax credits to Foxconn, and that her agency will handle the specifics of how to do that. 

“Statute directs WEDC to determine how best to award tax credits for wages of employees in Wisconsin. Balancing statutory language and based on LAB’s [Labor Audit Bureau’s] own distinction between residents of contiguous and non-contiguous states,” Hughes explained in her letter. “WEDC will identify a rebuttable presumption that employees who are not Wisconsin residents or residents of a state contiguous to Wisconsin are ineligible for credits.”

Auditors suggest that the WEDC update its written policy for the tax credits to comply with its interpretation of state law. 

The audit is, as expected, launching more questions about the Foxconn deal overall. 

“Today’s audit highlights the importance of ensuring that jobs created with taxpayer dollars go to hard working Wisconsinites,” Rep. Gordon Hintz, D-Oshkosh, said after the audit was released. “With Foxconn constantly shifting what they are building and what they will be producing in Wisconsin, there continues to be more questions than answers about this project. The uncertainty created by Foxconn and its long term prospects means we have to be even more vigilant about protecting Wisconsin workers and taxpayers.”

The audit and the questions come less than a week after Gov. Tony Evers’ administration said that Foxconn will not qualify for any tax credits until it renegotiates its deal with the state. 

Benjamin Yount reports on Illinois and Wisconsin statewide issues for The Center Square. Reposted with permission.

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