The Associated Press is reporting that the possible Foxconn deal will cost the state and local governments sales tax revenue:

What’s more, borrowing for the interstate rebuild would leave the state on the hook for $408.3 million in interest and the sales tax exemption would cost the state $139 million.

If Foxconn builds the plant in Kenosha County, the local sales tax exemption would cost that county about $13.9 million. Neighboring Racine County doesn’t have a county sales tax, but the county is part of the stadium district that collects a 0.1 percent sales tax to support Miller Park, the Milwaukee Brewers’ home. The local exemption would cost the district about $2.78 million in revenue.

The fiscal bureau also noted that Foxconn’s presence in the state could have substantial benefits.

Let’s set aside that the “interstate rebuild” is the I-94 north-south project, and lawmakers were already haggling over a way to make that project happen before the Foxconn facility, “Wisconn Valley,” was announced.

The supposed “cost” of the sales tax exemptions are non-existent. Those hypothetical sales tax collections would only be possible if the Foxconn incentive package goes through. If there is no Foxconn development, no “Wisconn Valley,” then the economic activity that generates the sales taxes doesn’t occur.

So it’s impossible for the money to be lost to those government bodies. They never had the money in the first place.

However, the Legislative Audit Bureau memo that prompted the AP story also specifically says it cannot account for all of the economic effects of the Foxconn deal. So it’s likely that rather than “lose” sales tax revenue, Kenosha County, the Miller Park stadium district and the state of Wisconsin will actually gain sales tax revenue as a result of the new economic activity.

Unfortunately, by reporting the “lost” sales tax income as if it is an actual loss, the Associated Press is giving the false impression that the cost of the Foxconn deal is greater than it actually is.


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