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Our Views: Foxconn deal gets better and better... for Illinois

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Sunday, August 6, 2017

The more we learn about the deal that lawmakers are seeking for Foxconn, the better it sounds—for Illinois, that is.

While Gov. Scott Walker and Foxconn Chairman Terry Gou stood together smiling and clinging to a Wisconsin state flag at a July 27 news conference, Illinois Gov. Bruce Rauner should have been the one doing a happy dance.

If Foxconn constructs a $10 billion plant in Racine or Kenosha county (as officials deem likely), Illinois residents living near the border would be able to feast on the employment opportunities. And we’d have no problem with this, except that Wisconsin lawmakers are proposing to pay a steep price for the 13,000 jobs Foxconn says it would eventually create—$3 billion in tax breaks, or nearly 50 times what Wisconsin has previously offered a company.

But Illinois wouldn’t have to pay a penny. Under a reciprocity agreement between the two states, residents only pay income taxes to their home state, not to the state where they work. Foxconn paychecks for Illinois residents would be mainly boosting the Illinois economy and treasury.

While it’s still unclear how close to the Illinois border Foxconn would locate, building a plant in Racine or Kenosha counties would put it within commuting distance of residents living just south of Kenosha County, according to U.S. Census data. The 2015 American Community Survey shows about 21 percent of McHenry County, Illinois, workers travel 60 minutes or more to get to their jobs, while nearly 31 percent are on the road for 30 to 59 minutes. In adjacent Lake County, Illinois, about 12 percent of workers commute for 60 minutes or more and about 35 percent spend 30 to 59 minutes to get to their jobs—easily within striking distance of a Foxconn plant, especially one in Kenosha County.

Foxconn should release the location of its prospective plant before the Legislature makes any promises to the company. The closer the plant is to the Illinois border, the more gravy flows to Illinois—gravy made by Wisconsin taxpayers. Indeed, this question mark about location makes the tax incentive proposal difficult to evaluate, according to Todd Berry, president of the Wisconsin Taxpayers Alliance.

“In order to make some estimate as to what the tax benefits to (Wisconsin) are, you have to not only know where the plant is going to be physically located, you need to know where those (Foxconn) employees choose to live,” Berry said during an interview with The Gazette Editorial Board.

To be sure, some Illinois residents would move to Wisconsin to be closer to their jobs, but many others would be content to commute. Regardless, Wisconsin residents would be taking all the risks, and tax breaks aren’t our only concern. The proposed Foxconn deal would exempt Foxconn from obtaining permits for many activities, such as filling in wetlands and building on lake or stream beds. Ignoring these regulations could lead to poorer water quality and set a terrible precedent for subsequent developments, conservationists say.

Meanwhile in Illinois, nobody is talking about chiseling away that state’s environmental standards. Illinois residents working at Foxconn would be living nowhere near the plant, likely far from affected water tables or wetlands.

The benefits to Illinois residents would extend beyond the Foxconn plant itself, as some ancillary businesses supplying Foxconn would likely set up shop along the I-94 corridor, either in or near Illinois.

While Janesville business leaders are hopeful Foxconn suppliers would come here, Lake and Cook counties in Illinois would be arguably better suited because of their proximity to I-94 connecting Racine and Kenosha counties. From Janesville, there’s no direct route to Racine and Kenosha counties that doesn’t involve traveling stretches of two-lane highways through small towns.

In summation, as Wisconsin calculates the costs and benefits of the Foxconn proposal being advanced by Gov. Scott Walker and state lawmakers, the formula needs to account for the economic benefits that will spill outside of Wisconsin’s borders.

Government officials need to be smart in their assessment of the deal to avoid fleecing Wisconsin taxpayers and unfairly giving our neighbors to the south a free ride.



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