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Foxconn challenges Wisconsin's refusal to grant state tax credits
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Foxconn challenges Wisconsin's refusal to grant state tax credits

From the Keep up with the latest news on Foxconn in Wisconsin series
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Foxconn Technology Group has challenged the state’s decision earlier this month to refuse the Taiwan-based company’s application for state tax subsidies for work taking place on the southeastern Wisconsin facility.

In a letter sent Friday to Wisconsin Economic Development Corp., Foxconn attorney Robert Berry said “of significant concern is the WEDC’s position regarding material terms and timelines.”

On Oct. 12, WEDC told Foxconn it had been denied billions of dollars in state tax credits until officials with the company come to the table to draw up a new contract. The company was told late last year it would not receive subsidies until a new agreement was reached.

“Despite frustrations and disappointment with WEDC’s decision and the method chosen by the WEDC to inform the Recipients of its determination, it is the Recipients’ intention to continue to work with the WEDC in good faith to resolve this disagreement within the next 30 days in a manner that benefits interested parties, including Racine County and the Village of Mount Pleasant,” Berry said.

WEDC Secretary Melissa Hughes said in a statement Friday the state has received Foxconn’s letter, but has not received the basis for the company’s objection.

“Once Foxconn is able to detail the scope and nature of its evolved project, WEDC stands ready to work on crafting a new agreement that balances the company’s needs with the interests of Wisconsin taxpayers,” Hughes said.

This year would have marked the state’s first payment of refundable tax credits to Foxconn. The company fell 82 jobs short of the minimum required to claim state tax credits in 2018.

Foxconn said it created more than 800 jobs in 2019, above the 520 minimum needed for state subsidies. Under the contract the goal was to have 2,080 full-time jobs and more than $3.3 billion in capital expenditures by the end of 2019. Foxconn’s jobs report this summer also identified more than $415 million in capital investments — a considerable difference from the $280 million reported by Foxconn in April.

WEDC reported earlier this month that only 281 of Foxconn’s reported jobs had been verified as eligible and the company had invested roughly $300 million in capital expenditures.

Regardless of how many jobs Foxconn has created, state officials have said tax subsidies agreed to in the original contract are tied to jobs and capital investment for specific projects, which Foxconn is failing to deliver. Foxconn’s contract calls for a Generation 10.5 facility that would build larger panels for TV screens, but the project has downsized to Generation 6, which would manufacture small screens for mobile phones, tablets, notebooks and wearable devices.

Under the contract, signed in 2017 by former Gov. Scott Walker, Foxconn would earn incentives totaling as much as $3 billion over 15 years if the company reached the 13,000-employee benchmark and made a $10 billion capital investment in the state.

State and Foxconn officials have been discussing possible amendments to the existing contract, but so far an agreement has not been reached.

Foxconn founder Terry Gou said earlier this month the company remains committed to the project, but added that “Foxconn will work as a partner with those who treat the company as a partner.”

Wisconsin has not yet given the company any tax subsidies, but a recent state estimate shows that the Foxconn project has cost the state nearly $237 million so far in state and local road improvements, sales and use tax exemptions, grants to local governments and for worker training and employment.

Foxconn officials have estimated that the company has invested $750 million in the state.

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