Wow. This story was mind blowing. I don't understand how a small town can borrow against a state's future tax earnings? Why are Wisconsin's taxpayers on the hook for the stupid mistakes of these council members? Also the story doesn't make this clear. How are the incentive payments made to Foxconn? I'm certain that it's not just a direct transfer of tax dollars from the city/state to Foxconn (?).
I can understand the naivete of Americans on the receiving end of this, like Walker or the president of the town for just being lured in by the idea "investment => profit". Foxconn however is obviously much more sophisticated and the story alludes to how manufacturing is cheaper in Asia; so the premise of why they'd invest in a plant here doesn't make much sense. Although it flirts with answering this question I still don't have a clear answer. It sounds like they received tax incentives, which, maybe were incentive enough for production demand that they at some point may have? It just doesn't make sense to me if they weren't planning on actually hiring 13,000 workers, what's the incentive? Tax breaks do you no good if you generate no revenue.
> "I don't understand how a small town can borrow against a state's future tax earnings?"
states are the canonical units of governance in the US. towns/cities have no budget or power on their own. that's all delegated from the state, analogous to allowing VP's access to their company's credit line. since it's (literally) a ward of the state, the responsibility for debts also fall on the state in cases of insolvency of the municipality.
note that state and local muni bonds are the same thing--borrowing against a state's future tax earnings (often at great cost).
