MADISON (WKOW) -- State taxpayers will cover 17 percent of the salaries Foxconn pays to its employees at the LCD panel manufacturing facility it plans to build in Racine County.
The state will also cover 15 percent of all capital investment made by the company, for the construction and development of its facilities.
The salary compensation would be paid for with up to $1.5 billion in job creation tax credits, while the construction would be paid for with up to $1.35 billion in capital investment tax credits.
In order to receive the full $2.85 billion from the state, Foxconn would have to create and maintain 13,000 jobs and invest $9 billion of its own money in the project.
Those are some of the terms the Taiwanese electronics giant negotiated in a contract approved by the Wisconsin Economic Development Corporation (WEDC) Board of Directors Wednesday afternoon.
The job creation tax credits equal 17 percent of wages for all eligible full-time employees, paid out over a 15-year period.
WEDC Secretary Mark Hogan said other large Wisconsin employers that receive job creation tax credits, such as Amazon and Milwaukee Tool, see just 7 percent of their employee wages covered by the state.
An employee is considered full-time under the Foxconn contract, if they earn between $30,000 and $100,000 each year.
The company must also maintain an average salary of $53,875 in order to qualify for those credits, although Secretary Hogan said board members could still award the credits if the average salary is close to that amount.
Secretary Hogan said such a decision would have to be based on "common sense."
The company must also create and maintain a minimum number of jobs in a given year to receive job creation tax credits, ranging from 260 in 2018 to 10,400 from 2027 through 2032.
In order to receive the full $1.5 billion, Foxconn would have to create even more jobs, ranging from 1,040 in 2018 to 13,000 per year from 2022 to 2032.
The contract would pay out the capital investment tax credits in 7 annual payments of $193 million, from 2019 through 2025, again assuming Foxconn created and maintained a certain number of jobs in each of those years.
There are also provisions in the contract that would require Foxconn to pay the state back if it failed to meet certain conditions.
Foxconn would have to pay back 100 percent of any money it receives in the first five years of the contract, if it does any of the following:
- Supplies false or misleading information
- Leaves the area/state to conduct the same business elsewhere
- Ceases operations here and does not restart within 12 months.
- Fails to maintain employment and capital investment levels as required in the contract through 2032.
After the first five years, Foxconn would only pay the state back if its total number of jobs falls below 5,850 in 2023, and below 6,500 jobs between 2024 and 2032.