Look who’s ten!
Dropped into the 2011 State Budget without public hearing or discussion (and providing a cautionary tale for the budget ahead), the manufacturing tax credit took effect in 2013 and is alive and well—and an abject failure. Originally billed as a boon to job creation, the results have been anything but. It is time to end this failed credit.
As shown by new memos from the non-partisan Legislative Fiscal Bureau, the years since the credit took effect have seen dramatically slower growth in manufacturing jobs. Coming out of the Great Recession, Wisconsin was adding manufacturing jobs at a rate of 2.4% per year. Since the costly and ineffective credit took effect, however, manufacturing employment has shrunk to a quarter of that rate, a paltry 0.45%.
Far from putting Wisconsin ahead of the curve, the now $393 million credit has Wisconsin manufacturers adding jobs at far less than the national rate, and 4th out of six upper Midwest neighbors. In fact, WI manufacturers added more jobs in the THREE years before this handout took effect than in the NINE years since they started qualifying for the credit.
Worse yet, as the credit has grown by an average of 9.9% per year, those reaping the benefit at taxpayer expense have increased weekly wages to their employees at less than 1/3 that rate (3.2%). That sorry statistic places Wisconsin at 37th nationally and second worst among 6 upper Midwest states.
By comparison, the vast majority of private employers who do not benefit from this credit largesse have increased weekly wages at a rate that ranks 19th nationally and 2nd best among six upper Midwest states. The tax credit actually depresses manufacturing growth and wages.
The manufacturing tax credit is a failed initiative, and should be removed from the 2023 budget bill. The tax credit proved not to be a solution for Wisconsin, but indeed, a problem. Ten years ago the idea took effect and has since failed miserably. Let’s not give this bad idea another birthday.
