Gov. Scott Walker announced Monday an aid package that will provide a Milwaukee-based tool company with up to $18 million in tax credits to create jobs, but some say the jobs might have been created anyway.
The goal of the tax credit is to incentivize Milwaukee Tool to create nearly 600 new jobs over the next five years, Steve Michels, WEDC spokesperson, said. In addition to the creation of new jobs, Milwaukee Tool will also have to retain the 800 people they currently employ in order to get credit.
“Milwaukee Electric Tool needs to earn those credits and the way they earn them is through job creation and capital investment,” Michels said.
The expected boost in jobs comes from Milwaukee Tool’s $35 million investment to expand its Brookfield facility by 200,000 square feet, Michels said. The $18 million is available because of WEDC’s Enterprise Zone Program, which Milwaukee Tool qualified for. The Enterprise Zone Program is a designation for companies that have a large economic impact in Wisconsin.
Milwaukee Tool is a manufacturer that develops heavy-duty power tools and hand-tools. Milwaukee Tool group president Steve Richman said in a statement the company has a history of being a driver of economic growth.
“Milwaukee Tool is dedicated to driving growth and creating new jobs in Wisconsin, and throughout the United States,” Richman said.
While all new jobs are good, Andrew Reschovsky, University of Wisconsin applied economics professor, said there is not strong evidence to indicate that tax credits actually lead to new jobs. He said the company may have created the jobs anyway, without the tax credit.
It is also unclear why a government subsidy is appropriate for Milwaukee Tool, specifically, Steven Durlauf, UW professor of economics, said.
Michels said Milwaukee Tool chose Wisconsin to invest in. It is not clear whether the tax credit incentive influenced this decision.
Despite the uncertainties, Reschovsky and Durlauf said the tax credit is likely to help Milwaukee Tool because of the cost benefits.
But Reschovsky said the taxpayer dollars could be used in better areas like the University of Wisconsin System, public education, Medicare or building roads.
Walker said in a statement Monday the investment in Milwaukee Tool will help to continue a pattern of economic growth in Wisconsin.
“More people are working, fewer are unemployed and our businesses continue to grow throughout the state,” Walker said. “We’re happy to be here in Brookfield today to celebrate the expansion of Milwaukee Tool and work with them to provide state income tax credits for employee retention, job creation and capital investment.”
