Stealing Money from Kids

by RUSSEL MOKHIBER And ROBERT WEISSMAN

If there’s one thing that brings together the right and the left, and citizens and corporations, it is the importance of education — for stimulating the intellect, developing a moral sensibility, enhancing the civic culture, enabling a skilled workforce and creating a sense of community.

The question is: Who’s willing to pay?

Not big corporations.

They instead demand cities and states offer tax breaks before they will invest in new plants and facilities. Those tax breaks, frequently in the form of property tax abatements or what is called tax increment financing (TIF, a long-term diversion of certain areas’ property taxes to corporations investing in those areas), deprive schools of money.

Property tax breaks often directly siphon money away from schools, which rely heavily on property taxes as a revenue source. According to “Protecting Public Education From Tax Giveaways to Corporations,” a report issued last week by the National Education Association (NEA), local property taxes constitute 65 percent of all local education funding, and 29 percent of all school funding, including local, state and federal contributions.

Property tax abatements and TIF districts cost schools hundreds of millions of dollars a year, at least.

Case studies in the NEA report, which was conducted by Good Jobs First, the leading organization studying state and local business subsidies, show that abatements and TIF districts cost schools in Texas $52 million a year. Montana schools lose $16 million a year in revenues to business tax subsidies. Abatements and TIF reduced or diverted property tax revenue for Ohio schools by $102 million in 1999.

Poor reporting rules and the diversity of jurisdictions and tax revenues make it almost impossible to determine a total cost to schools from business tax breaks.

However, some estimates have tagged the cost of local and state subsidies to business as high as $50 billion annually. This is an estimate of the total cost, not just the amount borne by schools, and some states reimburse schools, in whole or part, for revenues foregone due to property tax breaks.

The NEA report offers three recommendations to redress the problem highlighted by the study. First, there should be improved disclosure of subsidies and enforcement of conditions attached to subsidies. Second, local school boards should have a formal say — up to and including veto power — over subsidy decisions. Third, states should prohibit the abatement or diversion of the school portion of property taxes.

This all seems logical enough to us.

What the report did not do was suggest what corporations’ role should be in these matters. Since corporations drive the “bidding for business” game, this is an important question.

Since companies so heavily emphasize the importance of a skilled workforce, shouldn’t corporations simply be willing not to ask for property tax abatements?

We decided to call up the U.S. Chamber of Commerce and find out.

We asked Marty Regalia, the Chamber’s chief economist: In light of the impact on schools, should companies stop seeking tax breaks from cities and states?

That proposal, he said, is “blatantly un-American.” (Yes, they really talk this way at the Chamber.)

No one forces cities and states to give tax breaks, he said. They are competing for a benefit — new investment — and they choose to enter the competition. If they think it is a bad deal, they are free not to offer tax breaks. “Local communities do not give away [tax breaks] at gunpoint,” he said.

There is some truth to Regalia’s point that cities and states are free to decline to offer tax benefits.

The problem, though, is not just that most government officials are spineless and/or indentured to business, but that there is an inherent difference in bargaining power between government and business. The companies have the power to decide where to locate. And even though most threats to move factories or offices are bluffs, in some cases, a tax break may influence a decision to locate in this town or the one next door.

However, property tax breaks and benefits virtually never determine whether or not a company of any size is going to undertake a new investment.

In the bigger picture, and based on the rules of the game, the outcome is always the same: the cities and states collectively lose tax revenues, the investing company always saves money that it would have been willing to pay in taxes on investments it would have made anyway.

This all comes at the expense of education, among other important government spending priorities.

The tax breaks are taking money from kids as sure as the schoolyard bully stealing classmates’ lunch money — just on a scale so large that few have been willing to call it by name.

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter. Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor, and co-director of Essential Action. They are co-authors of Corporate Predators: The Hunt for MegaProfits and the Attack on Democracy (Monroe, Maine: Common Courage Press, 1999.)

Like What You’ve Read? Support CounterPunch
September 01, 2015
Mike Whitney
Return to Crisis: Things Keep Getting Worse
Michael Schwalbe
The Moral Hazards of Capitalism
Eric Mann
Inside the Civil Rights Movement: a Conversation With Julian Bond
Pam Martens
How Wall Street Parasites Have Devoured Their Hosts, Your Retirement Plan and the U.S. Economy
Jonathan Latham
Growing Doubt: a Scientist’s Experience of GMOs
Fran Shor
Occupy Wall Street and the Sanders Campaign: a Case of Historical Amnesia?
Joe Paff
The Big Trees: Cockburn, Marx and Shostakovich
Randy Blazak
University Administrators Allow Fraternities to Turn Colleges Into Rape Factories
Robert Hunziker
The IPCC Caught in a Pressure Cooker
George Wuerthner
Myths of the Anthropocene Boosters: Truthout’s Misguided Attack on Wilderness and National Park Ideals
Robert Koehler
Sending Your Children Off to Safe Spaces in College
Jesse Jackson
Season of the Insurgents: From Trump to Sanders
August 31, 2015
Michael Hudson
Whitewashing the IMF’s Destructive Role in Greece
Conn Hallinan
Europe’s New Barbarians
Lawrence Ware
George Bush (Still) Doesn’t Care About Black People
Joseph Natoli
Plutocracy, Gentrification and Racial Violence
Franklin Spinney
One Presidential Debate You Won’t Hear: Why It is Time to Adopt a Sensible Grand Strategy
Dave Lindorff
What’s Wrong with Police in America
Louis Proyect
Jacobin and “The War on Syria”
Lawrence Wittner
Militarism Run Amok: How Russians and Americans are Preparing Their Children for War
Binoy Kampmark
Tales of Darkness: Europe’s Refugee Woes
Ralph Nader
Lo, the Poor Enlightened Billionaire!
Peter Koenig
Greece: a New Beginning? A New Hope?
Dean Baker
America Needs an “Idiot-Proof” Retirement System
Vijay Prashad
Why the Iran Deal is Essential
Tom Clifford
The Marco Polo Bridge Incident: a History That Continues to Resonate
Peter Belmont
The Salaita Affair: a Scandal That Never Should Have Happened
Weekend Edition
August 28-30, 2015
Randy Blazak
Donald Trump is the New Face of White Supremacy
Jeffrey St. Clair
Long Time Coming, Long Time Gone
Mike Whitney
Looting Made Easy: the $2 Trillion Buyback Binge
Alan Nasser
The Myth of the Middle Class: Have Most Americans Always Been Poor?
Rob Urie
Wall Street and the Cycle of Crises
Andrew Levine
Viva Trump?
Ismael Hossein-Zadeh
Behind the Congressional Disagreements Over the Iran Nuclear Deal
Lawrence Ware – Marcus T. McCullough
I Won’t Say Amen: Three Black Christian Clichés That Must Go
Evan Jones
Zionism in Britain: a Neglected Chronicle
John Wight
Learning About the Migration Crisis From Ancient Rome
Andre Vltchek
Lebanon – What if it Fell?
Charles Pierson
How the US and the WTO Crushed India’s Subsidies for Solar Energy
Robert Fantina
Hillary Clinton, Palestine and the Long View
Ben Burgis
Gore Vidal Was Right: What Best of Enemies Leaves Out
Suzanne Gordon
How Vets May Suffer From McCain’s Latest Captivity
Robert Sandels - Nelson P. Valdés
The Cuban Adjustment Act: the Other Immigration Mess
Uri Avnery
The Molten Three: Israel’s Aborted Strike on Iran
John Stanton
Israel’s JINSA Earns Return on Investment: 190 Americans Admirals and Generals Oppose Iran Deal