Unjust, Complex System of Special Privilege Should Be Stopped
Corporate Tax Handouts Harm Public Schools, Says NEA Report
Do you believe that local and state governments are not allowed to run a budget deficit? Don't be too sure. When politicians search for ways to give taxpayer money to privileged corporations, they can get very creative. An increasingly common trick known as the corporate welfare TIF (tax increment financing) allows governments to give money, in the form of property tax exemptions, to whatever private corporations they choose. The government then pretends to imagine future property tax revenue increases that will eventually pay for the handouts.
Here is an announcement of a new report on this subject from the National Education Association.
A new study commissioned by the National Education Association (NEA) reveals that local policymakers nationwide are doling out tax breaks and other subsidies to corporations with little or no accountability. Moreover, these tax handouts often come at the direct expense of public schools, with school boards lacking any input in the decision.
“Our study shows that public schools are getting shortchanged by elected officials who give away the store to corporations in the form of tax subsidies,” said NEA President Reg Weaver. “Whether intended or not, these decisions hurt both schools and businesses in the long run. The fact is, a high-quality public school system benefits everyone in a community - especially the corporations that need highly skilled employees to succeed. For long-term economic growth, communities should invest in both their children and their businesses by investing in public schools.”
The 50-state study, Protecting Public Education from Tax Giveaways to Corporations, was performed by Good Jobs First, a nonprofit corporate and governmental accountability group. It found that:
These findings come at a time when policymakers in many states are searching for ways to deal with the worst budget crisis since World War II while providing public schools with the funding they need to insure that all children receive a quality education.
- Only two states shield public school funding from property tax breaks (abatements) and other property tax-based subsidies known as tax increment financing (TIF).
- Only two states give school boards full input in making decisions about these two tax subsidies.
- Many states do not even have adequate corporate disclosure requirements, making it hard for citizens to know how their tax dollars are being used.
“With the states’ fiscal crises squeezing vital services such as education, it is critical that school boards have a voice in protecting their revenue base,” said Greg LeRoy, director of Good Jobs First and principal author of the study. “We hope this study will help schools and school boards become full partners in the process of economic development.” “This is a time when policymakers, educators, corporations, and average citizens should come together to create a stronger economy and a stronger America so that all our children have the best future they can possibly have,” added Weaver.
An electronic (PDF) copy of the report is available here
The National Education Association is the nation's largest professional employee organization, representing 2.7 million elementary and secondary teachers, higher education faculty, education support professionals, school administrators, retired educators, and students preparing to become teachers.
There are better alternatives than corporate welfare TIFs. For example, if tax relief is a good thing, give it out to everyone, not just a privileged few. Land Value Taxation (LVT) would be far more fair and is completely revenue-neutral; no borrowing involved, no new bureacracy involved. See Dan Sullivan's summary Land Value Taxation vs. Tax Incremental Financing
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