ClawBack details tax bias for big business ...
Big-name economist tells Congress to geonomize
| Was Congress listening? One hopes so. Dr. Galbraith was speaking sense. We trim, blend, and append four 2011 articles, three from Clawback, the newsletter of Good Jobs First, on (1) Feb 23 about Walmart by M. Lee; (2) Mar 1 about Oregon by Jon Bartholomew (of OSPIRG); and (3) Mar 3 about Chicago by M. Lee; and one from (4) Huffington Post, Mar 8, on testimony before Congress on tax reform by James K. Galbraith (University of Texas at Austin). |
by M. Lee, by Jon Bartholomew, and by James K. Galbraith
- Walmart Tax Avoidance Exceeds $400 Million Annually
Walmart’s US operations steer more than $400 million a year, unscathed, through a variety of tax loopholes, according to a report released by Good Jobs First, Shifting the Burden for Vital Public Services.
Walmart:
* wins property tax abatements, tax increment financing, infrastructure assistance, and other forms of economic development subsidies that in recent years have amounted to roughly $70 million annually;
* for collecting sales taxes from their customers, claims the “vendor discounts” some states provide to large retailers -– to the tune of about $60 million a year;
* deducts rent payments made to itself (to its real estate investment trust), avoiding an estimated $300 million a year in state corporate income tax payments; and
* challenges its assessments, chipping away at its property tax bills.
To see the whole article, click here .
JJS: From one firm’s tax favors from states in general to one state’s favors for firms in general.
- Advances in Oregon’s Disclosure
How much Oregon state revenue is being used for corporate subsidies? We can get big picture about each tax loophole from our Tax Expenditure Report (TER), but it only tells part of the story. In the next biennium, tax breaks for businesses for the purpose of economic development come to at least $600 million.
One of the largest and most controversial of these tax expenditures is the Business Energy Tax Credit (BETC). Besides the BETC program, there are hundreds of millions of dollars that go to corporations in the name of economic development, recipients which the state does not identify.
Transparency is certainly not the silver bullet to ensure the state spends money in the most effective ways, but it is a powerful tool for accountability, since sunlight is the best disinfectant.
To see the whole article, click here .
JJS: From one state’s tax favors for big business to one city’s favors for influential firms.
- Shining A Light On $1.2 Billion In Chicago TIFs
A new analysis of the $1.2 billion Chicago has awarded in Tax Increment Financing (TIF) over the past 10 years has found that much of the money has been gone to large corporations and other institutions operating in thriving neighborhoods, not struggling businesses in blighted areas.
About $600 million went to private sector entities, accounting for the largest share of the $1.2 billion. These included subsidies to companies like United Airlines [struggling Chicago finds $25 million for United Airlines] ($31 million), USG Corp. ($7 million), and NAVTEQ ($5 million).
Some $100 million was used to lure companies to the city or to discourage them from leaving. In many cases, subsidies went to big box retail stores that supplanted small businesses. Target received at least $18.5 million at five locations throughout the city.
Housing developments received $340 million in subsidies. Some housing developers used TIF money to create luxury condos. Other TIF deals have been documented to actually create blight.
Another $200 million went to non-profits, hospitals, and cultural institutions like the Chicago Symphony Orchestra. Many of these non-profits have enormous philanthropic bases. Numerous hospitals in Illinois are under scrutiny as to whether they ought to remain tax-exempt.
The study was conducted by journalism students at Columbia College in Chicago. They had to undergo arduous and expensive Freedom of Information Act Requests to collect the information. Chicago has yet to shed light on how taxpayer money is spent, required by its 2009 sunshine law.
To see the whole article, click here .
JJS: If we got rid of taxes, we could get rid of tax loopholes. What would we replace taxes with? With land dues. Each landowner would owe as much as the annual rental value of their location, without exception. However, instead of getting a tax break or subsidy, each resident would get back an equal share of all the recovered rents. For anyone who has little income yet owns a pricey site, this “rent” dividend would make the land dues easy to pay.
Some professors urge Congress to take steps in the geonomic direction.
- Galbraith’s Testimony on Sensible Tax Reform
On the question of deficits, I attach a brief statement by Economists for Peace and Security:
“Eliminating waste in government spending is desirable. But that is not what the House proposes; indeed the House budget failed to address the largest waste in federal government, namely in the military, and the House failed to remove our most egregious subsidies, such as to oil companies.”
Considering tax reform, should we tax capital, labor — or rent? There is also no shortage of capital in our economy. As Mason Gaffney [member of the Forum on Geonomics] wrote: “The key to making jobs is changing the use and form of capital we already have. Tax preferences for property income, in their present and proposed forms, bias investors against using capital to make jobs, doing more harm than good.”
As a general rule fixed assets -- notably land -- should be taxed more heavily than income. The tax on property is a good tax, provided it is designed to fall as heavily as possible on economic rents. Taxes aimed at land rent and mineral rents and at “absentee landlords” do not distort business decisions.
An important question is how to treat the “quasi-rents” due to new technology. A small number of innovators and patent holders have become an oligarchy of never-before-equaled wealth. The incentive for innovation is an important public policy objective. But it does not require today’s vast prizes. And it does not require that those prizes escape tax indefinitely.
Plus, a tax on energy or on carbon would make a good substitute for the payroll tax, especially if it were designed to hold working families harmless, while increasing the incentives for conservation facing companies, retirees, and those with non-labor incomes.
To see the whole article, click here .
JJS: For somebody thinking within the box, his thoughts were pretty good! Overall, definitely in the right direction. I wonder, though, if we’re to have a popular movement if we need to dispense with the technical details and propose something dramatic and captivating, like a Citizens Dividend.
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Editor Jeffery J. Smith runs the Forum on Geonomics.
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Also see: Disclosing Who Gets Government Favors
Whole foods show just the opposite
UK call for reforming European CAP farming subsidies |
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