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Archive for April, 2019

Loss of Federal Corporate Taxes is Small Potatoes Compared to Local Property Taxes

April 30, 2019 Comments off

Profitable Giants Like Amazon Pay $0 in Taxes. Some Voters Are Sick of It“, a recent NYTimes article by Stephanie Saul and Patricia Cohen, provides a series of human interest stories that reflect the way members of the public view the impact of corporate tax loopholes. Unsurprisingly, the majority of voters find it appalling that they are required to pay their fair share of taxes while a long list of corporations not only avoid taxes altogether, but also receive rebates. Amazon, the poster child for this reality, issued a factual but appalling fact to defend themselves:

In a statement, the company said it “pays all the taxes we are required to pay in the U.S. and every country where we operate.”

Left unsaid is that Amazon also works hard to ensure that the taxes they are “required to pay” are as low as possible. Mss. Saul and Cohen also offered this tidbit on GM, another company that paid no taxes, a tidbit that perfectly displays the deep flaws of the concept of shareholder primacy:

General Motors, one of the companies on the zero-tax list, recently idled a large plant near Youngstown that produced the Chevrolet Cruze, a decision that helped increase the company’s stock price even as G.M. paid no federal taxes on $4.32 billion in income.

The article makes no explicit mention of another problem of corporate taxes: not only do these large profitable corporations like Amazon and GM avoid paying FEDERAL taxes, they also receive huge tax breaks to locate their operations in cities that are struggling to fund basic services but who need the low-wage high-stress jobs to keep their cities and towns afloat. Here’s a paragraph on Akron, Ohio, whose mayor is taking to keep unemployment low and attract business:

Akron, about an hour west, is faring better economically. Mayor Daniel Horrigan won’t confirm or deny it, but Amazon is believed to be the company he has recruited to move into the old Rolling Acres Mall, which closed in 2008. Amazon would not comment on whether it planned to open a facility there.

An article by Doug Livingston in the Akron Beacon Journal describes some background on the deal struck by the mayor to secure Amazon, a deal that is described as “shrouded in secrecy“:

To acquire the land, the project developer used a private equity firm to pay $600,000 for 40 acres owned by the city and $16.5 million for seven privately owned lots, some of which sold for as much as $3 million an acre, according to county property records. In a deal negotiated by Mayor Dan Horrigan’s economic development team and approved by everyone on City Council but Zack Milkovich, Akron has agreed to refund the developer the $17.1 million cost for all the land through property tax rebates.

The net impact on taxpayers and government services is difficult to calculate. Essentially, the developer would be made whole over the next 30 years with reduced tax revenue from the property for the city’s schools and diverted tax revenue for the county’s libraries, developmental disability board, children’s services, metro parks, zoo and more.In exchange, Amazon promises $30 million in annual payroll for at least 10 years. The Beacon Journal/Ohio.com calculates that it would take 24 years to amass $17.1 million in income taxes from that minimum level of payroll, assuming Amazon’s corporate profits are paid somewhere other than Akron.

In the end, it’s a trade of property taxes supporting countywide services for income taxes and new jobs directly benefiting the city, plus the revitalization of a once bustling mall that sat empty and blighted for a decade.

Readers of this blog know that FoxConn offered essentially the same kind of “deal” in Wisconsin and after receiving the deeply discounted property prices and property tax cuts decided it wouldn’t be brining in the jobs it promised. And this seems to be standard operating procedure for corporations: they secure tax breaks in exchange for jobs and when those jobs don’t materialize the tax breaks remain in place.

I hope Akron has a different experience in the long run… but it is evident that for the short run they will have a spiffy new Amazon warehouse where a shopping mall once stood and less money for their “…city’s schools and diverted tax revenue for the county’s libraries, developmental disability board, children’s services, metro parks, zoo and more. Maybe the schoolchildren can take field trips to the warehouse and play in the empty parking lots when the jobs fail to materialize.

A Lesson in Economics 101: Teacher Pay Diminishes as Teacher Shortages Increase

April 27, 2019 Comments off

The Economic Policy Institute’s Sylvia Allegretto and Laurence Mishel just issued a report on teacher compensation that indicated the disparity between teacher’s wages and those of other college graduates just hit an all time high and appears to be widening. The result is unsurprising to anyone who took a basic economics course in high school or college:

The deepening teacher wage and compensation penalty over the recovery parallels a growing shortage of teachers. Every state headed into the 2017–2018 school year facing a teacher shortage (Strauss 2017). New research by García and Weiss (2019) indicates the persistence and magnitude of the teacher shortage nationwide:

The teacher shortage is real, large and growing, and worse than we thought. When indicators of teacher quality (certification, relevant training, experience, etc.) are taken into account, the shortage is even more acute than currently estimated, with high-poverty schools suffering the most from the shortage of credentialed teachers. (1)

And, as Ms. Allegretto and Mr. Mishel indicate, the states are not short of money:

Spending cuts over the recovery were not the result of weak state economies. Rather, many state legislatures and governors cut spending in order to finance tax cuts for the wealthy and corporations.

As corporate taxes diminish so do the revenues for public services and, again unsurprisingly, so does the quality of those services. Sadly, for children, education is no exception and so the quality and depth of the teaching pool is diminished.

Providing teachers with a decent middle-class living commensurate with other professionals with similar education is not simply a matter of fairness. Effective teachers are the most important school-based determinant of student educational performance.1 To promote children’s success in school, schools must retain credentialed teachers and ensure that teaching remains an attractive career option for college-bound students. Pay is an important component of retention and recruitment.

The report notes that teachers across the country are uniting and demanding higher pay, particularly in those states where the wage disparity is the highest. The report also examines the benefits teachers receive as compared to other college graduates and acknowledges that there is a favorable gap in that area. But even with that taken into consideration, the total compensation gap is wider now than it has been in any year since 1960!

In their concluding paragraphs, Allegretto and Mishel describe the compensation gap and its consequences, and note that any alternative compensation plans like performance pay will not solve the problem unless total compensation is increased:

It is good news that teachers are able to bargain for a total compensation package—though it seems they may have forgone wage increases for benefits recently: As we’ve documented, teacher wages have been stagnant since the mid-1990s; public school teacher weekly wages have not grown in the 22-year period from 1996 to 2018! This makes the wage penalty, on its own, critically important, as it is only wages that families can put toward making ends meet—only wages can pay for expenses such as rent, food, and student loan payments.

Raising the level of teacher compensation, including wages, is critical to recruiting and retaining teachers who have the qualifications associated with teacher effectiveness in the classroom. Policies that focus solely on changing the composition of current compensation (e.g., merit or pay-for-performance schemes) without actually increasing compensation levels are unlikely to be effective. Simply put, improving public education in this country—by preventing teacher turnover, strengthening retention of credentialed teachers, and attracting young people to the teaching profession—requires eliminating the teacher weekly wage and compensation penalty.

EPI’s research is thorough and even handed… and it’s results prove the laws of supply and demand. If you demean a profession, lower the compensation for that profession, and limit job security in that profession it is difficult to find employees.

Tennessee’s ESA Shenanigans Illustrate Why Delegating Education Policy to States is a BAD Idea

April 25, 2019 Comments off

A friend on Facebook shared a blog post from Momma Bear, a group of concerned Tennessee parents, grandparents, citizens, and– in a ll probability— teachers who are appalled at what is taking place in Tennessee. It seems that the Governor wants to get a voucher bill passed and in order to secure the votes he needed to do so was offering enticements to legislators if they voted in favor of his plan and threatening funding shortfalls for those who didn’t. The post describes how the House went from a 49-49 deadlock to a tie-breaking 50-48 vote on the voucher bill… and it seems that very few of the votes were cast in favor of the voucher policy itself… rather they were cast to secure funding for better roads and avoiding vengeance.

This is Lamar Alexander’s legacy for weakening the Federal policy guidelines and handing them off to the states…. and I rest my case for the flaws in the ESA legislation.

Defunding of Oregon Schools Good Proxy for National Phenomenon, a Phenomenon that Ultimately Destroys Democracy

April 24, 2019 Comments off

Beaverton OR Visual Arts Teacher Belle Chesler wrote an excellent op ed that appeared in Tom Dispatch titled “Defunding Children, A National Crisis of the Soul“. In the article Ms. Chesler provides mounds of compelling evidence supporting her thesis that the defending of public education is a national phenomenon that is eroding public education, one of our country’s bedrock institutions. Midway through her essay, Ms. Chesler homes in on the heart argument for defunding schools: money is not the solution.

There is a large disconnect between the lip service paid to supporting public schools and teachers and a visible reticence to adequately fund them. Ask almost anyone — save Secretary of Education Betsy DeVos — if they support teachers and schools and the answer is probably “yes.” Bring up the question of how to actually provide adequate financial support for education, however, and you’ll quickly find yourself mired in arguments about wasteful school spending, pension funds that drain resources, sub-par teachers, and bureaucratic bloat, as well as claims that you can’t just continue to throw money at a problem, that money is not the solution.

The next paragraph, Ms. Chesler offers this rejoinder, a response that resonated with me:

I’d argue that money certainly is part of the solution. In a capitalist society, money represents value and power. In America, when you put money into something, you give it meaning. Students are more than capable of grasping that when school funding is being cut, it’s because we as a society have decided that investing in public education doesn’t carry enough value or meaning.

As one who grew up in the post-World War II boom, I had a sense that the public DID support public education and DID hold out high hopes for our generation. I had this sense because new schools and additions were being constructed everywhere, we seemed to get new textbooks every year, there seemed to be new classes added to help us get into college, and we had more and more extra-curricular offerings. Education was clearly valued and was clearly meaningful to our parents and our community.

When I became a school superintendent in several Northeastern states, it was evident that my experiences in West Chester PA were not limited to that region. Regional High Schools sprung up throughout New England, New York, and Maryland during that same time frame and state colleges and junior colleges expanded shortly thereafter as our generation moved through the school systems. The message we got as students was that we mattered, that school was important, and people in the community cared about us.

Now that we can vote, though, my generation is not lending a helping hand to those behind us…. and, as Ms. Chesler notes, that is having a corrosive effect on the institution that drives democracy: the public schools. She concludes her essay with this call to arms to her colleagues in Oregon:

Public schools represent one of the bedrock institutions of American democracy. Yet as a society we’ve stood aside as the very institutions that actually made America great were gutted and undermined by short-term thinking, corporate greed, and unconscionable disrespect for our collective future.

The truth is that thereis money for education, for schools, for teachers, and for students. We just don’t choose to prioritize education spending and so send a loud-and-clear message to students that education doesn’t truly matter. And when you essentially defund education for more than 40 years, you leave kids with ever less faithin American institutions, which is a genuine tragedy.

On May 8th, educators across the state of Oregon are planning to walk out of schools. The action, a precursor to a strike, is a direct response to the inadequate funding in the upcoming state budget and a referendum on the continuing divestment in public education. Teachers like me will be stepping out of our classrooms not because we don’t want to teach, but because we do.

Already Oklahoma, West Virginia, and Arizona teachers have staged similar walkouts to good effect. MAYBE my generation is feeling some pangs of guilt and is ready to step forward to offer more financial support for schools. Time will tell.

Millions of Federal $$$ for Charters Wasted Since 2006. Note the Date, Please!

April 23, 2019 Comments off

Jeff Bryant, co-author of a recently released report from the Network for Public Education (NPE), wrote a post for Common Dreams describing Betsy DeVos’ most recent reaction to the report, which was an ad hominem attack of the writers. Mr. Bryant’s summarized Ms. DeVos’ reaction and the NPE’s response in this paragraph:

By denying, distracting, and personally attacking the report authors, she encouraged us to delve further into the evidence that much of the money awarded by the program went to charter schools that are, at best, bungling attempts to start up education businesses that should never have been financed to begin with or, at worst, scam operations that willfully intended to make off with taxpayer money and not suffer any negative consequences.

What I find particularly alarming after reading this post is that the easiest defense of DeVos COULD have been: “The waste, fraud, and abuse happened under the watch of previous administrations and I will be taking the following steps to correct this problem”… because almost all of the documented cases in the NPE report come from actions taken by the DOE under the Obama administration.

She didn’t say that… which means she does not care at all about the need to regulate for profit charter schools or the impact those schools have on the lives of parents, children, and community members.

But here’s what I find even MORE alarming: there are probably at least a dozen Democratic candidates who WILL defend charter schools using that line of reasoning.

My bottom line on charters is that they should be governed by democratically elected boards and subject to the same regulations as public schools.

Borderless Transnational Corporations are Ultimate Source of international Inequality, Demise of Democracy

April 22, 2019 Comments off

A few days ago I wrote a post decrying the 56 corporations that avoided paying taxes altogether. Shortly after writing that post, Common Dreams blogger Patti Lynn wrote a post underscoring that these corporations are part of a small group of multi-national enterprises whose allegiance is not to any country or any form of government— only to themselves and to profits. And in a series of paragraphs undertake heading “Abandoning the Common Good” she describes the impact of our government’s policy that kowtows to the demands of these companies:

It’s becoming more and more clear how our current economic and political system is failing to provide, take care of, and manage the resources and services we all need. Our aging water infrastructure is in dire need of public reinvestment. Public schools struggle mightily around the country. And in most places in the U.S. public transportation is not equitable, in need of major reinvestment, or doesn’t even exist.

Who bears the brunt of these failures? Well, certainly not super wealthy corporate and mostly white CEOs being driven in limos stocked with bottled water. Or celebrities and hedge fund managers bribing college coaches to get their children into Ivy League and other prestige-bestowing schools.

It’s the mostly Black folks in Flint and Detroit whose water is poisoned or shut off who are experiencing these systemic failures to the greatest degree. It’s people who rely on public transportation to get them to their hourly wage jobs—and who get docked pay or fired if they come in late because of a broken-down subway. It’s low-income families who do the best they can by their kids in resource-starved public K-12 schools.

Ms. Lynn goes on to note that “taxing the rich” will only get us part of the way toward our goal: we need to also examine the tax policies we have in place for these multi-national corporations. And, as the third paragraph below emphasizes, the recent tax laws are only making things worse:

But taxing the ultra-wealthy is only addressing half the solution. We must also apply the same scrutiny to corporations and enact policies that ensure corporations pay what they owe in taxes (not to mention what they owe in externalized costs). Sen. Warren’s new proposal is a welcome policy proposal in that direction.

The argument against doing so is that the U.S. already has too high of a corporate tax rate, and if we actually make corporations pay their fair share, more of them will move their headquarters somewhere else with lenient tax laws, offshore their profits, and/or take jobs elsewhere.

But the truth is, without effective regulation and enforcement, transnational corporations will keep gaming the system, no matter what. Today, few corporations paythe actual tax rate, which is now at 21 percent, down from 35 thanks to the 2017 law…

That’s why we need to take the system back. We need transformative, deep-seated changes where corporations do not get to write the rules and where people and our government hold them accountable.

This is the right time for this vision and demand for change. People across the political spectrum are outraged at our rigged system that is leaving them behind. To unrig the system we need to not only tax the ultra-wealthy. We also need to tax and hold accountable the driving force behind their wealth and our nation’s overall income inequality: transnational corporations.

If we want to provide the schools children needs, the clean air and water we all need, and the job security that makes for a strong democracy we need to reverse the actions of the past several months.

 

We’re Not in Palo Alto Any More

April 21, 2019 Comments off

An article by Nellie Bowles in today’s NYTimes describes the reaction of parents in Kansas when their school district decided to adopt Mark Zuckerberg’s Summit Learning program that relies more on Chromebooks than teachers…. and the reaction was NOT good!

“We’re allowing the computers to teach and the kids all looked like zombies,” said Tyson Koenig, a factory supervisor in McPherson, who visited his son’s fourth-grade class. In October, he pulled the 10-year-old out of the school.

In a school district survey of McPherson middle school parents released this month, 77 percent of respondents said they preferred their child not be in a classroom that uses Summit. More than 80 percent said their children had expressed concerns about the platform.

Oops! Well… maybe the problem was limited to a small rural district in Kansas!

The resistance in Kansas is part of mounting nationwide opposition to Summit, which began trials of its system in public schools four years ago and is now in around 380 schools and used by 74,000 students. In Brooklyn, high school students walked out in November after their school started using Summit’s platform. In Indiana, Pa., after a survey by Indiana University of Pennsylvania found 70 percent of students wanted Summit dropped or made optional, the school board scaled it back and then voted this month to terminate it. And in Cheshire, Conn., the program was cut after protests in 2017.

“When there are frustrating situations, generally kids get over them, parents get over them, and they all move on,” said Mary Burnham, who has two grandchildren in Cheshire’s school district and started a petition to end Summit’s use. “Nobody got over this.”

Oops again and again!
But here’s an imponderable. How would parents have reacted to the imposition of the factory school model when it was “invented” in the early 1920s? Would they have preferred the one-room school house model to the egg crate school? Would they have preferred a different form of grouping than the age-based cohorts imposed by efficiency minded administrators? And a final question: are the Silicon Valley CEOs imposing their way of thinking on future generations the same way that business-minded efficiency experts imposed their way of thinking on generations that followed?