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Posts Tagged ‘funding equity’

Krugman’s Bottom Line: To Create Jobs in America, Create Jobs in America… Don’t Wait for Businesses to Do It Because You Gave Them a Tax Break

April 11, 2021 Leave a comment

Earlier this week NYTimes op ed writer and Nobel economist Paul Krugman offered a positive assessment of Joe Biden’s approach to job creation and yet another disparaging assessment of trickle down economics. Dr. Krugman’s  bottom line on job creation is summarized in his last two penultimate paragraphs:

The corporate tax plan, then, looks like a really good idea. In part that’s because President Biden, unlike his predecessor, has hired people who know what they’re talking about. And it also marks a welcome break with the ideology that says that the only way we can help American workers is indirect action: cutting taxes on corporations and the wealthy in the hope that they’ll somehow deliver a pot of gold at the end of the rainbow.

What the Biden team seems to have concluded, instead, is that the way to create jobs is to create jobs, mainly through public investment, rather than by chasing unicorns and leprechauns.To the (partial) extent that direct job creation must be paid for with new taxes, the new taxes should be imposed on those who can afford to pay.

This seems to be a very simple equation: create government jobs and pay for them with taxes raised on those who can afford it most. Why, you might ask, has this not been done of late? Because everyone who ran for President from Michael Dukakis onward based their platform on the same assertion… the Reagan credo: GOVERNMENT is the Problem. And what has four decades of giving corporations tax breaks given us? A yawning gap between the rich and poor, a class of individuals (like the former President) who inherited great wealth and used it to secure endless power, and a set of awesome jobs like those described in the Lego Movie.

“Mind Melting” Data Point: Public Education Lost Nearly $2,400,000,000 to Abatements for Businesses in 2018-19… And That’s from Only 27 States!

April 9, 2021 Leave a comment

In the Public Interest’s Jeremy Mohler interviewed Christing Wen, planning/fiscal policy coordinator of Good Jobs First, a national think tank that studies state and local job subsidies, including corporate tax breaks and one of the authors of Good Job First’s new study, Abating Our Future: How Students Pay for Corporate Tax Breaks. He leads the blog post that includes his interview with this:

The topline fact in Abating Our Future is mind-melting. School districts nationwide lost nearly $2.4 billion to corporate subsidies in fiscal year 2019. That’s money meant for students that ended up in the pockets of Amazon, Tesla, and other corporations.

And that’s based on data from only 27 states. In the other 23 states plus Washington, D.C., (which should be a state), school districts fail to disclose any meaningful information about how much money they’re losing to corporations.

Last week sure was a doozy for those of us who think corporations should pay more in taxes. The Institute for Taxation and Economic Policy (ITEP) also released a report revealing that at least 55 of the largest American corporations paid no federal income taxes on their 2020 profits.

How can we adequately pay for public goods, things we all rely on like public health and clean water, without raising taxes on those who can afford it? We simply can’t.We desperately need a more progressive tax system.

As noted in earlier blog posts frequently, the impact on school funding that results from Payments in Lieu of Taxes (a.k.a. PILOT) agreements is clearly harmful and the notion that it cannot be avoided in order for a community to attract business is shameful, especially when those same businesses seek subsidies from the State and Federal government at the same time. The only clear beneficiaries of PILOT agreements are the shareholders of the corporation and, in all probability, the highest paid executives whose salaries are based on earnings.

And how much districts are losing from PILOTs? Christine Went reports that one hundred and forty-nine districts reported having foregone more than $1,000 per student… and those districts tended to be the ones who serve the neediest children.

And here’s what’s even worse: the abatements don’t demonstrably improve employment nor are they really necessary! Christine Wen:

A lot of times, tax incentives create no net new jobs. They just shift the existing jobs or investments from one locality to another, sometimes within the same metro area. It’s a zero-sum game. Even if growth happens, it often can’t be traced to the incentives.

Taxes are just too small a fraction of a typical company’s expenses for abatements to be the decisive factor in where to relocate or expand. A company may choose its location regardless of the subsidies offered.

Basically, subsidies are often wasteful, and places do fine without them.

These abatements, like trickle down economics favored by anti-government libertarians, assume that business’s largesse and the “rising tide” of the local economy will offset the short term tax losses. Absent hard data on the issue, the public relies on anecdotal evidence, like a business that donates $10,000 to a school to help them get laptops. What the public fails to read about is how much that corporation benefitted from the tax breaks they received at the local level…. and it makes $10,000 look like chump change.

Here’s hoping that Congress will close the loopholes on corporate taxes and use those funds to shore up the infrastructure… including the dilapidated public schools that exist across the nation while corporate campuses get new roads and sewers.

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In GA, Democracy Wins Either Way! Corporate Support for Voting Rights Helps Democracy… Corporate Support for Voting Rights Could Increase Public Funds if GOP Keeps its Promise and Raise Corporate Taxes… Which Would ALSO Help Democracy.

April 7, 2021 Leave a comment

A recent NYTimes article on the quandary corporate leaders face in Georgia downplayed the impact of the Delta and Coca Cola CEOs on democracy in general…. and in doing so downplayed the pickle the GOP finds itself in for supporting legislation that is clearly undemocratic and rooted in lies. 

As the title of this post indicates, the ultimate winner in the fight over voting rights is democracy. The laws the GOP passed to make it difficult to vote were so clearly anti-democratic that businesses could not abide their passage or the impact they might have on their workforce. In response to pressure from civil rights and religious leaders in their home state of Georgia, the CEOs of Delta Airlines and Coca Cola who are headquartered in Atlanta issued public statements expressing general support for voting rights. When a bloc of black business leaders joined a bloc of moral and civic leaders in Georgia and across the country, both Delta and coca Cola denounced the passage of Georgia’s law and the local Atlanta businesses were joined by over 100 national corporations AND Major League Baseball in denouncing Georgia’s law. 

The GOP pushback was swift and predictable: they objected to businesses interposing their new “woke” ethos into politics and threatened to retaliate in some form. But how that would work is unclear. Would they, for example, support higher taxes for businesses the Democrats are seeking to address infrastructure upgrades? If not, what would they do with the revenues from those taxes? Would they impose regulations on those corporations to help address climate change? Would they support legislation to help workers unionize in “right to work” states? would they work to repeal Citizens United so that corporations are no longer viewed as individuals? Given the track record of the GOP when it comes to supporting legislation businesses want it is difficult to imagine exactly what they will be able to do in terms of “punishment” without siding with the Democrats who tend to seek higher taxes, more regulations, and more wages, benefits, and improved working conditions. 

The only clear victor in this battle is democracy, because the brouhaha over voting rights is making it clear that laws designed to restrict voting are laws that undercut democracy and the recent efforts by the Democrats to modestly increase the taxes on businesses are designed to meet needs virtually every American supports but require funding to complete. Shifting the revenues from shareholders to the general public to help cover the costs of needed repairs would reinforce the role a democratic government can and should play.