CORPORATE TAX GIVEAWAYS TO AMAZON COULD COST PUBLIC EDUCATION

CORPORATE TAX GIVEAWAYS TO AMAZON COULD COST PUBLIC EDUCATION
CORPORATE TAX GIVEAWAYS TO AMAZON COULD COST PUBLIC EDUCATION

BY: JIMMY VAN BRAMER

 

TODAY, December 10th, Council Member Jimmy Van Bramer is highlighting a new report by Good Jobs First, a DC-based watchdog group on economic development incentives, that sheds light on how tax breaks for corporations—like the nearly $3 billion in tax cuts and subsidies included in the Amazon HQ2 deal—can cost public schools millions of dollars in revenue.

In the newly released report titled The New Math on School Finance: Adding Up the First-Ever Disclosure of Corporate Tax Abatements’ Cost to Public Education, Good Jobs First examined Comprehensive Annual Financial Reports of more than 5,600 school districts across the country and found that “schools in 28 states lost at least $1.8 billion over the last fiscal year as a result of corporate tax subsidies.”

Of the “States with the Greatest Disclosed Losses to Abatements,” New York disclosed a loss of $322,225,413 in subsidies across 402 school districts—the highest sum in the nation. Based on this disclosure, Good Jobs First calculated that 3,934 teachers could have been hired using the revenue that was lost to corporate tax abatements.

The illuminating report was conducted in advance of the Amazon HQ2 announcement, but directly addresses critical information related to corporate deal-making with elected officials:

Surveys of corporate leaders consistently find that the availability of a well-trained workforce is a leading factor in facility siting and investment decisions, almost always far more important than the availability of economic development subsidies. That is especially true during times like these when unemployment is low, and it is projected to remain critical as the Baby Boom generation finishes retiring. Thus, when elected officials hand out subsidies that undermine local school finances, they are shortsightedly undermining the very economic development that taxpayers want to support.

“This report is disturbingly relevant to the corporate tax breaks included in the Amazon deal. It makes clear that corporate leaders choose their site locations based on the availability of a skilled workforce, not the availability of tax breaks, and that New York schools have already lost millions of dollars in revenue because of similar corporate tax breaks. The nearly $3 billion in corporate welfare handed to Amazon by our City and State was completely unnecessary and will only work to deflect more funding away from public education and other vital community services. How about instead of giving away billions of dollars in tax revenue to a trillion dollar company, we use that new revenue to hire more teachers, reduce class size, and invest in the students of Long Island City,” said Council Member Jimmy Van Bramer.

The report does not include specific statistics for New York City because the City “reports its total corporate tax abatement losses, but is not required to, and does not, break out how these losses affect school funding.” That is, unlike upstate, the City’s school districts are not independent of the City itself.

“It is hypocritical of Amazon to choose a location, praise its excellent workforce, and then try to drain the public treasuries that support schools, community colleges and universities. New York’s public schools and universities are terrific economic development assets that taxpayers are right to defend. Great schools make for a great business climate,” said Greg LeRoy, Good Jobs First’s executive director.

“Politicians often like to claim that incentives pay for themselves, often with ratios like a 9:1 incentive to tax return. Academics are very critical of these claims and the majority of studies find that incentives cost communities. These costs tend to either be an increase in taxes or a reduction in services. Different communities fund these programs in different ways, but the recent Good Jobs First report makes clear how damaging these programs are to schools,” said Nathan Jensen, a University of Texas professor of government and the author of Incentives to Pander: How Politicians Use Corporate Welfare for Political Gain. “Most research indicates that incentives are given to companies that were coming anyway. In the case of HQ2, Amazon may have come for substantially less incentives, or even zero incentives. The Governor and Mayor’s claim that they perfectly priced this deal and didn't pay a penny more than necessary isn't credible. We have decades of research showing that the vast majority of companies would have relocated for zero incentive dollars.”

 

Link to the full report:

https://www.goodjobsfirst.org/sites/default/files/docs/pdfs/newmath2.pdf

 

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