Corporate tax breaks cost U.S. schools
billions of lost revenue: report
Send a link to a friend
[December 04, 2018]
By Hilary Russ
(Reuters) - Corporate tax subsidies, in the
spotlight again after Amazon.com Inc's <AMZN.O> secretive quest to find
a site for its second headquarters, are costing American public schools
big money, a report will say on Tuesday.
In fiscal 2017, U.S. public schools lost $1.8 billion across 28 states
through corporate tax incentives over which most schools themselves had
little or no control.
The 10 most affected states could hire more than 28,000 new teachers if
they were able to use the lost revenues, according to a report to be
released by Good Jobs First, a left-leaning Washington think tank.
The report comes amid increased taxpayer scrutiny of such deals in the
wake of Amazon's nationwide, year-long search for its "HQ2" site.
Though conducted mostly in secret, the search was still a public
spectacle, pitting state against state in a bidding war and raising
questions about transparency and the efficacy of such subsidies for a
company run by the richest man in the world.
Amazon decided last month to build two new headquarters at $5 billion
each in New York City and Arlington, Virginia, saying it will hire up to
50,000 people altogether.
States and cities have long used abatements, subsidies and other tax
incentives to lure companies, keep them from leaving or encourage them
to expand.
Such deals are meant to boost development and investment, and proponents
of the agreements say the lost tax revenue is worth it because they grow
local economies.
But it can be hard to know if the benefits outweigh the burdens, and
until recently it has been difficult to discern how much one entity lost
because of another entity's tax breaks.
However, a new governmental accounting rule issued in August 2015 now
requires local U.S. governments to report how much money they lose on
corporate tax breaks for development projects - their own, or another
nearby governmental entity.
Good Jobs examined the first full year of reporting for most of the
school districts, which are particularly affected because most of their
revenues come from property taxes - yet they usually have little
influence over subsidies granted by the cities or counties where they
are located.
[to top of second column]
|
A school bus is shown in Rancho Bernardo, California May 12, 2016.
REUTERS/Mike Blake/File Photo
"Cities say they care about economic development, but then they end
up granting subsidies in a way that cuts out control by school
boards, parents and others," said Good Jobs' Scott Klinger, who
authored the report.
Good Jobs reviewed financial reports from fiscal 2017 for more than
5,600 of the nation's 13,500 independent school districts.
Of the five districts that lost the most, three are in Louisiana.
Together, they lost more than $158 million, or at least $2,500 for
each student enrolled.
More than half of the districts did not report any such losses - in
many cases because the new accounting rule appeared to have been
"simply ignored," the report said.
In Oregon's Washington County, Intel Corp <INTC.O> and Genentech Inc
[ROGING.UL] have both been getting a property tax exemption on
capital projects for years. Its Hillsboro School District lost
nearly $97 million in fiscal 2017, more than any district in the
country, the report found.
The School District of Philadelphia, which only last year regained
control from state officials after climbing out of a deep fiscal
crisis, lost the second most revenue at $62 million.
Schools' lost revenues are often offset by state funding formulas,
but "they seldom make school districts anywhere near whole" and are
ultimately "a transfer of money from districts with few abatements
to those where abatements are common," the report said.
(Reporting by Hilary Russ in New York; Editing by Lisa Shumaker)
[© 2018 Thomson Reuters. All rights
reserved.]
Copyright 2018 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|