Tax Giveaways to Corporations†
The deepening federal and state budgets are causing cuts that affect the most defenseless and least powerful of Americans. That, of course is the direct consequence of plutocracy -- rule by the wealthy. Their ownership and control of the nation's private assets is growing while the poor and middle class are losing. The latest figures show wealth inequality is growing in America and is the worst in the western world.
If you've been reading the newspapers, you can see that the budget cuts are reducing health, education, housing, and many critical services for children. Safety programs are losing out. However, prisons are doing well, along with the welfare programs for the corporations.
Our politicians, with few exceptions, are not demanding that the cuts start FIRST with the corporate welfare programs and corporate tax escapes costing the country hundreds of billions of dollars yearly.
California is one -- albeit big -- example. Facing a deficit of over $25 billion this year, the state and its cities are being squeezed. Oakland and Alameda County are paying Al Davis' Oakland Raiders NFL football franchise $25 million a year to service bonds issued to renovate the stadium and lure the Raiders from Los Angeles.
Oakland pays the $12.5 million of this sum. By contrast, the annual budget of the city's library system is about this dollar amount and is facing sharp cuts. The Raiders only play 10 games a year there (including exhibitions) which hardly produce many jobs. To make matters worse, Al Davis is also suing Oakland and the County for $1.1 billion claiming they promised to guarantee a full stadium for every game. Imperiously, Davis orders television blackouts when the game is not sold out 72 hours before kickoff -- an insensitive way to treat the taxpayers.
Corporate draining of the defenseless can be very direct. Pressuring or buying local officials to give tax abatements and other giveaways, these companies don't even care when the losers are public school children. In a brand new report prepared by "Good Jobs First" -- a non-profit group, called "Protecting Public Education from Tax Giveaways to Corporations," data from the 50 states showed that letting companies off the property tax hook costs the schools who rely on that revenue much money. One hundred million dollars in Ohio alone!
The same game of tax escape is played with ruthless precision in all the states. Companies dangle office buildings, hotels, retail chain stores or factories before state development agencies and ask for bids. The bids are a race to the bottom for exempting or abating these companies from paying their fair share to support the communities' services as do workers, homeowners, small businesses and others.
These companies are shameless freeloaders, not free enterprisers. They say they want good schools for their labor force and a good community for their employees, but they participate in depleting school budgets through their avaricious demands for more corporate welfare.
In conjunction with the National Education Association, Greg LeRoy, director of Good Jobs First, and author of the report, made three recommendations. First, improve disclosure of subsidies and enforce "clawback" provisions that require returning the subsidies given to developers "who have failed to meet their promises on jobs, wages, or capital investment."
Second, give school boards a formal say, with veto power, over subsidy decision-making.
Third, state governments should "prohibit the abatement or diversion of the school portion of property taxes." Today, only two states shield school funding from these subsidies.
Only two states enable school boards of elected members adequate participation in decisions about tax abatements and the diversion of tax increment financing.
Call or write Greg LeRoy (1311 L Street, NW, Washington, DC 20005) to find out where the corporate freeloaders are in your area so you can let them know that you know what they have gotten away with. This knowledge has many uses, including charity drives when these companies are asked to give to local charitable causes.
Ralph Nader is Americaís leading consumer advocate. He is the founder of numerous public interest groups including Public Citizen, and has twice run for President as a Green Party candidate. His latest book is Crashing the Party: How to Tell the Truth and Still Run for President (St. Martinís Press, 2002)