Corporations Versus Classrooms

How corporate tax breaks entrench educational inequality.

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Members of the city council in Kansas City, Missouri, recently released data showing that corporate tax giveaways cost the city’s school districts an average of $650 per student per year. But that average doesn’t tell the whole story.

In the Kansas City public school district, the loss totaled more than $2,000 per student. 80 percent of the students there are Black or Latino, with most eligible for free or reduced cost lunch. In the Park Hill school district, the loss was $97 per student. 70 percent of the students there are white.

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The is the perfect example of how corporate tax giveaways can exacerbate and entrench educational inequality.

About 70 percent of corporate tax breaks are in the form of property tax reductions, and thus come right out of classrooms, since property taxes fund public schools. Remember the story of the Iowa school that lost $900,000 because of a tax cut for Facebook? Though the circumstances there were somewhat unique, the basic dynamic happens all over, all the time: Schools lose out in the name of economic development and job creation that may never actually occur.

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In only the places that bother to disclose corporate giveaways, which is far from everywhere, they cost schools about $1.8 billion annually. And incentive programs are often targeted explicitly at poorer neighborhoods, so schools that are already shortchanged by America’s absurd insistence on using land taxes to fund education get hit again when officials grant some of their already insufficient property tax revenue to a corporation.

Other cities likely face the same situation that Kansas City does, in which the poorest students bear the brunt of failed economic development efforts.

Two Kansas City council members have proposed legislation that would give local school boards the ability to weigh in on new property tax reductions, so at least schools wouldn’t be subject to the whims of lawmakers who aren’t as attuned to specific school budgets. This is similar to reforms Louisiana implemented in 2016 (and then partially rolled back) in an attempt to get a handle on its out of control corporate incentives, though Kansas City’s proposals have more restrictions and carveouts.

Giving school districts such power, generally, is a good idea. As I explained here, empowering local officials and residents to decide for themselves what resources get dedicated to big corporations brings a new level of accountability to a process that often has very little, and that provides those affected the most little influence. 

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For instance, in Philadelphia, a local school board recently rejected a set of tax breaks for Hilco to re-develop an old refinery, citing the company’s less-than-stellar history with other cities. Per the coverage, it seems unlikely that evaluation would have happened at other levels of the local government.

Giving school boards a say is doubly important now that they are having to deal with smaller budgets and increased costs thanks to the pandemic. It’s time to fund protective equipment for teachers and virtual learning tools for students, not siphon away resources via new corporate giveaways.

The proposal in Kansas City will come before the council again on September 16. If you happen to live there, call your city council member and tell them it’s a good idea!

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One more thing: I have a new American Economic Liberties Project paper out that examines the ways in which Facebook and Google harm local communities. Come for the discussion of data center subsidies, stay for the explanation of how Google meddles with how you find small businesses! Give it a read here.


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Finally, if you’d like to pick up a copy of my book, The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs, go here.

Thanks again!

— Pat Garofalo