Teachers Versus Tax Breaks
Some teachers are fed up with corporations taking money out of classrooms.
|Pat Garofalo||Aug 27, 2019|
Here's a back-to-school story for you: Public school teachers in Columbus, Ohio, recently agreed to a new contract, thus averting a strike they had voted to authorize. While some of their demands matched those of other U.S. teachers who have threatened or undertaken strikes in recent years — better pay, smaller classes, more support staff, and more resources going to students — another complaint they had was that the city gives away too many tax breaks to local corporations:
[Columbus Education Association President John] Coneglio took particular aim at CoverMyMeds, a Columbus-based health care software company that was acquired in 2017 for $1.3 billion. Coneglio says CoverMyMeds and its downtown headquarters will avoid more than $50 million in property taxes thanks to the abatement it received from the city.
“We cannot continue to return time and time again to individual taxpayers to shoulder the burden of funding our schools while the richest among us don’t help push the cart,” Coneglio says.
Columbus is not the first place in which public school teachers are highlighting the link between tax breaks and school budgets: Cincinnati, Philadelphia, and East Baton Rouge have all seen versions of the same protest.
Why has this become such a point of contention? Well, property taxes are one of the main sources of funding for cities and states — comprising more than a third of total revenue — so they’re also one of the main avenues for tax giveaways. In fact, about 70 percent of corporate tax subsidies come from property tax reductions.
Sometimes this is accomplished via a direct tax cut; for instance, a city will say that if a company moves within its borders, it doesn’t have to pay property taxes for a set number of years. Sometimes it’s more indirect, using what’s known as tax increment financing — which is a setup in which property taxes are diverted away from a town’s general fund and toward benefiting a particular area or company — or other mechanism.
The end result is the same, though: Less property tax revenue for a city to spend on stuff. And therein lies the issue, because property taxes are also the primary way schools are funded in America. (Which is dumb, but it’s the system we have at the moment.) Every dollar doled out in property tax breaks to some big company is one less dollar that can be put into the classroom.
This is no small chunk of change we’re talking about. According to a report from Good Jobs First, schools lose a collective $1.8 billion annually to corporate tax giveaways in the U.S. That’s an undercount, too, because many states and school districts don’t disclose how much corporate tax breaks cost them, even though they’re supposed to.
So at least $1.8 billion that could have bought textbooks, hired teachers, or installed air-conditioning in sweltering schools was instead diverted into the pockets of CEOs and big developers.
Tax breaks undermining schools is something teachers have been highlighting for a long time — here’s an article from 1991 that reads like it could have been written this week — but those calls are more urgent today in an era of shrinking school budgets and growing reliance on subsidy schemes and other tax nonsense to spark economic development.
In certain places, though, educators can do more than just make hay about this. For instance, thanks to a reform put in place by Democratic Gov. John Bel Edwards, school boards in Louisiana are able to vote on the share of tax breaks that would affect their budgets. Earlier this year, in the aforementioned East Baton Rouge, teachers and activists stopped a property tax break for Exxon by convincing the school board to vote it down.
Some other states, including Minnesota and Texas, give local school boards similar powers to say no to tax breaks that pull money out of their classrooms, in certain circumstances. It’d be great if more states did the same, and if those who have the power already actually use it.
Alas, in Columbus the city refused to deal with its tax break issue in the new contract, so it’s still hanging out there. But the attention paid to the problem was worth something, and the teachers insist they’re going to keep hammering away. By doing so, they’re providing an education that will benefit far more people than just the students in their classes.
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