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Public school students in the U.S. suffered poorer schools—and local and state taxpayers paid higher taxes—in 2019 due to corporate tax breaks; economic development tax abatements given to corporations cost public school districts at least $2.37 billion in foregone revenue in FY 2019. This report presents case studies from schools in Louisiana, Missouri, New York, South Carolina, and Texas where schools are losing significant revenue to tax abatements. Additionally, this report makes recommendations to these states and offers suggestions to the Governmental Accounting Standards Board (BASB); these recommendations include capping the share of each locality’s property and sales tax base that can be abated in the name of economic development, giving school boards control to opt in or out of tax-break deals, requiring all governments that are making abatement agreements to report the costs of such deals to all affected jurisdictions, and more.
The City of Memphis has deliberately avoided its municipal pension obligations at the same time it has granted a series of costly property tax abatements, such as payments in lieu of taxes (PILOTs), to large corporations and sports franchises. For every year between 2009 and 2012, the revenues lost by Memphis to economic development subsidies exceeded the annual cost of funding the city’s pension system. This report outlines the burdens of PILOTs, and ultimately determines that Memphis’ spending on subsidy deals is eroding the revenues needed to adequately fund public services.
Tax incentives given in the name of economic development are the dominant form of spending for job creation in New Mexico; these types of tax incentives are also the least transparent and most poorly monitored. Thus, in response to New Mexico’s costly, ineffective, and insufficiently disclosed tax incentives, this report recommends the following changes: the state should ensure internet sales are taxed, adopt combined reporting for all multistate corporate entities, close the Locomotive Fuel Sales Tax Exemption, disclose online the costs and benefits of each economic development incentive deal for all its incentive programs, and more.
Over the past decade Nissan has created thousands of manufacturing jobs in Mississippi. While the company has spent considerable amounts of its own money, it has also received large amounts of financial assistance from taxpayers at the local and state levels. This report documents the varieties of economic development subsidies the company has been offered, including corporate income tax credits, rebates of withholding taxes, site preparation and infrastructure grants, training grants, and property tax abatements. It also reveals that in total, the value of the state and local subsidies offered to the company in Mississippi is $1.3 billion, which is considerably more than has been reported.
The Governmental Accounting Standards Board (GASB) Statement 77 requires most state and local government bodies, including school districts, to annually disclose the costs of corporate tax abatements. As a result of the new rule, thousands of America’s public school districts are reporting how much revenue they lose to corporate tax breaks granted in the name of economic development. This report examines the financial reports of more than 5,600 independent school districts and found that some school districts are losing significant sums of vital funding to tax abatements, and that abatement dollars, if redirected, could help restore better-quality education. Additionally, this report recommends that school districts should be mandated to adhere to the Generally Accepted Accounting Principles (GAAP) and publish their Statement 77 data, and that exclude school revenue from abatements.