Transcript The NEA’s Connecting the Dots Series:

TEF Lessons for Members and Citizens
Lesson 6
Investing in
Public Education
Pays
6-1
Objectives
Participants will:
• Learn the story behind our current
economic crisis;
• See how corporate tax cuts hurt public
education funding; and
• Review why investing in public education
provides more economic growth and a
greater investment return than tax cuts.
6–2
As a group can we agree that we will:
1) Respect and value differences of opinions
and varying levels of knowledge
2) Be attentive
6–3
The story begins with:
THE RELATIONSHIP
“The relationship between the
business community and public
schools is…”
6–4
A quality education
system depends on
a strong economy…
Because business
needs qualified
workers that
schools provide.
Because
education needs
business taxes to
fund schools.
A strong economy
depends on a quality
education system…
6-5
American business and public education:
Both face serious challenges
• Business: needs a highly skilled and
innovative workforce to compete in the
new global economy.
• Public Education: needs a modern
infrastructure and resources to attract and
retain a highly qualified workforce and
meet the needs of an increasingly diverse
student body.
6–6
What’s changed?
• The Economy. Knowledge-based. Now
the best investment is in human capital.
• Over 50% of teachers leave within their
first 5 years.
• Education funding isn’t keeping pace
with the increasing costs of education.
6–7
7
Percentage Increase per Year
16
14
Average U.S. Teacher Salary
and Inflation
12
10
8
6
4
2
0
-2
-4
Salary Increase/Decrease after Inflation
-6
-8
6–8
Professional Pay Gap
1960, 2000 & 2009
$33,223
$28,033
$13,927
NEA Research analysis of US Census Bureau data; Values adjusted for inflation (2010
dollars) using Bureau of Labor Statistics CPI calculator, available at:
http://data.bls.gov/cgi-bin/cpicalc.pl
6–9
9
Many of the current economic conditions
that are creating massive cuts in our
public education budgets, are a result of
the economic policy agenda implemented
in the 1980s:
•
Privatize
• Deregulate
• Cut Taxes/Shrink Government
6–10
Privatize
• Government outsourcing
Example: hire bus companies to run school
buses instead of hiring school board employees
directly.
Example: hire a corporation to run the school
cafeteria instead of hiring school board
employees directly.
• Tuition Tax Credits and Vouchers: Using
public dollars to fund private schools to
increase “competition”
6–11
Deregulate
• Governments removed, reduced, or
simplified laws on business.
• This resulted in less government
oversight.
• Think about the financial crisis and the
housing bust precipitated by lax
regulations.
6–12
Tax Cuts Really = Tax Shifts
1. From progressive to regressive taxes
2. Decreasing taxes on wealth and
increasing taxes on work
3. Taxing corporations less and taxing
individuals more
6–13
Trends in Effective State &
Local Income Tax Rates,
1980-2007
Corporate
Effective Tax Rate
Personal Effective
Tax Rate
Source: Bureau of Economic Analysis, National Income Accounts. Corporate profits from Table 1.12, “National Income by Type of Income;” Corporate income taxes paid to state and local governments from Table
3.23, “State and Local Government Current Receipts and Expenditures, Not Seasonally Adjusted;” Personal income and personal taxes paid to state and local governments from Table SA50, “State Annual Personal
Income.”
Since the late 1970s, corporations
were granted short-sighted tax cuts and
incentives that ultimately erode the
funds needed for quality schools,
which impacts their own pipeline for
quality workers.
6–15
EXAMPLES OF WHAT SOME COMPANIES
COST PUBLIC EDUCATION
• Lowe’s deducted $833 million in rent payments to itself
and reduced its Alabama income tax liability by $25
million
• Abercrombie and Fitch deducted over $200 million in
royalty payments to itself and reduced its Alabama
income tax liability by almost 90%
• McDonald’s received a $466,000 check from the federal
government to market Chicken McNuggets in the
country of Turkey.
• Over 90% of Wal-Mart’s distribution centers received
taxpayer subsidies totaling more than $1 billion
6–16
(meaning a $1 billion cost to taxpayers)
The vicious cycle
of the BIG BOX
with tax breaks…
6–17
6–18
Small businesses and the average
citizen do not have the money or
political clout to influence legislation
providing similar exemptions, so we
are left paying higher taxes while
unaccountable, global corporations
are given an unfair advantage.
6–19
Corporation Wannamove
A One-Act Role Play
6–20
Activity Debrief
1. What was the determining factor for
Corporation Wannamove’s choice of
State A?
2. Is this a common occurrence?
6–21
In Fact, Firms Report that the Quality of
Available Labor is their Major Concern
When Making Relocation Decisions
Source: Robert M. Ady, “The Effects of State and Local Public Services on Economic Development,” New England Economic
Review, Federal Reserve Bank of Boston, March/April, 1997.
6–22
Site Selection
Magazine’s Annual ‘Business
Climate’ Rankings (1998-2008)
Top 10 States in
Business Climate Ranking
& Per Capita Income Growth
Adjusted for Inflation (2008)
Business Climate
State
Rank
PCPI Growth
1998-2008
1998-2008
Business Climate Ranking from Site Selection Magazine, for 1998-2008; Per Capita
Personal Income data from Bureau of Economic Analysis, Regional Economic
Accounts, for 1998-2008.
1
2
3
4
5
6
7
8
9
10
NC 0.5%
TX 1.6%
GA 0.2%
OH 0.3%
FL 1.4%
MI -0.1%
TN 0.8%
SC 0.9%
IL 0.9%
VA 1.7%
Growth
Rank
47
16
50
49
24
51
40
39
37
14
23
Wyoming
Louisiana
District of Columbia
Oklahoma
North Dakota
New York
Alaska
Hawaii
Connecticut
Texas
Montana
Florida
Massachusetts
New Mexico
Maryland
Iowa
South Dakota
Vermont
Mississippi
Arkansas
Washington
New Jersey
Alabama
Kansas
California
Nevada
West Virginia
Virginia
Pennsylvania
Idaho
Rhode Island
Illinois
Colorado
Minnesota
New Hampshire
North Carolina
South Carolina
Kentucky
Maine
Nebraska
Arizona
Wisconsin
Oregon
Utah
Delaware
Tennessee
Missouri
Ohio
Georgia
Indiana
Michigan
Average annual growth 2003-08
10 States with highest taxes as a percent of income shown in red
10 States with lowest taxes as a percent of income shown in blue
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
6-24
Shares of Total Business Costs
60%
State
Corporate
Income Taxes
0.27%
Direct Labor
48.0%
50%
40%
30%
20%
10%
Compared
to labor
costs taxes
are just not
that
significant
0%
Source: U.S. Department of Commerce, National Income and Product Accounts, 2003.
Richard G. Sims Sierra Institute on Applied Economics
6–25
Telling it like it is…
Watch the video…
26
So what does all this mean
for educators?
• For many years we’ve had one recipe for
economic growth: cut taxes. We’ve seen that
this hasn’t produced the long term, stable
prosperity we’d hoped for our communities.
• Corporations aren’t intentionally trying to
hurt public schools. However, by continuing
to advocate for tax cuts and incentives they
are removing the very funds needed to make
their communities prosperous, desirable
places to live, work and play.
6–27
It’s no longer enough for educators to
advocate for public education funding, we
must be proactive in fighting revenue
erosion.
28
“I simply want to reduce government to
the size where I can drag it into the
bathroom and drown it in the
bathtub.”
Grover Norquist, Americans for Tax Reform
Interviewed on National Public Radio, 5/24/01
6–29
The Economics of
Public Education: What Every
Educator Should Know!
6–30
REFLECTION
1. Were you aware that investing in education
provides greater returns than tax cuts?
2. What does this mean for you? For your
students? For your community?
3. How might you act on this knowledge or
awareness?
6-31
MAKE THE TEF CONNECTION
When they lack the
capacity to
deliver those results…
When tax
structures are
out of sync
with the
economy…
Schools are being
held accountable for
results…
Accountability
School Capacity
When funding is
inadequate and
inequitable…
School Funding
Economy & Tax Structure
And not
everyone
is aware.
Public Support
6-31
TEF Tools and Resources
TEF Website:
http://www.nea.org/tef
1
Publications
Studies supporting TEF concepts:
•
The Effects of State Public K-12
Expenditures on Income Distribution
•
K-12 Education in the U.S. Economy
•
Protecting Public Education from Tax
Giveaways to Corporations.
•
School Funding, Taxes and Economic
Growth
•
TEF Series
Why invest in education makes sense:
Enriching Children, Enriching the Nation
Corporate abuse:
The Great American Job Scam - corporate tax
dodging and the myth of job creation.
Your Tax Dollars At Work…Offshore - foreign
outsourcing firms are capturing state
government contract.
No More Secret Candy Store - A grassroots
guide into investigating corporate
subsidies.
2
State-Specific
Data Sources
States Facing Budget Shortfall – Center
for Policy and Budget Priorities (CBPP)
reports state fiscal profiles.
State-by-state tax news and policy
analysis provided by the Institute of
Economics and Policy Analysis (ITEP).
Economic Policy Institute’s (EPI) new report
analysis rank states by overall unemployment
as well as the change seen since the start of
the recession in December 2007.
Enriching Children, Enriching the Nation show
state returns in budget, salary, crime reduction
by investing in Pre-K thru 12.
Find out how much Wal-Mart is costing your
state in subsidy deals, healthcare cost, and
property tax appeal appeals.
Combined Reporting, How Does Your State
Stack-Up? Institute on Taxation and
Economic Policy (ITEP) This reporting
requires multi-state corporations to report the
income earned by both the parent corporation
and all of its subsidiaries and to determine
their income tax liabilities on that basis.
Good Jobs First state-by-state corporate
subsidy websites.
3
State affiliates in
TEF Action
A few examples…
This video address from Alabama EA
President, John Wright.
Alabama EA sheds light on
corporate tax avoidance in
Alabama
Detroit News, Friday, July 25, 2008
MEA Press Release: Drop-outs One
Too Many, April. 4, 2008
Honolulu Advertiser, Dec, 2006
Honolulu Advertiser, Feb. 2007
Iowa State EA News Article
Kentucky EA - School Funding
Statement.
Michigan’s Business Tax Incentives:
A study commissioned by MEA and
NEA to improve the quality of the
debate on business tax incentives.
Mississippi EA op-ed piece.
State Affiliate TEF Websites:
Colorado, Illinois, Michigan,
Mississippi, New Jersey, Oklahoma
6–33
TEF Tools and Resources
TEF Website: http://www.nea.org/tef
4
Customizable
Tools
Community Organizing
•
Business Outreach
5
Other
Useful Links
6
Introducing a
New TEF
Interactive Tool
NEA Information on establishing a social
networking site to use as an organizing
tool.
Sample Political Action Tools
Others are: (http://www.ning.com/ ) and
•
•
Corporate Legislation
TEF Model Legislation
(http://www.groupsite.com/)
http://www.faireconomy.org/tfoc to
locate your state’s tax fairness
organizing collaborative. These
groups are located in 21 states.
www.nea.org/tef
6–34
Other Resources
7
On Taxes…
Videos
PBS Now, "Taxing the Poor" ((26.03)
Wal-Mart Subsidies (7:48)
Warren Buffett's Tax Rate is Lower than His
Secretary's (4:39)
TAXES: Warren Buffett - Rich Taxed Too Little,
Poor Too Much (5:17)
Eye To Eye With Katie Couric: Buffett's Tax
Code (CBS News) (1:40)
8
On Economic
Policies
Videos
U.S. PIRG on Countdown. Olbermann talks about
U.S. PIRG's report "Tax Shell Game.”
9
Funding for Schools
Access Quality Education: School
Funding Litigation A National
Network of Advocates Involved in
Education Finance Litigation,
Abbott vs. Burke is the New Jersey
Free Lunch, Corp Welfare, Bill Moyers and
David Cay Johnston (9:49)
David Cay Johnston - A History of
Government Subsidies (3:08)
Supreme Court ordered a set of
education programs and reforms
widely recognized to be the most fair
and just in the nation.
David Cay Johnston - Are Government
Subsidies Unfair? (4:43)
David Cay Johnston - A Moral Argument
for Progressive Taxes (3:04)
6-35
“Our lives begin to end the day we become silent
about things that matter.”
— Martin Luther King, Jr.
6–36