Corporate Tax Dodging And The Myth Of Job Creation
According to author and corporate watchdog Greg LeRoy, there is a scandal lurking in the tax records of most cities and states in America: Hundreds of corporations receive taxpayer subsidies every year in the name of jobs, yet many companies have failed to create or retain as many jobs as they said they would. In The Great American Jobs Scam, LeRoy details the truth behind the corporations that have received millions of dollars from city and state taxes under the guise of job creation and economic development, but have outsourced jobs, cut health care benefits, or created no new jobs.
LeRoy explains that almost every big company has received taxpayer subsidies from property tax abatements, corporate income tax credits, sales and excise tax exemptions, tax increment financing, low-interest loans and loan guarantees, free land and land write-downs, training grants, infrastructure aid or cash grants. The average state has more than 30 economic development subsidies, many coming from city and county coffers. Despite all this economic development aid, LeRoy points out that many of the companies that receive these subsidies "are paying poverty wages or failing to provide health care to their employees. Companies that are abandoning our cities and sprawling onto farmland and natural spaces." Some of these companies, he writes, have actually laid people off since they received the subsidies.
The Great American Jobs Scam describes how an internationally constructed system allows corporations to win huge tax breaks by promising quality jobs and then lets them fail to deliver. LeRoy writes that this system costs U.S. taxpayers $50 billion each year in total state and city spending, and is especially harmful to schools.
The scandal, LeRoy explains, is that "in return for all our taxpayer dollars we are not getting higher wages, better benefits, a stronger tax base, or better public services." Instead, workers' wages have been stagnating or dropping for the last quarter century, health care has become less affordable and available, and pensions have shrunk in number and value. Schools and infrastructure maintenance suffer as a result, LeRoy points out, because states and cities have developed structural budget deficits that force them to cut back on funding public programs.
A Collection of Scams
The collection of scams LeRoy describes has evolved over the past 50 years and relies on taxpayer confusion about the causes and effects of job creation, as well as taxpayer costs being kept vague, understated or hidden. He writes that there is a system in place that ensures that the companies involved suffer no consequences when they fail to deliver on their promises of new quality jobs. "And most of all," he writes, "these scams are built upon a corporate-controlled definition of 'competition' that prevents government officials from cooperating in taxpayers' best interests."
The first part of LeRoy's book describes in detail 14 scams that are costing U.S. taxpayers billions of dollars each year, as well as the companies that are responsible. Next, he writes about the lobbying that takes place behind the scenes when a company decides to relocate to a new area, and describes how the "Single Sales Factor" allows some companies to pay up to 90 percent less corporate income tax to their home base state. The final chapter in The Great American Jobs Scam presents a dozen reforms that can get many more taxpayers involved in helping to create an organized approach to fixing the problem. Here is one reform LeRoy proposes: "[T]he amount of money a company gets to deduct from its income tax bill by taking a tax credit in the name of jobs should be disclosed."
Why We Like This Book
The Great American Jobs Scam pulls no punches as it lays out its argument against corporate subsidies that cost tax dollars but offer few jobs or benefits to taxpayers. By promoting more transparency in the system and proposing many commonsense reforms to the problems he describes, LeRoy offers readers a thoughtful exposé that is based on numerous case studies and recent examples.