Sunday, October 16, 2005

"Corporate Tax Dodging and the Myth of Job Creation"

by Kyle Michaelis
Nebraskans for Peace held their annual conference in Lincoln Saturday. The keynote address was given by Greg LeRoy, a prominent critic of the short-sighted and out-of-control race by states to provide more and more tax breaks and government subsidization to businesses in the name of job creation.

This, of course, is relevant in Nebraska where the hallmark of the 2005 legislative session - as well as the crowning moment of Governor Heineman's short career - was the passage of its "Nebraska Advantage" $430 million expansion of the state's long-standing LB775 program.

The Lincoln Journal-Star reports:
Job creation tax breaks are a costly scam that hinders long-term economic health, a leading national critic of corporate tax incentives said Saturday.

“In most cases, they pay companies to do what they would have done anway,” Greg LeRoy told about 150 people at the annual conference of Nebraskans for Peace.

The cost in lost revenue in Nebraska is likely to approach $200 million a year, LeRoy said. “When the big boys pay less,” LeRoy said, “everyone else pays more, or the quality of public services goes down, or both occur.”

LeRoy, founder and director of Good Jobs First, is author of a widely discussed book called “The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation.”

The better avenue for cities and states to pursue healthy economic growth would be through development of a skilled workforce and infrastructure improvement, with an emphasis on quality education, LeRoy said.

“Corporate windfalls divert resources from things that could really strengthen the economy,” he said.

Under the current corporate tax break program, education is denied needed resources, LeRoy said. “If it undermines public education,” he said, “we should get rid of it.”

Donald Mihovk, public affairs vice president of the Nebraska Chamber of Commerce and Industry, rejected criticism of Nebraska’s business incentive package. “We believe in it, and we think it works,” he said.

Nebraskans for Peace, which marked its 35th anniversary at Saturday’s event, has spearheaded legislative efforts to reform the business incentive and job growth initiative originally enacted as LB775.

A second-generation plan approved by the Legislature earlier this year includes new disclosure provisions that LeRoy hailed as a critical breakthrough.

Although the new plan may turn out to be “LB775 with steroids,” he cautioned, the disclosure requirement over time may allow Nebraskans for Peace and other monitors to “find lots of stinky deals.”

That, in turn, will help critics mount public support to overturn runaway tax breaks, LeRoy said....

Too often, LeRoy said, companies fail to keep the promises associated with tax breaks.

Too many of them pay “poverty wages,” he said, when the thrust of the economic incentive program was to create good jobs. Tax breaks often go to companies that do not provide health care benefits for their employees, he said, shifting increased costs to taxpayers through programs like Medicaid.

I missed the conference this year but have attended in the past. Though I don't always agree with the scope and tone of various peace groups' messages, Nebraskans for Peace have long provided an important alternative voice in this state, and I - for one - am thankful for their continued efforts to create a better informed and more just society.

With so few senators willing to ask the tough questions about these corporate tax subsidies, this state is dangerously dependent on the likes of NFP and like-minded civic crusaders to maintain even some minimal degree of accountibility in government. I hope they are up to the task because those business interests for whom plans like this mean hundreds of millions of dollars most definitely have their end covered.


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