T ax Structures, E conomic Development, and F unding for Public Schools

1. TEF Lessons for Members and Citizens Lesson 7 Tax Structures, Economic Development, and Funding for Public Schools Thanks to the Arizona Education Association for their work on this Lesson! 7–1

2. Objectives Participants will self assess their knowledge of taxes, economic development and funding for public schools. They will learn how the three parts of TEF are interrelated, and how public education is the best investment for economic development. 7–2

3. As a group can we agree that we will: • Respect and value differences of opinions and varying levels of knowledge • Be attentive 7–3

4. Quiz Time! 7–4

5. TAXES TAXES Taxes TRUE 1. Americans are unfairly taxed. 7–5

6. TAXES Taxes FALSE 2. Raising taxes will harm our economy. 7–6

7. TAXES TRUE Taxes 3. The economies of states with higher taxes grow faster than states with lower tax levels. 7–7

8. TAXES FALSE Taxes 4. Tax cuts stimulate the economy through increased consumer spending. 7–8

9. TAXES Taxes TRUE 5. Low taxes lead to low- quality public services. 7–9

10. Taxes Economic Development EconomicDevelopment FALSE 1. Business tax subsidies have a more positive impact on a state’s economy than investing in education. 7–10

11. FALSE EconomicDevelopment 2. We need to provide business incentives like tax subsidies to grow our state’s economy and attract business. 7–11

12. Site Selection Magazine’s Annual ‘Business Climate’ Rankings (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.

13. 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.

14. EconomicDevelopment FALSE 3. All businesses, large and small, have a fair shot at success in our economy.

15. EconomicDevelopment TRUE 4. There is proof that investing in education is good for a state’s economy. 7–15

16. Economic Development Taxpayers’ return on investment in public education exceeds returns generated by the stock market. Long-term return on common stocks: 6.3% (Includes dividends and price changes) Public return on investment in education: 11% (Includes additional income and social security taxes paid - does not include additional sales taxes or reductions in social service outlays) Sources: Stock market evaluations from a literature survey reported in “Long-term Returns,” by Victor Niederhoffer and Alex Castaldo, April 2004; education information from “Education at a Glance 2008: OECD Indicators,” Organisation for Economic Cooperation and Development, 2008, pp. 190-191.

17. An Investment in Public Education Always Pays Because: $ It is labor intensive (employs many people). $ The money stays in the local economy because the people employed pay local and state taxes and spend their money locally (as opposed to tax cuts for corporations who may invest their money in an overseas factory). $ Educated citizens go on to be gainfully employed, pay taxes and contribute to the economy with their purchasing power. 7–17

18. Economic Development TRUE 5. Tax subsidies should only be given out to companies if they include accountability. 7–18

19. $2.1 million per job “State and local officials agreed to give Scripps $310 million in state funds, plus another $200 million in local government money toward its construction of a 364,000-square-foot campus now in progress at Florida Atlantic University in Jupiter. Scripps now operates from temporary space at the university. “In return for the money, Scripps committed to creating 545 jobs by 2015. As of March 17 [2008], the institute created 242 jobs, [according to] Scripps Florida spokesman Keith McKeown….” Alex Philippidis, “Florida, Facing a $2B Budget Shortfall, Weighs Scrapping ‘Innovation Incentive’,” BioRegion News, April 7, 2008. Available at: http://www.genomeweb.com/bioregionnews/florida-facing-2b-budget-shortfall-weighs-scrapping-%E2%80%98innovation-incentive%E2%80%99 7–19

20. Funding for Schools FALSE 1. School funding should be dependent on student test scores. 7–20

21. Funding for Schools Funding for Schools TRUE 2. No state in America provides adequate funds for their public schools. 7–21

22. Funding for Schools Funding for Schools TRUE 3. (Insert Your State) has a $____ adequate funding deficit for public education. 3.(Insert your state) has a $___ billion adequate funding deficit for public education. 7–22

23. 4. An equitable finance system means equal spending per pupil across all school districts in a state. Funding for Schools FALSE Funding for Schools 7–23

24. The Economics of Public Education: What Every Educator Should Know! 7–24

25. REFLECTION • Were you aware that investing in education provides greater returns than tax cuts? • What does this mean for you? For your community? For our country? • How might you act on this knowledge or awareness? 7–25

26. Schools are being held accountable for results… When they lack the capacity to deliver those results… Accountability When funding is inadequate and inequitable… When tax structures are out of sync with the economy… School Capacity School Funding And not everyone is aware. MAKE THE TEF CONNECTION Economy & Tax Structure Public Support 7-26

27. TEF Tools and Resources TEF Website: http://www.nea.org/tef Publications State affiliates in TEF Action 1 2 State-Specific Data Sources 3 • 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. 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. • 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 ArticleKentucky 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 7–27

28. TEF Tools and Resources TEF Website: http://www.nea.org/tef Customizable Tools Introducing a New TEF Interactive Tool Other Useful Links 4 5 6 • Community Organizing • Business Outreach • Sample Political Action Tools • Corporate Legislation • TEF Model Legislation NEA Information on establishing a social networking site to use as an organizing tool. Others are: (http://www.ning.com/ ) and (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 7–28

29. Other Resources On Taxes… Funding for Schools On Economic Policies 7 8 9 Access Quality Education: School Funding Litigation A National Network of Advocates Involved in Education Finance Litigation, Abbott vs. Burkeis the New Jersey Supreme Court ordered a set of education programs and reforms widely recognized to be the most fair and just in the nation. U.S. PIRG on Countdown. Olbermann talks about U.S. PIRG's report "Tax Shell Game.” Free Lunch, Corp Welfare, Bill Moyers and David Cay Johnston (9:49)David Cay Johnston - A History of Government Subsidies (3:08)David Cay Johnston - Are Government Subsidies Unfair? (4:43)David Cay Johnston - A Moral Argument for Progressive Taxes (3:04) 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) Videos 7–29

30. “Our lives begin to end the day we become silent about things that matter.” — Martin Luther King, Jr. The Call to Action! 7–30