By Ada Fuentes-Zullo & Sam Nelson
For years, corporate accountability advocates demanded governments provide more transparency around the sweetheart economic development deals lavished upon profitable companies at the expense of taxpayers. However, much of that may be about to change. Those looking to shine a light on the impact of corporate incentives scored a major victory by ushering in a new rule that will help communities hold corporations accountable for paying their fair share.
Who can we thank for this new rule? The Governmental Accounting Standards Board (GASB), an independent organization whose responsibilities include accounting and financial reporting standards for state and local governments.
In 2015, the GASB released rules clearly outlining a process for states and municipalities to report losses from corporate tax breaks. As a result, data on corporate tax breaks should be available this year. In the past it was hard to calculate whether corporate tax breaks were used to evade property taxes. With the new rule, citizens now have information that can be used to hold local governments accountable for corporate handouts and measure how they harm our communities.
Why is accountability important? Too often local governments dole out tax breaks to large corporations, with little regard of their impact on the community.
Profitable and successful corporations like Amazon and Walmart lobby states and local governments to spend public funds to subsidize their businesses on the promise of job creation. The key word is promise. Often the jobs that are created as a result of the taxpayer-supported incentives are small in number. These jobs rarely pay the bills. And corporate handouts come at a high cost.
Texas gave Facebook almost $150 million in incentives to build a data center in Fort Worth, a city where nearly 20 percent of residents live below the poverty level. Despite the significant incentives, Facebook only committed to creating 40 jobs. Texas lawmakers also generously provided Amazon with its most lucrative deal to date, forgiving the company for not collecting $269 million in sales taxes over a four-year period. Since 2000, Amazon accrued over half a billion dollars’ worth of tax abatements and sales tax forgiveness. In 11 metro areas where Amazon has warehouses, it pays an average of 15 percent less than the prevailing local wage for comparable warehouse work. There’s no excuse for using taxpayer funds for a corporation that benefits from creating unsustainable jobs.
The new rule couldn’t come at a better time. When local governments are cutting municipal and public school budgets, along with other vital social services, working people have new means to ensure that public funds are invested in ways that sustain communities and put people, and not corporations, first.