When companies like Tesla Motors are given billion-dollar deals to locate in a state, the taxes they are absolved from paying must be shouldered by everyone else, who must pay more. And it is communities that can least afford to do so that surrender the biggest proportion of tax revenue in these so-called economic development deals. Perversely, communities that are home to people of color and immigrants, or those that have large numbers of jobless and low-income people, feel the greatest impact when decreased revenues affect public services like schools, policing, and transportation.
Because so little is known about these deals, it is difficult to mobilize local residents to ask tough questions, debate whether they really like these deals, and perhaps put pressure on lawmakers to end them.
In some cities, where deals to subsidize companies take property tax dollars away from public services, the issue has led to a push back against proposals to raise property tax rates. In Memphis, for example, where one in seven property-tax dollars is lost to property-tax abatements, neighborhood fire stations are suffering capacity cutbacks.
Surdna is pushing to make these deals as transparent and accountable as the funds lawmakers regularly appropriate to support education, infrastructure, and other public goods. Our grantee Good Jobs First of Washington, DC is driving an effort to press for greater disclosure requirements of corporate deals so that taxpayers will know how much revenue they lose to business tax breaks granted in the name of economic development.
Good Jobs First has collected tax give-away information from various hard-to-find reports and web pages—along with unpublished data obtained through open records requests—to create a national search engine for economic development subsidies. And it is activating civil society to push the Governmental Accounting Standards Board—the body that oversees government accounting standards—to mandate that state and local governments report how much revenue they lose to business tax breaks.
