Tax Structures,

Economic Development, and

Funding for Public Schools

TEF Lessons for Members and CitizensLesson 7

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Thanks to the Arizona Education Association for their work on this Lesson!

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.

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As a group can we agree that we will:

1) Respect and value differences of opinions and varying levels of knowledge

2) Be attentive

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Quiz Time!

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Taxes

1. 1.

Americans Americans are unfairly are unfairly

taxed.taxed.

TAXES

TAXES

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Taxes

2. 2.

Raising Raising taxes will taxes will harm our harm our economy.economy.

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TAXES

Taxes

33. . The economies The economies of states with of states with higher taxes higher taxes grow faster grow faster than states than states

with lower tax with lower tax levels.levels. 7–7

TAXES

Taxes

4. 4. Tax cuts Tax cuts stimulatestimulate the economy through the economy through increased consumer increased consumer

spending.spending.

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TAXES

Taxes

5. Low taxes

lead to low-

quality public

services.7–9

TAXES

Economic Development

1. 1. BusinessBusiness tax tax

subsidies have a more subsidies have a more positive impact on a positive impact on a

state’s economy than state’s economy than investing in education.investing in education.

Taxes Economic Development

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2. We need to provide business

incentives like tax subsidies to grow our state’s economy and

attract business.

Economic Development

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Top 10 States in Business Climate Ranking

& Per Capita Income GrowthAdjusted for Inflation (2008)

Business Climate Rank

1998-2008State PCPI Growth

1998-2008Growth Rank

1 NC 0.5% 472 TX 1.6% 163 GA 0.2% 504 OH 0.3% 495 FL 1.4% 246 MI -0.1% 517 TN 0.8% 408 SC 0.9% 399 IL 0.9% 37

10 VA 1.7% 14

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.

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.

3. 3.

All All businesses, businesses, large and large and

small, have a small, have a fair shot at fair shot at success in success in

our economyour economy..

Economic Development

4. 4.

There is proof that There is proof that investing in education is investing in education is

good for a state’s economy.good for a state’s economy.

Economic Development

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Taxpayers’ return on investment in public education exceeds returns generated by the stock market.

Long-term return on common stocks: 6.3%Long-term return on common stocks: 6.3%(Includes dividends and price changes)(Includes dividends and price changes)

Public return on investment in education: Public return on investment in education: 11%11%(Includes additional income and social (Includes additional income and social security taxes paid - does security taxes paid - does not not include include additional sales taxes or reductions in social additional sales taxes or reductions in social service outlays)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.

Economic Development

$ 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.

An Investment in Public Education Always Pays Because:

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5. 5. Tax subsidies Tax subsidies

should only be should only be given out to given out to

companies if they companies if they include include

accountability.accountability.

Economic Development

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 “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….”

$2.1 million per job

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

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Funding for Schools

1. School funding

should be dependent on student test

scores.

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Funding for Schools

2. No state in

Americaprovides adequate

funds for their public schools.

Funding for Schools

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Funding for Schools

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.

Funding for Schools

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Funding for Schools

4. An equitable finance system means equal spending per

pupil across all school districts

in a state.

Funding for Schools

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The Economics of

Public Education: What Every Educator Should Know!

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REFLECTION

1. Were you aware that investing in education provides greater returns than tax cuts?

2. What does this mean for you? For your community? For our country?

3. How might you act on this knowledge or awareness?

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Schools are being held accountable for results…

When they lack the capacity to deliver those results…

When funding is inadequate and inequitable…

When tax structures are out of sync with the economy…

School Capacity

School Funding

Economy & Tax Structure

Public Support

And not everyone is aware.

Accountability

MAKE THE TEF CONNECTION

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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, 2006Honolulu Advertiser, Feb. 2007

Iowa State EA News Article Kentucky 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

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.

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.

Publications1 2State affiliates in TEF Action

3

TEF Tools and Resources

State-SpecificData Sources

TEF Website: http://www.nea.org/tef

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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.

Community Organizing• Business Outreach

Sample Political Action Tools

• Corporate Legislation• TEF Model Legislation

Customizable Tools4 Other

Useful Links5Introducing aNew TEFInteractive Tool

6

TEF Tools and Resources

www.nea.org/tef

TEF Website: http://www.nea.org/tef

7–28

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)

On Taxes…7 On Economic Policies8 Funding for

Schools9

Other Resources

Access Quality Education: School Funding Litigation A National Network of Advocates Involved in Education Finance Litigation,

Abbott vs. Burke is 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.

Videos

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“Our lives begin to end the day we become silent about things that matter.”

— Martin Luther King, Jr.

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