The Problem:

Property taxes are one of the most popular vessels for corporate tax incentives, which means those incentives often come directly out of school budgets, as property taxes are also the primary way in which U.S. schools are funded. This either results in lower school budgets, or school boards being forced to negotiate with individual corporations for what are known as PILOTS — payments in lieu of taxes — which opens the door to corrupt dealings. In fiscal year 2019, schools lost a collective $2.37 billion due to corporate tax breaks.[1] Usually, school boards are powerless to stop corporate incentives that would affect their budgets, as they have no influence over their authorization, although some teachers unions have effectively made corporate incentives a local political issue.

The Policy:

The state of Louisiana and the city of Philadelphia both give local entities like school boards the ability to reject the portion of corporate tax subsidies that would come out of local school budgets. In Louisiana, early data showed that the policy had a measurable, positive effect on reducing the amount of money given to big corporations, saving the state $116 million after two years, and saving millions of dollars for local school districts as well, including $10.4 million for Baton Rouge.[2] All 50 states should advance a similar policy, whether through executive action or legislation, depending on the state. Or they can simply ban any incentive that would result in a loss of revenue for a school district.

Model bill: New York, S8395, 2021-2022

Notes:

[1] Wen, Christine, Katie Furtado, and Greg LeRoy, “Abating Our Future: How Students Pay for Corporate Tax Breaks,” Good Jobs First, March 2021, https://www.goodjobsfirst.org/sites/default/files/docs/pdfs/Abating%20Our%20Future.pdf.

[2] Riegel, Stephanie, “Report: ITEP changes net $10.4M for Baton Rouge, $116M for state,” Greater Baton Rouge Business Report, March 10, 2020, https://www.businessreport.com/article/report-itep-changes-net-10-4m-for-baton-rouge-116m-for-state.