The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation

Founder and director of the nonprofit center Good Jobs First, LeRoy offers a parade of damning case studies showing why communities should not woo corporations with subsidies. Corporate tactics, he finds, include quickly shuttered subsidized facilities, union busting and jobs that pay below the poverty line. Rewritten tax codes, which focus on sales taxes but ignore payroll and property taxes, as well as other tax abatements, undermine schools; most stadiums and convention centers further bleed public monies. Moreover, subsidies generally support suburban sprawl rather than accessibility to public transit used by the poor. Some corporate location consultants work both for companies and governments—"a sad reflection" of a disorganized public sector. On the corporate minus side, tax incentives to relocate, he shows, are dwarfed by labor, transport and utility costs. The upshot? Corporations are paying 28% less in state and local taxes than 20 years ago. LeRoy's suggested reforms include greater disclosure about subsidy deals; money-back guarantees if companies don't fulfill their pledges; requiring subsidized jobs to meet local average wages; closing corporate loopholes; and making sure every deal is approved by elected officials rather than appointed ones. (July)