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The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation
Exploring in depth the abuses of tax breaks by large corporations and government through the ''economic development'' of communities, LeRoy offers a series of commonsense reforms that would give taxpayers powerful new tools to redirect monies in ways that will really pay off.
468 pages, Paperback
First published January 1, 2005
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December 10, 2025
Politicians love a ribbon cutting. The scissors catch the light, the crowd is packed against the barricades, and behind the podium a banner announces hundreds, maybe thousands, of “new jobs” coming to town. What Greg LeRoy wants you to see in “The Great American Jobs Scam” is everything that happens offstage – the closed-door threats, the secret bidding wars, the tax codes quietly rewritten so that the company behind that banner may never pay much of anything to the community that just paid to bring it there. His book is part exposé, part field guide, and part prosecutorial brief against a system that, he argues, routinely rewards corporations for doing what they would have done anyway while starving the very public goods that actually create lasting jobs.
LeRoy comes to the topic not as a detached theorist but as the longtime director of Good Jobs First, a small research and advocacy outfit that has spent decades tracking subsidies, tax abatements, and “economic development” deals. That dual identity – researcher and organizer – shapes the book’s voice. He writes like someone who has read the footnotes, called the auditors, sat through zoning hearings, and then gone home to answer calls from union locals, school board members, and city council staff trying to understand why their budgets will not stretch. The result is a narrative that is both densely documented and deliberately plainspoken. The prose has an almost conversational rhythm, heavy on specific dollar figures and job counts, light on abstraction, with a vein of moral anger running just under the surface.
The opening chapters lay out the core argument through a series of what he bluntly calls “scams.” In Massachusetts, Raytheon hints that it might move thousands of jobs unless the state changes its corporate income-tax formula to a “single sales factor” that will dramatically lower the company’s bill. In city after city, call-center operator Sykes Enterprises pockets grants, training subsidies, and free land, only to close the facility as soon as the ink on the deal is dry and reopen in another jurisdiction or another country. Southern governors use federally tax-exempt industrial revenue bonds to lure factories away from the industrial North, and then discover they have subsidized low-wage branch plants that leave as soon as labor costs rise. The pattern is familiar, but LeRoy’s reporting gives it specificity and scale.
The book’s first pivot comes with his explanation of how companies actually choose sites. Drawing on veteran consultants such as Robert Ady and on a memorable quote from former Alcoa chief and Treasury Secretary Paul O’Neill, LeRoy argues that tax breaks are rarely the deciding factor. Location decisions are driven by fundamentals – labor, transportation, energy, access to markets, proximity to suppliers, quality of life for executives and employees – and incentives are almost always icing on a cake that has already been baked. By the time a consultant walks into a local development office and asks what the community is prepared to “do” to land a project, the short list of viable sites is largely fixed. What local officials see as the decisive subsidy negotiation is, in his telling, a ritual designed to extract money in exchange for a decision the firm has effectively already made.
That argument gives the book its title. The “jobs scam” is not one crooked deal or one corrupt official, but a structural confidence game. Multistate corporations hold up the threat of exit or the promise of new jobs, site consultants serve as brokers and choreographers, state and local governments compete rather than cooperate, and the bill is quietly forwarded to taxpayers who seldom see the terms. LeRoy has a good eye for the language of extortion – his description of “job blackmail” recalls a ransom note rewritten in legislative prose – but he is careful to show that most of what he documents is legal, even celebrated, within the prevailing orthodoxy of business climate politics.
Some of the most compelling chapters focus on specific tax instruments that would otherwise remain in the domain of accountants and revenue officials. His discussion of single sales factor apportionment does an impressive job of turning a fairly technical corporate income-tax formula into a story a lay reader can follow. With a fictional “Rapid Razor Company,” he walks through how basing taxable profits only on in-state sales, instead of on a traditional three-factor mix of property, payroll, and sales, can reduce a big manufacturer’s tax bill in its headquarters state by 90 percent without any new jobs created. Elsewhere he explains “nowhere income,” profit that falls between the cracks of interstate nexus rules, and the Delaware holding company trick that allows retailers and restaurant chains to shift earnings into lightly taxed subsidiaries. In each case the tone is calm and almost patient, but the cumulative picture is damning: whole categories of income disappear from the state tax base, most often in the name of “jobs.”
Where the book moves from numbers into visceral territory is in its treatment of property-tax abatements and tax-increment financing. Because property taxes are the main local revenue source for public schools, writing down a factory’s assessment or diverting the growth in tax collections from a shopping center can have immediate consequences in a classroom across town. LeRoy walks the reader through cases from Indiana, Oregon, Ohio, and elsewhere in which school districts lose millions of dollars a year while abated companies fail to meet job targets or shut down altogether. Especially in older cities and high-poverty districts, he argues, the effect is to force homeowners and small businesses to pay more while their children sit in crowded rooms under leaking roofs.
The book’s longest and perhaps most vivid case studies deal with the geography of subsidies. Enterprise zones and TIF districts were originally pitched as tools to revitalize distressed neighborhoods; LeRoy shows how, in many states, they have morphed into engines of suburban sprawl. Retail and office parks follow the highway out past older suburbs into farmland; local governments, hungry for sales-tax revenue and corporate property, fall over one another to subsidize projects that simply shift shopping and jobs from one part of a metro area to another. The losers in this game are easy to identify: city school systems, transit-dependent workers, communities of color concentrated in neighborhoods bypassed by new investment. By the time he gets to Wal-Mart, which he estimates has received more than a billion dollars in subsidies for stores and warehouses, his argument that retail is not economic development in any meaningful sense has been carefully prepared.
LeRoy is at his most caustic when he turns to publicly financed sports stadiums. The stories are familiar – the Brooklyn Dodgers leaving for Los Angeles, the Baltimore Colts decamping to Indianapolis, the chain of football and baseball stadiums in Baltimore and Cleveland, the ballpark in Arlington that helped finance the rise of a future president – but his contribution is to line them up next to independent economic studies that consistently fail to find much job or income growth connected to stadium construction. Almost all the permanent stadium jobs are low-wage and part-time; the highly paid construction work ends after a few seasons; the promised “spillover” effects are mostly a reshuffling of leisure spending within a region. Meanwhile, franchise values soar. LeRoy does not begrudge anyone their sports fandom, but he insists that fans confront the public price of their civic pride.
If this were all the book offered, it would be a useful catalogue of abuses. What lifts it into something more than a jeremiad is the back half, where he turns to the slow shifts in tax burdens and the possibility of reform. He lays out, with data from national and state studies, how corporate income taxes have declined as a share of state revenue even as state and local governments have raised sales and property taxes that fall more heavily on low- and middle-income households. He shows how, in states with aggressive incentive programs, a newly subsidized facility can wipe out not only its own tax liability but that of older plants as well, sometimes leaving profitable companies with negative effective tax rates. The winners are firms large enough to navigate the maze; the losers are people who cannot move and still need schools, roads, and clinics.
His reform chapter is brisk, almost programmatic. He calls for disclosure – public, online, company-specific reporting of subsidy awards and performance – and for clawbacks that require firms to repay money when they fall short on jobs or investment. He argues that no publicly subsidized job should pay poverty wages, that school boards should have a veto over any deal that touches their property-tax base, and that states should publish unified “development budgets” that place tax expenditures and appropriations on the same page. He wants to regulate site-location consultants as lobbyists, limit their incentives to pump up subsidy demands, and bar them from working both sides of the table. At the federal level he suggests tying a small share of commerce and labor funding to state adoption of basic accountability standards. Here the prose takes on a slightly different cadence – less narrative, more checklist – but it remains grounded in examples from the preceding chapters, and it is rare, in a book this polemical, to encounter a policy section that feels this practical.
The final chapter widens the lens beyond subsidies. LeRoy argues that the real jobs crisis facing the United States is not a shortage of corporate suitors but a coming shortage of skilled workers and a backlog of neglected infrastructure. Baby Boomers are retiring from teaching, nursing, the skilled trades, and public employment; bridges, water systems, transit lines, and school buildings are aging faster than governments repair or replace them. The economic development dollar, he suggests, would be far better spent training nurses, upgrading community colleges, modernizing freight rail, or repairing school roofs than coaxing another warehouse or call center to move across a county line. Skills and infrastructure are “sticky” assets – when a subsidized firm leaves, it takes its jobs with it, but a trained worker and a rebuilt bridge remain in place for the next employer.
There are places where the book’s strength is also its limitation. LeRoy writes from the perspective of someone who has seen the worst of the incentive world, and at times his tone flattens distinctions among different kinds of programs. His account contains relatively little from inside the executive suites of the companies he criticizes; corporate leaders appear mostly through their public statements or the testimony of their consultants. A reader might wish for more sustained engagement with arguments about globalization, regulatory disparity, or genuine place-based barriers that sometimes make targeted incentives more defensible. And because his focus is on the United States, the book does not explore how other countries have tried to discipline subsidy races or coordinate regional development, which might have offered additional models.
Yet those gaps do not fundamentally weaken the case he makes. If anything, they leave space for the debates he clearly wants to provoke. What “The Great American Jobs Scam” demonstrates, with a relentlessness that is something like its own moral style, is that the burden of proof ought to rest on those who claim that tax breaks and subsidies are necessary to create or retain jobs. LeRoy does not insist that every incentive is inherently illegitimate; he does insist that incentives be transparent, conditioned, and measured against the alternative uses of the money. When he shows a school district losing ten or twenty million dollars a year so that a handful of companies can reduce their tax bills, or a city financing a gleaming stadium while closing neighborhood libraries, he is asking a simple question of priorities.
As a reading experience, the book can feel repetitive in its structure – another deal, another broken promise – but that repetition is part of the point. The cases span regions, industries, and decades; what ties them together is not some grand conspiracy but a set of habits that have hardened into doctrine. LeRoy writes with a reporter’s insistence on names and numbers, an advocate’s impatience with euphemism, and a teacher’s gift for the illustrative example. There are moments of bitter humor, as when he asks whether a mall without a Nordstrom can now be classified as “blighted,” and there are passages of understated empathy, especially when he writes about communities that have seen factory after factory close.
In the end, I would give the book an 88 out of 100. It is not the last word on economic development policy, nor does it try to be. Instead it does something rarer and more useful: it opens the ledger. It asks readers to think of subsidies not as magical job-creation tools but as line items that can and should be compared with everything else a public body might fund. It gives reformers a vocabulary and a set of examples, and it gives taxpayers a way to connect the ribbon cutting on the evening news to the class size in their child’s school or the potholes on their drive to work. That is a substantial achievement, and it makes “The Great American Jobs Scam” feel, nearly two decades after its publication, less like a period piece than like a book waiting to be taken seriously by the officials who still rush to those podiums.
LeRoy comes to the topic not as a detached theorist but as the longtime director of Good Jobs First, a small research and advocacy outfit that has spent decades tracking subsidies, tax abatements, and “economic development” deals. That dual identity – researcher and organizer – shapes the book’s voice. He writes like someone who has read the footnotes, called the auditors, sat through zoning hearings, and then gone home to answer calls from union locals, school board members, and city council staff trying to understand why their budgets will not stretch. The result is a narrative that is both densely documented and deliberately plainspoken. The prose has an almost conversational rhythm, heavy on specific dollar figures and job counts, light on abstraction, with a vein of moral anger running just under the surface.
The opening chapters lay out the core argument through a series of what he bluntly calls “scams.” In Massachusetts, Raytheon hints that it might move thousands of jobs unless the state changes its corporate income-tax formula to a “single sales factor” that will dramatically lower the company’s bill. In city after city, call-center operator Sykes Enterprises pockets grants, training subsidies, and free land, only to close the facility as soon as the ink on the deal is dry and reopen in another jurisdiction or another country. Southern governors use federally tax-exempt industrial revenue bonds to lure factories away from the industrial North, and then discover they have subsidized low-wage branch plants that leave as soon as labor costs rise. The pattern is familiar, but LeRoy’s reporting gives it specificity and scale.
The book’s first pivot comes with his explanation of how companies actually choose sites. Drawing on veteran consultants such as Robert Ady and on a memorable quote from former Alcoa chief and Treasury Secretary Paul O’Neill, LeRoy argues that tax breaks are rarely the deciding factor. Location decisions are driven by fundamentals – labor, transportation, energy, access to markets, proximity to suppliers, quality of life for executives and employees – and incentives are almost always icing on a cake that has already been baked. By the time a consultant walks into a local development office and asks what the community is prepared to “do” to land a project, the short list of viable sites is largely fixed. What local officials see as the decisive subsidy negotiation is, in his telling, a ritual designed to extract money in exchange for a decision the firm has effectively already made.
That argument gives the book its title. The “jobs scam” is not one crooked deal or one corrupt official, but a structural confidence game. Multistate corporations hold up the threat of exit or the promise of new jobs, site consultants serve as brokers and choreographers, state and local governments compete rather than cooperate, and the bill is quietly forwarded to taxpayers who seldom see the terms. LeRoy has a good eye for the language of extortion – his description of “job blackmail” recalls a ransom note rewritten in legislative prose – but he is careful to show that most of what he documents is legal, even celebrated, within the prevailing orthodoxy of business climate politics.
Some of the most compelling chapters focus on specific tax instruments that would otherwise remain in the domain of accountants and revenue officials. His discussion of single sales factor apportionment does an impressive job of turning a fairly technical corporate income-tax formula into a story a lay reader can follow. With a fictional “Rapid Razor Company,” he walks through how basing taxable profits only on in-state sales, instead of on a traditional three-factor mix of property, payroll, and sales, can reduce a big manufacturer’s tax bill in its headquarters state by 90 percent without any new jobs created. Elsewhere he explains “nowhere income,” profit that falls between the cracks of interstate nexus rules, and the Delaware holding company trick that allows retailers and restaurant chains to shift earnings into lightly taxed subsidiaries. In each case the tone is calm and almost patient, but the cumulative picture is damning: whole categories of income disappear from the state tax base, most often in the name of “jobs.”
Where the book moves from numbers into visceral territory is in its treatment of property-tax abatements and tax-increment financing. Because property taxes are the main local revenue source for public schools, writing down a factory’s assessment or diverting the growth in tax collections from a shopping center can have immediate consequences in a classroom across town. LeRoy walks the reader through cases from Indiana, Oregon, Ohio, and elsewhere in which school districts lose millions of dollars a year while abated companies fail to meet job targets or shut down altogether. Especially in older cities and high-poverty districts, he argues, the effect is to force homeowners and small businesses to pay more while their children sit in crowded rooms under leaking roofs.
The book’s longest and perhaps most vivid case studies deal with the geography of subsidies. Enterprise zones and TIF districts were originally pitched as tools to revitalize distressed neighborhoods; LeRoy shows how, in many states, they have morphed into engines of suburban sprawl. Retail and office parks follow the highway out past older suburbs into farmland; local governments, hungry for sales-tax revenue and corporate property, fall over one another to subsidize projects that simply shift shopping and jobs from one part of a metro area to another. The losers in this game are easy to identify: city school systems, transit-dependent workers, communities of color concentrated in neighborhoods bypassed by new investment. By the time he gets to Wal-Mart, which he estimates has received more than a billion dollars in subsidies for stores and warehouses, his argument that retail is not economic development in any meaningful sense has been carefully prepared.
LeRoy is at his most caustic when he turns to publicly financed sports stadiums. The stories are familiar – the Brooklyn Dodgers leaving for Los Angeles, the Baltimore Colts decamping to Indianapolis, the chain of football and baseball stadiums in Baltimore and Cleveland, the ballpark in Arlington that helped finance the rise of a future president – but his contribution is to line them up next to independent economic studies that consistently fail to find much job or income growth connected to stadium construction. Almost all the permanent stadium jobs are low-wage and part-time; the highly paid construction work ends after a few seasons; the promised “spillover” effects are mostly a reshuffling of leisure spending within a region. Meanwhile, franchise values soar. LeRoy does not begrudge anyone their sports fandom, but he insists that fans confront the public price of their civic pride.
If this were all the book offered, it would be a useful catalogue of abuses. What lifts it into something more than a jeremiad is the back half, where he turns to the slow shifts in tax burdens and the possibility of reform. He lays out, with data from national and state studies, how corporate income taxes have declined as a share of state revenue even as state and local governments have raised sales and property taxes that fall more heavily on low- and middle-income households. He shows how, in states with aggressive incentive programs, a newly subsidized facility can wipe out not only its own tax liability but that of older plants as well, sometimes leaving profitable companies with negative effective tax rates. The winners are firms large enough to navigate the maze; the losers are people who cannot move and still need schools, roads, and clinics.
His reform chapter is brisk, almost programmatic. He calls for disclosure – public, online, company-specific reporting of subsidy awards and performance – and for clawbacks that require firms to repay money when they fall short on jobs or investment. He argues that no publicly subsidized job should pay poverty wages, that school boards should have a veto over any deal that touches their property-tax base, and that states should publish unified “development budgets” that place tax expenditures and appropriations on the same page. He wants to regulate site-location consultants as lobbyists, limit their incentives to pump up subsidy demands, and bar them from working both sides of the table. At the federal level he suggests tying a small share of commerce and labor funding to state adoption of basic accountability standards. Here the prose takes on a slightly different cadence – less narrative, more checklist – but it remains grounded in examples from the preceding chapters, and it is rare, in a book this polemical, to encounter a policy section that feels this practical.
The final chapter widens the lens beyond subsidies. LeRoy argues that the real jobs crisis facing the United States is not a shortage of corporate suitors but a coming shortage of skilled workers and a backlog of neglected infrastructure. Baby Boomers are retiring from teaching, nursing, the skilled trades, and public employment; bridges, water systems, transit lines, and school buildings are aging faster than governments repair or replace them. The economic development dollar, he suggests, would be far better spent training nurses, upgrading community colleges, modernizing freight rail, or repairing school roofs than coaxing another warehouse or call center to move across a county line. Skills and infrastructure are “sticky” assets – when a subsidized firm leaves, it takes its jobs with it, but a trained worker and a rebuilt bridge remain in place for the next employer.
There are places where the book’s strength is also its limitation. LeRoy writes from the perspective of someone who has seen the worst of the incentive world, and at times his tone flattens distinctions among different kinds of programs. His account contains relatively little from inside the executive suites of the companies he criticizes; corporate leaders appear mostly through their public statements or the testimony of their consultants. A reader might wish for more sustained engagement with arguments about globalization, regulatory disparity, or genuine place-based barriers that sometimes make targeted incentives more defensible. And because his focus is on the United States, the book does not explore how other countries have tried to discipline subsidy races or coordinate regional development, which might have offered additional models.
Yet those gaps do not fundamentally weaken the case he makes. If anything, they leave space for the debates he clearly wants to provoke. What “The Great American Jobs Scam” demonstrates, with a relentlessness that is something like its own moral style, is that the burden of proof ought to rest on those who claim that tax breaks and subsidies are necessary to create or retain jobs. LeRoy does not insist that every incentive is inherently illegitimate; he does insist that incentives be transparent, conditioned, and measured against the alternative uses of the money. When he shows a school district losing ten or twenty million dollars a year so that a handful of companies can reduce their tax bills, or a city financing a gleaming stadium while closing neighborhood libraries, he is asking a simple question of priorities.
As a reading experience, the book can feel repetitive in its structure – another deal, another broken promise – but that repetition is part of the point. The cases span regions, industries, and decades; what ties them together is not some grand conspiracy but a set of habits that have hardened into doctrine. LeRoy writes with a reporter’s insistence on names and numbers, an advocate’s impatience with euphemism, and a teacher’s gift for the illustrative example. There are moments of bitter humor, as when he asks whether a mall without a Nordstrom can now be classified as “blighted,” and there are passages of understated empathy, especially when he writes about communities that have seen factory after factory close.
In the end, I would give the book an 88 out of 100. It is not the last word on economic development policy, nor does it try to be. Instead it does something rarer and more useful: it opens the ledger. It asks readers to think of subsidies not as magical job-creation tools but as line items that can and should be compared with everything else a public body might fund. It gives reformers a vocabulary and a set of examples, and it gives taxpayers a way to connect the ribbon cutting on the evening news to the class size in their child’s school or the potholes on their drive to work. That is a substantial achievement, and it makes “The Great American Jobs Scam” feel, nearly two decades after its publication, less like a period piece than like a book waiting to be taken seriously by the officials who still rush to those podiums.
December 15, 2014
This book proves the Tea Party wrong beyond all reasonable doubt, and should be required reading for all those seeking or working in public office. Tax cuts do not create jobs, they leave companies raping communities, not paying their fair share, destroying jobs, infrastructure and schools, leaving a large footprint, and absconding with the riches. I took notes for a forthcoming fuller review. There is plenty of hard data, citations of studies, and implementable solutions to the problem. It's a shame this book was not touted heavily while Mitt Romney was crafting his asinine "job creator" language or claiming that only 46% of Americans pay taxes (both untrue).
"to that end, according to the gospel, states must not be allowed to compare notes to determine whether companies are lying about competing subsidy bids or cheating on their income taxes. Instead, states can only be allowed to compete to see which will tax the least corporate income, or which will give the biggest tax gift to a trophy deal" (4).
According to Michael R. Bloomberg, "Any company that makes a decision as to where they are going to be based on the tax rate is a company that won't be around very long...If you're down to that incremental a margin you don't have a business." (43, quoting from the New York Times, November 8, 2001)
Robert Ady, formerly of Fantus and now the head of his own site relocation company, Ady International, says "[I]n the facility location process, taxes are not relatively important when compared to other cost factors such as labor, transportation and utility and occupancy costs... In summary, site selection data do not suggest any correlation between low taxes and positive economic growth, or between high taxes and slow growth. the location requirements are many, the process too complicated, and other factors too important to justify a strong relationship." (50, citing New England Economic Review, March/April 1997)
Professor Peter Fisher of the University of Iowa demonstrates that when corporate tax revenue goes down, so do public services, and that the return on investment for such breaks is so low, about ten businesses for every 100 that actually exist in the community in the high growth of the 1990s, which Le Roy likens to catching fish with dynamite. (58)
Businesses know that the tax abatements are, as Dennis Cuneo of Toyota put it, "pennywise but dollar-foolish" Toyota chose Alamo City, near San Antonio, in spite of larger subsidy promises in four other states, and even voluntarily paid $34 million in taxes to the local school district, because the resources in the other bidding locales were not as good (61).
63
64n33
74 1st paragraph
"Business friendly"=low quality of life. (81).
96-97
101 2nd full paragraph
102 lying Chicago school
117 Fort Wayne foolishness
"After Sony announced the closure of its Springfield, Oregon, CD factory, which had enjoyed a five-year enterprise zone property tax break, the Eugene Register-Guard investigated 76 other abated companies--6 big firms that got 95 percent of the tax break dollars and 70 smaller ones. It found that the big companies--Hynix, Weyerhaeuser, and Symantac--had fallen short of their job projections but renegotiated deals to keep some or all of the breaks. The net outcomes with the smaller companies were far better. Although 11 had closed, the small companies as a group created almost as many new jobs as the six big companies did--with just 5 percent of the dollars. Cost per job at the small companies: $2,100. At the big companies: $32,000" (118).
"Louisiana also gave enterprise zone rebates and credits; in just four years, these totaled another $188 million. One of the zone subsidies is a $2,500 tax credit for each new employee hired. Shell Oil collected seven such credits for hiring workers at its plant in Norco--to replace seven wokrers killed in a 1988 explosion. The tax credits far exceeded the $3,630 fine imposed by the Occupational Safety & Health Administration for the fatal tragedy" (119-120).
"Toledo businesses complain that the poor schools make it hard to find well-trained workers--at the same time those businesses are taking big property tax rates." (121) Those businesses are hypocrites, creating the problem and then complaining about it--"Why should we lose profits to pay for good schools, even though we want them?" is not a valid question.
"Instead of good new jobs, workers are getting low wages and taxpayers are getting poor public services. The South Carolina Department of Commerce brags, on its website, that the state has the lowest rate of unionization and that its manufacturing wages are 10 percent below the national average. But as jobs and population grow, public systems get strained and services suffer. With overcrowded roads, South Carolina has the nations sixth highest rate of auto fatalities. With poorly funded public healthcare systems, its infants are the sixth most likely to die. with low school funding, children fare poorly on SAT scores: lowest among the states in verbal and second lowest in math" (124).
"Can you imagine your local school board passing a resolution that allows a company to pay no property tax for the fire department and the police department--without those departments having any say in the matter? Of course not. But that is exactly what's happening to school boards in most states. This is terrible public policy, a telling sign of our collective disrespect for education, at a time when education matters more than ever for our economy" (125)
126 paragraph 3
137 paragraph 1
139 n 30
141 1st full and 2nd paragraph
142 n 38
143 n 39
149 third full paragraph
152 Wal-Mart welfare
162 n 13, n14
163 n 15
174
175 first full paragraph
176 $8.8 million per job
On page 177, LeRoy shows a table from the Institute on Taxation and Economic Policy that demonstrates the higher your income bracket, the lower your state and local taxes, a disparity shown to increase between 1989 and 2002. "In Florida...the lowest income families pay 14.4%of their income in state and local taxes, while the top 1 percent pay just 2.7 percent. In Texas, the poor pay 11.4 percent vs. 3.2 percent for the ultra-rich" (177-8).
"In Washington state, families making an average of just $9,600 in 2002 paid a whopping 17.6 percent of their income in state and local taxes, while families in the top 1 percent income bracket paid just 3.1 percent. So the world's richest person, Bill Gates [himself the son of high-powered attorneys for the government--SAH] (with an estimated worth of $48 billion) is just like every other Washington state personal resident in paying no state income tax there--while the Evergreen State gives Boeing and the aerospace industry a $3.2 billion subsidy for the 7E7 "Dreamliner deal. That's some serious redistribution of wealth--upward!" (178), yet the Tea Party never complains about upward redistribution of wealth, while condemning downward as theft, when clearly, the reverse is true.
"[I]nstead of creating lots of new jobs, the tax cuts increased corporate profits and made the federal budget deficit bigger, while the nation suffered a 'jobless recover.' Between 2001 and 2003, U.S. corporate pretax profits rose 26 percent, yet federal corporate income tax payments shrank 21 percent in the same period. Job creation was worst since the Great Depression. From the start of the recession in March 2001 through November 2004, the U.S. economy had a net loss of 1.2 million private-sector jobs" (179).
The U.S has third lowest corporate tax rates, behind only Germany and Iceland (181), yet the Two Party thinks they are too high and opposes the socialist programs that make Germany and Iceland so livable.
"In this area of heightened capital mobility, investments in skills and infrastructure are especially wise because, unlike a call center or a widget plant, they don't up and run away. If a business fails or moves, at least the tax payers in the area retain the value of their past investments: the dislocated workers will take their skills to new jobs, and the infrastructure will still be there, helping other businesses" (198).
"to that end, according to the gospel, states must not be allowed to compare notes to determine whether companies are lying about competing subsidy bids or cheating on their income taxes. Instead, states can only be allowed to compete to see which will tax the least corporate income, or which will give the biggest tax gift to a trophy deal" (4).
According to Michael R. Bloomberg, "Any company that makes a decision as to where they are going to be based on the tax rate is a company that won't be around very long...If you're down to that incremental a margin you don't have a business." (43, quoting from the New York Times, November 8, 2001)
Robert Ady, formerly of Fantus and now the head of his own site relocation company, Ady International, says "[I]n the facility location process, taxes are not relatively important when compared to other cost factors such as labor, transportation and utility and occupancy costs... In summary, site selection data do not suggest any correlation between low taxes and positive economic growth, or between high taxes and slow growth. the location requirements are many, the process too complicated, and other factors too important to justify a strong relationship." (50, citing New England Economic Review, March/April 1997)
Professor Peter Fisher of the University of Iowa demonstrates that when corporate tax revenue goes down, so do public services, and that the return on investment for such breaks is so low, about ten businesses for every 100 that actually exist in the community in the high growth of the 1990s, which Le Roy likens to catching fish with dynamite. (58)
Businesses know that the tax abatements are, as Dennis Cuneo of Toyota put it, "pennywise but dollar-foolish" Toyota chose Alamo City, near San Antonio, in spite of larger subsidy promises in four other states, and even voluntarily paid $34 million in taxes to the local school district, because the resources in the other bidding locales were not as good (61).
63
64n33
74 1st paragraph
"Business friendly"=low quality of life. (81).
96-97
101 2nd full paragraph
102 lying Chicago school
117 Fort Wayne foolishness
"After Sony announced the closure of its Springfield, Oregon, CD factory, which had enjoyed a five-year enterprise zone property tax break, the Eugene Register-Guard investigated 76 other abated companies--6 big firms that got 95 percent of the tax break dollars and 70 smaller ones. It found that the big companies--Hynix, Weyerhaeuser, and Symantac--had fallen short of their job projections but renegotiated deals to keep some or all of the breaks. The net outcomes with the smaller companies were far better. Although 11 had closed, the small companies as a group created almost as many new jobs as the six big companies did--with just 5 percent of the dollars. Cost per job at the small companies: $2,100. At the big companies: $32,000" (118).
"Louisiana also gave enterprise zone rebates and credits; in just four years, these totaled another $188 million. One of the zone subsidies is a $2,500 tax credit for each new employee hired. Shell Oil collected seven such credits for hiring workers at its plant in Norco--to replace seven wokrers killed in a 1988 explosion. The tax credits far exceeded the $3,630 fine imposed by the Occupational Safety & Health Administration for the fatal tragedy" (119-120).
"Toledo businesses complain that the poor schools make it hard to find well-trained workers--at the same time those businesses are taking big property tax rates." (121) Those businesses are hypocrites, creating the problem and then complaining about it--"Why should we lose profits to pay for good schools, even though we want them?" is not a valid question.
"Instead of good new jobs, workers are getting low wages and taxpayers are getting poor public services. The South Carolina Department of Commerce brags, on its website, that the state has the lowest rate of unionization and that its manufacturing wages are 10 percent below the national average. But as jobs and population grow, public systems get strained and services suffer. With overcrowded roads, South Carolina has the nations sixth highest rate of auto fatalities. With poorly funded public healthcare systems, its infants are the sixth most likely to die. with low school funding, children fare poorly on SAT scores: lowest among the states in verbal and second lowest in math" (124).
"Can you imagine your local school board passing a resolution that allows a company to pay no property tax for the fire department and the police department--without those departments having any say in the matter? Of course not. But that is exactly what's happening to school boards in most states. This is terrible public policy, a telling sign of our collective disrespect for education, at a time when education matters more than ever for our economy" (125)
126 paragraph 3
137 paragraph 1
139 n 30
141 1st full and 2nd paragraph
142 n 38
143 n 39
149 third full paragraph
152 Wal-Mart welfare
162 n 13, n14
163 n 15
174
175 first full paragraph
176 $8.8 million per job
On page 177, LeRoy shows a table from the Institute on Taxation and Economic Policy that demonstrates the higher your income bracket, the lower your state and local taxes, a disparity shown to increase between 1989 and 2002. "In Florida...the lowest income families pay 14.4%of their income in state and local taxes, while the top 1 percent pay just 2.7 percent. In Texas, the poor pay 11.4 percent vs. 3.2 percent for the ultra-rich" (177-8).
"In Washington state, families making an average of just $9,600 in 2002 paid a whopping 17.6 percent of their income in state and local taxes, while families in the top 1 percent income bracket paid just 3.1 percent. So the world's richest person, Bill Gates [himself the son of high-powered attorneys for the government--SAH] (with an estimated worth of $48 billion) is just like every other Washington state personal resident in paying no state income tax there--while the Evergreen State gives Boeing and the aerospace industry a $3.2 billion subsidy for the 7E7 "Dreamliner deal. That's some serious redistribution of wealth--upward!" (178), yet the Tea Party never complains about upward redistribution of wealth, while condemning downward as theft, when clearly, the reverse is true.
"[I]nstead of creating lots of new jobs, the tax cuts increased corporate profits and made the federal budget deficit bigger, while the nation suffered a 'jobless recover.' Between 2001 and 2003, U.S. corporate pretax profits rose 26 percent, yet federal corporate income tax payments shrank 21 percent in the same period. Job creation was worst since the Great Depression. From the start of the recession in March 2001 through November 2004, the U.S. economy had a net loss of 1.2 million private-sector jobs" (179).
The U.S has third lowest corporate tax rates, behind only Germany and Iceland (181), yet the Two Party thinks they are too high and opposes the socialist programs that make Germany and Iceland so livable.
"In this area of heightened capital mobility, investments in skills and infrastructure are especially wise because, unlike a call center or a widget plant, they don't up and run away. If a business fails or moves, at least the tax payers in the area retain the value of their past investments: the dislocated workers will take their skills to new jobs, and the infrastructure will still be there, helping other businesses" (198).
September 10, 2022
Very well researched and presented. Even more evidence of how America is now a corporate oligarchy that the nation is still in collective denial about. We do not live in a capitalist system. Corporates rig the system to take our money and make their own. Published in 2004 - the predictions about short staffed schools, hospitals, and skilled labor shortages was prophetic, though the author would argue it was obvious. The book was a little dry in some parts and I think would have benefited from some interviews or personal observations/anecdotes/Gonzo-style reporting.
April 13, 2022
The central pilar of the book’s argument, job creation, is more the hobbyhorse of cranks and pundits than a topic for serious economic analysis. Still, many of the forecasts have aged well and politicians could do worse than to follow LeRoy’s recommendations for greater investment in infrastructure and K-12 education.
October 3, 2011
This books is, once again, one of those books that will not be read by the persons who really need to read it. I knew by instinct that the ubiquitous tax packages given to most big companies these days were bad, but I didn't have the personal knowledge as to why. This book spells it out in black in white. Furthermore, author Greg LeRoy went to the horses mouth, the consultants that help negotiate these sweetheart deals, and proved that most of these time companies decide where to relocate FIRST and THEN go to cities and states with fake competing cities to try to get any deal they can. In most cases the promised numbers of jobs are never delivered. Other companies have taken the money and ran. In most cases until relatively recently there were no contract provisions to get money back from corporations that reneged on the deal. The jobs that have been created usual cost the state thousands of dollars in lost revenue and in some extreme cases cost more than one million dollars each! Numbers also show that they don't create the "downstream" or "upstream" jobs promised by a significant number. Overall, independent studies have shown that these deals are almost always not a good use of money (except in some instances where used for truly blighted areas), however the use of tax abatement deals continue year after year.
By their own admission, Corporations look for good quality of life, needed resources, and skilled labor pools before they look at taxes. If they can get the tax breaks it's simply icing on the cake. This, of course, completely defeats the reasoning of handing out tax abatements: to encourage business in areas where it otherwise wouldn't have been. Needed tax revenue gets lost for no reason, moving the tax burden on lower and middle classes. It all ends up becoming a downward spiral: with less revenue the schools and roads lose funding, making the "business basics" behind the area decline, making businesses flee, making revenue decline, etc...
The independent figures listed in this book make the job creation ideas, especially proposals of reduction of corporate tax rates, absolutely laughable. In many states a majority of major corporations are paying the minimum tax or even achieving a NEGATIVE income tax rate. The numbers show that since Federal tax reductions in the Bush administration corporate profits have soared with no corresponding increase in labor investment. This book successfully unearths how much of our future we're giving away while benefiting only the top tier of the corporate ladder. I wish every taxpayer could read this as we go into another election year filled with "ideas" that will do nothing to solve a constantly deepening jobs crisis. The ideas, however, will serve to line of the pockets of corporate contributors.
By their own admission, Corporations look for good quality of life, needed resources, and skilled labor pools before they look at taxes. If they can get the tax breaks it's simply icing on the cake. This, of course, completely defeats the reasoning of handing out tax abatements: to encourage business in areas where it otherwise wouldn't have been. Needed tax revenue gets lost for no reason, moving the tax burden on lower and middle classes. It all ends up becoming a downward spiral: with less revenue the schools and roads lose funding, making the "business basics" behind the area decline, making businesses flee, making revenue decline, etc...
The independent figures listed in this book make the job creation ideas, especially proposals of reduction of corporate tax rates, absolutely laughable. In many states a majority of major corporations are paying the minimum tax or even achieving a NEGATIVE income tax rate. The numbers show that since Federal tax reductions in the Bush administration corporate profits have soared with no corresponding increase in labor investment. This book successfully unearths how much of our future we're giving away while benefiting only the top tier of the corporate ladder. I wish every taxpayer could read this as we go into another election year filled with "ideas" that will do nothing to solve a constantly deepening jobs crisis. The ideas, however, will serve to line of the pockets of corporate contributors.
July 18, 2017
Great read, albeit a frustrating topic. Something inherently exhausting to think about cities devoid of a manufacturing base handing over tax incentives for jobs to companies that eventually fail or fire everybody and leave town.
Read
September 7, 2013I've looked forward to reading this one for a while, which is why it's disappointing that it's written so poorly it makes it hard to read.
p. x "creating workers without a living wage..."
p. 2 "Other companies that have gotten paid just to move existing jobs from one place to another, where they are proclaimed to be "new jobs.""
How does that pass for a sentence?!
p. x "creating workers without a living wage..."
p. 2 "Other companies that have gotten paid just to move existing jobs from one place to another, where they are proclaimed to be "new jobs.""
How does that pass for a sentence?!
February 10, 2013
Very informative and pretty much what I already believed about Corporations who come in with taxes favoring them and then do not provide the promised jobs.
Picked up at are local library felt it might be a good read for the economics of the time.
Picked up at are local library felt it might be a good read for the economics of the time.
November 25, 2012
Seven years later and its still one of the most narrative corrections out there on economic development, local and state taxation levels and the growth of 'bad jobs'.
Want to Read
July 3, 2014I registered a book at BookCrossing.com!
http://www.BookCrossing.com/journal/12760885
http://www.BookCrossing.com/journal/12760885
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