The Great American Jobs Scam:
Corporate Tax Dodging and the Myth of Job Creation
by Greg LeRoy
Berrett-Koehler Publishers, 2005
Annotated Table of Contents
Introduction: Money for Nothing. The great American jobs scam: an intentionally constructed system that enables corporations to exact huge taxpayer subsidies by promising quality jobs – and then lets them fail to deliver. A system with a long history and many moving parts. At its core are corrupted definitions of “competition” that salute corporate bottom lines while thumbing their noses at common sense, social science, and good government. They are the legacy of a 50-year campaign by corporations to divide and conquer the states – as well as the suburbs – preaching a gospel that governments at all levels must never be allowed to cooperate.
Chapter One: The Tax Dodgers Are Coming! The Tax Dodgers Are Coming! Fourteen illustrated scams, including: Job Blackmail (Raytheon); Take the Money and Run (Sykes): Payoffs for Layoffs (Bank of America and IBM); Exploit the War Among the States (foreign auto “transplants”); Exaggerate the “Ripple Effect” Benefits (Boeing); Pirate Thy Neighbor’s Jobs (from Los Angeles); Pay Poverty Wages, Stick Taxpayers with Hidden Costs (Wal-Mart); Bust the Union (Briggs & Stratton); and Ride Enron’s Coattails (ConAgra).
Chapter Two: Site Location 101. How companies decide where to expand or relocate is driven by business basics – subsidies rarely make a difference. The trouble is, the way the system is rigged, companies are getting huge subsidies to go where they would go anyway. (Location Management Services, Hewlett-Packard, Toyota, Cabela’s).
Chapter Three: Fantus and the Rise of the Economic War Among the States. In the depths of the Great Depression, a young Chicago industrial real estate salesman named Leonard Yaseen grew impatient with his father-in-law and boss, Felix Fantus. ...Thus was born the Fantus Factory Locating Service, one of the most powerful yet obscure consulting firms in U.S. history. (The birth of IRBs, Grant Thornton and the “business climate,” Mintax, Deloitte and Boeing, Ernst & Young on “Milking the Cash Cow”).
Chapter Four: “Single Sales Factor” and the Corporate Assault on the Income Tax. Suppose you’re a manufacturing executive and you don’t like paying corporate income tax. How’d you like to get an 80 or 90 percent tax cut? No conditions, no strings attached. Just be sure your state manufacturers’ association keeps saying this gigantic tax cut will create jobs, jobs, jobs. Maybe rent an economist to issue a rosy study. (Fidelity Investments/Massachusetts, Illinois, Georgia, the Multistate Tax Commission and the Long-Term Corporate Assault on State Cooperation on Income Taxes).
Chapter Five: Property Tax Abatements and Your Local School. Companies love to locate in areas with good schools; they just don’t want to pay for them. Families don’t get a 10-year holiday on their property tax for moving into their preferred school district, but companies often do. (Exxon in Louisiana. Poor Pay More in Ohio, TIF on Steroids in Illinois, International Paper “double dipping” in Maine).
Chapter Six: Subsidizing Sprawl, Subsidizing Wal-Mart. Taxpayers often subsidize sprawl – in the name of jobs (TIF, enterprise zones). The economic war among the states is a serious problem, but so is the economic war among the suburbs. Stay tuned as we investigate the real suburban issue today: is a mall “blighted” unless it has a Nordstrom? We report. You decide. (Wal-Mart, Proposition 13, “Greyfields” and “Ghostboxes,”).
Chapter Seven: Loot, Loot, Loot for the Home Team. The obvious winners are the owners of the teams that inhabit the stadiums erected at public expense. About two dozen of them appear on the Forbes list of the 400 wealthiest Americans. Owners may make money on operations, but selling remains a sure thing. Just ask the President of the United States. (Dodgers, Orioles, Colts, Browns, Rangers, and Convention Centers: Overbuilt)
Chapter Eight: Shifting the Burden. There is a mountain of evidence, from national statistics and from individual states, that over the past 25 years corporations – especially big ones – are getting lower tax rates and paying a smaller share of the cost for public services, shifting the burden onto everyone else. (How Subsidies Zero Out Income Taxes. The Poor and Middle Class Pay More. Is Corporate America Pulling Out?)
Chapter Nine: Building a New Consensus for Reform. You’d think that our public officials would be proposing drastic solutions, but the typical debate these days is about cooking up new giveaways. We are, after all, talking about $50 billion a year worth of entrenched self-interests, so there is no silver bullet. Only an organizing approach to the problem will do. (Clawbacks, Job Quality Standards, Unified Development Budgets, Smart Growth Policies, School Board Say on Abatements, Regulate Site Location Consultants, Community Benefits Agreements, A Federal Carrot Against Job Piracy).
“A powerful compendium of corporate tax dodging in the U.S. Most disturbing is evidence that states and cities are usually paying companies to do whatever they would have done anyway. A persuasive study supported by lots of disturbing evidence.”
“... meticulously documented ...scrupulously accurate ...evocative storytelling...
»State Tax Notes
“In the field of investigative business reporting, few writers are on a par with Greg LeRoy. LeRoy’s investigative style busts chops and sizzles up his narrative, especially the way he describes the trap that so many towns fall for.”
» Houston Chronicle, 10 Significant Business Titles of 2005
“a brisk and breezy tour through these sweetheart deals.... enough examples to outrage free-market conservatives and anti-corporate liberals alike.”
“bubbles with rage... asks the crucial questions that should accompany any incentive package: Would those jobs have come without the tax break? How much are they really costing taxpayers? What kinds of growth patterns do they encourage? LeRoy knows his material.”
“Greg LeRoy… knows how to conduct an educated rant. In 205 well-documented pages, LeRoy builds the case, with examples from almost every state, that the jobs don’t materialize and the subsidies drain resources from other sectors of the community.”
»St. Paul Pioneer Press
“the best job yet of exposing how business and state/local governments have checked into the No-Tell Motel together and how business has gained the advantage nearly every time. LeRoy argues persuasively that tax rates aren’t the main thing driving business locations anyway; tax discounts are just something to be extracted because companies have figured out they can do it.”
Greg LeRoy, a “Prophet of accountability,” “skewers some of the most common tax breaks and argues that states desperately need to reform their incentive programs.”
“...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.”
“a roll call of economic development’s worst excesses. ...a style that is simple without being simplistic... and a nice chapter on sports stadiums that someone might want to read aloud to Mike Bloomberg.”
»New York Press
“His biting exposé alleges that companies use extortionary practices to obtain favorable treatment from state and local governments in exchange for bringing in or keeping jobs. But then, instead of delivering the promised jobs, these companies often move, shift, or cut positions, leaving the locality in worse shape than before. Venerated companies such as Fidelity, Bank of America, and Dell Computer find themselves bedfellows with such known villains as Enron and Wal-Mart in LeRoy’s caustic chronicle.”
“The fairy tale of public policies ostensibly designed to spur growth by subsidizing private companies is exposed... ...LeRoy amasses a great deal of evidence from states and cities around the country showing that publicly financed economic development programs are outlandishly wasteful.”
»Prof. William Shugart, University of Mississippi
“succeeds in elucidating the abstruse tax-break mechanisms by which corporations fleece local governments in such a clear, compelling and accessible way. ...offers concrete things to do about it...”
“Giving businesses tax dollars to create jobs, as Greg LeRoy so deftly shows, almost always creates problems - less revenue for schools, higher taxes on working families, environmentally dangerous sprawl in our dwindling open spaces.”
“case study after case study of corporate rip-offs of communities and states. LeRoy shows how blind faith, bad negotiating and illusory promises leave local and state government officials with little or no guarantee that new and permanent jobs will be created.”
»Focus on the Corporation
“It is hard to tell whether city and state officials are just stupid or actually corrupt, but one thing is for sure - there is a scandal of monumental proportions going on and LeRoy is blowing the whistle.[This book] should not only be read but studied by community activists, planners, and public officials. ...a wonderful book to use in a wide range of courses on government and public policy.”
»Lawrence Wallack, Dean of the College of Urban and Public Affairs, Portland State University
“The book does not attack all business incentives. Just incentives that lack accountability or any guarantees of performance. Just incentives that subsidize big corporations but are never offered to small businesses. Just incentives that companies promising jobs use to spur bidding wars between states.”
»St. Petersburg Times