Tax avoidance is just as bad at the state level, which is a much greater source of K-12 educational funding. Both individuals and corporations are paying less state taxes than ever before. As a result, our public schools, the most important expression of a society working together to secure future generations, are being defunded and dismantled and left to decay.
It may be the ugliest extreme of inequality in our country -- tax avoidance by the rich vs. broken-down schools.
Rich White Male Tax Avoidance
According to a Standard and Poor's analysis, average annual state tax revenue fell from 10% to 5% between 1980 and 2011, even as the share of total income for the top 1% of earners doubled. The top 10% and the top 500 CEOs are predominately white males. Our country's missing tax revenue can be found in their growing stock portfolios.
Corporate Tax Cheats
Walgreens and Burger King are the most recent manifestations of the so-called inversions that allow companies to skip out on the country that made them successful. They don't want to pay for decades of publicly funded research in technology and medicine; a legal system that protects patents and intellectual property; infrastructure, including roads and seaports and airports to ship their products; unprecedented amounts of local and national security, a nationwide energy grid to power factories, emergency management (FEMA) to clean up industrial accidents.
President Obama said, "I don't care if it's legal, it's wrong." These inverting companies, he continued, "don't want to give up all the advantages of operating in the United States. They just don't want to pay for it."
Inversions and other tax haven deceptions are a double insult to us, because not only are taxes left unpaid, but profits have also been manipulated by accounting chicanery to end up in the U.S. anyway.
State School Funding Gone
Three separate studies have shown that corporations pay less than half of their required state taxes, which are a main source of K-12 educational funding and a significant part of pension funding. Most recently, the report "The Disappearing Corporate Tax Base" found that the percentage of corporate profits paid as state income taxes has dropped from 7 percent in 1980 to about 3 percent today.
Public schools anchor their communities, providing the stability and sense of common purpose that benefit all their members, from students to parents to teachers. As researcher Sarah Hainds explains, "At school closing hearings, people constantly say that it’s as if CPS is erasing their history. There are schools where three generations of family members have attended. There’s a ton of pride...it’s still the center of their community."
With the breakup of public schools, students are often required to walk an extra eight blocks or more across busy streets and through neighborhoods with foreclosed homes, to get to schools that are usually no better in performance than the schools being shut down.
Communities Are Left to Pay, and They Don't Want To
Without state tax revenue, the funding burden falls on local property and sales taxes. Wealthier areas are able to spend much more on their children. They also have better connections to private educational foundations.
Worst of all, some well-to-do communities are refusing to support the common good, transferring their local taxes to tax-deductible parent's foundations to avoid supporting poorer schools within their taxing districts.
The very wealthy -- both corporations and individuals -- have received countless benefits from our long-productive society, especially from our nation's educational system. But they like to believe they made it on their own. They don't want to feel guilty about kids without breakfast and without a neighborhood school.