Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

'It's a devious double whammy: Taxpayers are giving money to the corporations and then paying a second time to meet the needs of the underfunded public schools.' (Photo: OdysseyOnline)

Tax Time: How Corporations Are Cheating Schoolchildren

Paul Buchheit

Many of the largest U.S. corporations aren't paying the state taxes that should be funding our schools. Kids are the victims. So are the average Americans who are forced to pay higher property taxes, sales taxes, and excise taxes to meet educational budgets. Government and media sources would have us believe there's no alternative, for in a market-driven world it's heresy to make demands of big business, even when the companies are flagrantly avoiding their taxes.

Illinois: Schools Held Hostage by Just Six Corporate Tax Avoiders

The mayor and governor of Illinois are blaming each other for the Chicago Public School budget crisis, and Illinois colleges are in danger of being shut down. But Illinois lost over $1.3 billion (more than the $1.1 billion school budget shortfall) in 2015 state tax revenue to just six companies (Abbott, ADM, Boeing, Deere, Exelon, United), which together paid much less than 1% of their profits in state taxes, just pennies on the dollar for the required rate of 7.75%.

"Government and media sources would have us believe there's no alternative, for in a market-driven world it's heresy to make demands of big business, even when the companies are flagrantly avoiding their taxes."
Yet it’s the children and the taxpayers of Illinois who bear the burden of reform. Illinois has one of the "Ten Most Regressive State Tax Systems," according to the Institute on Taxation and Economic Policy. In Chicago, Mayor Emanuel recently announced another $200 million in education cuts and then raised property taxes by a half-billion dollars, but the mainstream media repeatedly hushes up the corporate tax avoidance.

California: Funding Goes to Charters as Corporations Take Tax Refunds

In California, where depleted public schools are giving way to business-happy 'reformers' and charter schools, Google took a $400 million refund on its $8 billion in U.S. profits. Chevron has over half of its oil and gas wells in the United States, yet the company claimed a loss of nearly $3 billion in the U.S., a foreign profit of $7.7 billion, and a refund on all its U.S. taxes. Intel managed to pay 1/2 of one percent in state taxes, on nearly $9 billion in U.S. profits.

The East Coast: Big Corporate Profits, Zero Tax Dollars for the Schools

New York City has nearly a half-million students in overcrowded classrooms in the most segregated city in the nation. Yet New-York-based Pfizer, which had $35 billion in profits over the past three years, has claimed massive losses in the U.S. despite having nearly half of its sales here, and just took an $8 million 2015 state tax refund while it prepares for future tax-slashing with an overseas inversion deal.

Pfizer CEO Ian Read complained that U.S. taxes had his company fighting "with one hand tied behind our back."

Just across the water in Connecticut is General Electric, which has paid little or no state income tax for years, and has now announced a move to Boston with a new state subsidy of $180,000 for every job it creates, even though Boston schools face a $50 million budget shortfall in 2016.

Insidious Tricks to Keep Tax Money Away from the Schools

Fake Loans: The New York Times reports on a practice called "earnings stripping," by which a company undergoing an inversion 'borrows' money from its foreign partner and then deducts interest on the debt. In effect writing off the money that it lends to itself.

Fake Taxes: Berkshire Hathaway (Warren Buffett's company) uses hypothetical amounts to 'pay' its taxes, which in actuality have been deferred for many years. Exxon, which uses a theoretical tax to 'pay' its bill, declared almost none of its 2015 income ($22 billion) in the U.S. even though about 80 percent of its productive oil and gas wells are in this country.

Sinking Lower: Taking School Revenue from Poor Nations: Action Aid reports: "Women and girls in the world’s poorest countries need good schools and hospitals...A little-known mechanism by which countries lose corporate tax revenue is a global network of binding tax treaties between countries." Lacking such a treaty, corporations have another strategy: lawsuits against poor countries, in the style of modern trade agreements.

Summary of Shame

Big business might claim that their minimal taxes are a result of agreements made with states to promote economic growth and create jobs. But the facts come from Good Jobs First and the New York Times, reporting on 2011-12 data:

  • Federal, state, and local governments give up $170 billion per year in tax incentives.
  • States were forced to cut public services and raise taxes by a collective $156 billion in 2011.
  • The subsidy cost per job averaged $456,000 for 170 'megadeals' analyzed by Good Jobs First.

It's a devious double whammy: Taxpayers are giving money to the corporations and then paying a second time to meet the needs of the underfunded public schools. Corporate annual reports never mention the need to support the U.S. educational system that helped make their companies prosperous.


Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
Paul Buchheit

Paul Buchheit

Paul Buchheit is an advocate for social and economic justice, and the author of numerous papers on economic inequality and cognitive science. He was recently named one of 300 Living Peace and Justice Leaders and Models. He is the author of "American Wars: Illusions and Realities" (2008) and "Disposable Americans: Extreme Capitalism and the Case for a Guaranteed Income" (2017). Contact email: paul (at) youdeservefacts.org.

... We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.

GOP 'Silence Speaks Volumes,' Says Ilhan Omar as Boebert's Bigotry Goes Unpunished

"Normalizing this bigotry not only endangers my life but the lives of all Muslims. Anti-Muslim bigotry has no place in Congress."

Brett Wilkins ·


Africans Should Be 'Applauded, Not Punished,' Say Advocates Amid Omicron Travel Ban

"What is going on right now is inevitable," said African Union Vaccine Delivery Alliance co-chair Dr. Ayoade Alakija. "It's a result of the world's failure to vaccinate in an equitable, urgent, and speedy manner."

Brett Wilkins ·


Biden Drilling Report Blasted as 'Shocking Capitulation to the Needs of Corporate Polluters'

"Greenlighting more fossil fuel extraction, then pretending it's OK by nudging up royalty rates, is like rearranging deck chairs on the Titanic," said one campaigner.

Jessica Corbett ·


UNESCO Members Adopt First Global AI Ethics Agreement 'To Benefit Humanity'

"We're at a critical juncture in history," said Ethics in Tech founder Vahid Razavi. "We need as humans to come together and decide what is the best course of action to take with these technologies before they surpass us in their abilities."

Brett Wilkins ·


Progressive US Lawmakers Mark Black Friday With Calls to Pass the PRO Act

"The right to organize, fight for better working conditions, and fair pay must always be protected."

Jessica Corbett ·

Support our work.

We are independent, non-profit, advertising-free and 100% reader supported.

Subscribe to our newsletter.

Quality journalism. Progressive values.
Direct to your inbox.

Subscribe to our Newsletter.


Common Dreams, Inc. Founded 1997. Registered 501(c3) Non-Profit | Privacy Policy
Common Dreams Logo