Tech companies want great STEM education — they should pay a fair share

Tech companies want great STEM education — they should pay a fair share
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Some have heralded Amazon’s search for their second headquarters as a wake-up call to policymakers about the need for increased computer science and STEM education funding. While the goals are laudable, it is easy to overlooks a significant problem with the growth of companies such as Amazon and others — It often comes at the expense of local education funding.

In a recent column, TechNet president Linda Moore praising the awareness the search would bring, Moore correctly noted that metropolitan areas are falling over themselves to lure Amazon. In doing so, many will offer all sorts of taxpayer subsidized goodies such as tax credits, property tax abatements and tax-increment financing.

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Philadelphia offered to forgo property tax for 10 years. New Jersey is offering 7 billion dollars of tax incentives. Here in Missouri, the Saint Louis and Kansas City areas have both submitted proposals — but won’t share them with the public. If the past is any indication, they will likewise be loaded with similar taxpayer giveaways.

 

Therein lies the problem. Big companies seek and receive a great deal of public assistance in the form of taxpayer subsidies. Often, these subsidies were designed to spur development in economically disadvantaged areas by lowering the developer’s tax burden — thus reducing the risk of investment.

As commendable as this sounds, the subsidies are often given to wealthy companies to build in more affluent, economically vibrant parts of town.

In Kansas City alone, successful companies such as H&R Block, Burns & McDonnell and JE Dunn have all sought and received taxpayer subsidies to build their own world headquarters in economically healthy areas.

Most of these subsidies come in the form of reduced or refunded property taxes. This means that subsidies being offered to the companies listed above — and those being sought by Amazon—actually divert money away from schools, libraries and other basic services funded by property taxes.

Amazon is looking for the best package of subsidies and tax breaks, but the sheer size of the opportunity only multiplies the effect. Most of those hired to work at the new headquarters would likely be drawn from elsewhere, placing additional demands on school districts in the form of hundreds of new children — while granting the districts no additional resources. This is in addition to the stresses placed on infrastructure and other services such as policing.

Because federal funding for education makes up only a small portion of any school district’s budget, the terrible irony is that even with the increase in federal funding Moore calls for, the school districts in the city that “wins” Amazon’s second headquarters may still be worse off because of the loss of local tax revenue.

Seventy-three civic organizations responded to these realities by writing an open letter to Amazon CEO Jeff Bezos demanding that Amazon pay its taxes — including on “building materials, machinery and equipment.”

The letter also noted, “If you want a highly-educated local talent pool you must pay all of your property taxes to fund our schools, public safety, infrastructure and other public goods and services.”

If tech leaders want to see increases to education funding of any kind, they should stop asking national, state and local governments to subsidize their companies and start contributing their fair share to public coffers. The result would be a financial boon for local school districts.

Patrick Tuohey is the director of Municipal Policy at the Show-Me Institute, a think tank promoting free markets and individual liberty. Follow him on Twitter @PatrickTuohey