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Corporate Tax Loopholes Hurting Education System in Minnesota

FOR IMMEDIATE RELEASE – May 10, 2013
Contact: Emily Bisek, 952.237.2429, emilyb@local284.com
Greta Bergstrom, 651.336.6722, greta@takeactionminnesota.org

CORPORATE TAX LOOPHOLES HURTING EDUCATION SYSTEM IN MINNESOTA, NEW REPORT FINDS
Report released Friday links corporate tax loopholes to decreased state
funding for kids and schools

St. Paul, MN (May 10, 2013)— If Minnesota closed a handful of corporate tax loopholes, the state would have enough revenue to make the biggest investment on the per pupil funding formula since 1991, a new report released Friday by TakeAction Minnesota, SEIU Local 284 and the Minnesota Teachers Federation shows. The report shows that the state could save over $580 million dollars over the next two years and increase education funding by $348 per pupil statewide if nine loopholes enjoyed by corporations were closed.

“This report shows that over the next ten days, the state has an important choice to make,” said Chris Conry, Economy Program Manager at TakeAction Minnesota. “Should Minnesota’s families continue to subsidize the state’s largest businesses or use our money to support investments like public schools and health care that everyone relies on? That should be an easy choice, but unfortunately, the past decade of school funding disinvestments show that corporate lobbyists have been winning at the expense of our schools.”

Minnesota now ranks 49th in the nation for class sizes and the racial achievement gap. The per-pupil state funding formula has continually decreased over the past two decades, according to the Minnesota Department of Education. If the per pupil formula had kept up with inflation, it would be $2,136 higher per student in the state. Because of the decreased funding, ten school districts in Minnesota are on four-day weeks in order to save money.

“As a mother, a grandmother and a taxpayer, I am happy to pay my fair share for Minnesota’s kids and schools,” said Anna Angeles-Farris, an employee in Lakeville School District which is facing $3.5 million in budget cuts this year. “It is so frustrating that legislators aren’t requiring corporations to do the same.”

Corporations represented at the Capitol by the Minnesota Chamber of Commerce and the Minnesota Business Partnership complain that Minnesota’s 9.8 percent corporate income tax rate is too high, but many take advantage of loopholes to pay much less than that already. Over half of our state’s corporations don’t pay the corporate franchise tax at all.[1]
In fact, Minnesota’s total effective business tax rate is just 4.5%, among the lowest in the nation. Only thirteen states have a lower rate.

Jeff Van Wychen, Director of Tax Policy and Analysis at Minnesota 2020 explained that loopholes contained in the report do nothing to grow jobs, the primary message corporate lobbyists claim. “There is no serious academic study that shows any indication that the foreign royalty deduction, the FOC loophole, tax havens, the nowhere income loophole do anything to promote job growth in Minnesota.” Meanwhile, school funding takes a big hit.

Taylor Maness, an organizer at the Minneapolis Federation of Teachers Local 59 believes it is “unacceptable for corporations to continue dodging taxes through loopholes.” Maness said “This report makes clear that when corporations don’t pay their fair share, Minnesota students suffer.” Minneapolis Public Schools have proposed a multi-million dollar cut to their school budgets and hope legislators will raise the revenue required to make sure students have access to the resources they need to be successful.

Conry believes the choice comes down to students or a continuation of corporate subsidies. “We can increase the per-pupil funding substantially if legislators can find the will to close these loopholes.”

To read the report, please visit http://50.87.249.163/~takeacu7/_assets/document/Students_v._Subsidies_report.pdf

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SEIU Local 284 is a union of more than 8,000 members working in schools and districts across Minnesota.

TakeAction Minnesota is a statewide people’s network of individual and organizational members working collaboratively to raise the voices of Minnesotans in their own communities to advance social, racial and economic justice.

Greta Bergstrom
Communications Director
TakeAction Minnesota
Mobile: 651.336.6722
Direct: 651.379.0765
www.TakeActionMinnesota.org

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Follow me @GretaABergstrom

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