It’s easy to cast about for other big pots of money to raid when these kinds of shortfalls arise, and no politician wants to raise taxes. There is, however, another big expense that tends to get overlooked: The tax breaks states already hand out to corporations, on the theory that they won’t stick around without them. In Pennsylvania, they amount to about $3.9 billion per year — several times the $1.4 billion that the state needs to contribute in order to make good on its pension obligations.
That means companies all around Lincoln High avoid taxes through offshore bank accounts, stashing income money in other states because of a failure to adopt “combined reporting,” locating in low-tax “opportunity zones,” and taking advantage of credits for research and development — while kids go without prom and after-school programs because the money isn’t there to fund them.
And it’s not just Pennsylvania. A new report out today from the research group Good Jobs First, which receives some funding from labor unions, finds that the annual cost of tax breaks and corporate subsidies often exceeds even the most out-of-control pension loads. In an examination of 10 states with some of the hottest battles over retirement plans for public employees, it calculated that they spend an average of 51 percent more to help out corporations than they do keeping up with contributions to pension systems.