---
[ ARCHIVE ](https://www.citywatchla.com/archive)
# Cheating the Schoolkids: Corporations Don't Pay Their State Taxes
January 05 2015
Written by Paul Buchheit.
[](https://www.addtoany.com/share)
EDUCATION POLITICS-The effects of state tax avoidance are seen all around the country, with impacts on schools and pensions and housing. (Photo: [watchdog.org](http://watchdog.org))
An Apple executive recently [said](http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?pagewanted=all&_r=0), "The U.S. has stopped producing people with the skills we need."
It's hard for a nation to build work skills when its corporations, the beneficiaries of a half-century of public support, have largely stopped paying for education.
Most of the attention to corporate tax avoidance is directed at the nonpayment of federal taxes. But state taxes, which to a much [greater](http://www2.census.gov/govs/school/12f33pub.pdf) [extent](http://febp.newamerica.net/background-analysis/school-finance) fund K-12 education, are avoided at a stunning rate by America's biggest companies. As a result, public school funding continues to be cut, and the worsening performance of neglected schools adds fuel to the reckless demands for privatization.
Inner-city schools are being devastated by this insidious process.
**Chronic Nonpayment** -A 2011 report by [Citizens for Tax Justice](http://www.ctj.org/corporatetaxdodgers50states) (CTJ) showed that corporations pay less than half of their required state taxes, which in addition to K-12 educational funding provide a significant part of pension funding. More recently, the [report](http://npa-us.org/files/thedisappearingcorptaxbase_report.pdf) 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.
It may be getting worse. A PayUpNow [analysis](http://www.payupnow.org/20150105_Educ_StateTax.xls) of 25 of our nation's largest corporations shows a total state tax payment of 2.4%, about a third of the required tax, based on the average maximum [state tax rate](http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=244) of 7.3%. Among them were:
•Boeing, which paid [zero federal taxes](http://www.ips-dc.org/wp-content/uploads/2014/11/IPS_Fleecing_Uncle_Sam_Report_Nov2014.pdf) last year, and about 1/50 of its required state taxes.
•Caterpillar, which paid less than a quarter of its tax bill after recently [threatening](http://www.chicagotribune.com/business/breaking/ct-biz-illinois-companies-leaving-cat-photo.html) to leave Illinois. [Rand Paul](http://www.courier-journal.com/story/news/politics/rand-paul/2014/04/01/rand-paul-award-caterpillar-tax-savings/7173673/) said Caterpillar should get "an award" for saving money.
•Verizon, which paid about one-tenth of its required tax. A company spokesman recently [said](http://www.washingtonpost.com/business/economy/big-corporations-use-loopholes-dodge-taxes-study/2011/11/02/gIQAIalngM_story.html), "Verizon fully complies with all tax laws and pays its fair share of taxes."
•Google, which paid less than a quarter of its state tax bill. Referring to tax havens, Google Chairman Eric Schmidt [said](http://www.telegraph.co.uk/technology/google/9739039/Googles-tax-avoidance-is-called-capitalism-says-chairman-Eric-Schmidt.html), "I am very proud of the structure that we set up."
**Starving the Public Schools** -As a result of the decline in state tax money, education gets cut. Overall spending on [K-12](http://lifeinc.today.com/_news/2013/05/26/18448956-recessions-fallout-spending-per-student-falls-for-first-time-ever?lite=) public school students fell in 2011 for the first time since the [Census Bureau](http://www.census.gov/newsroom/press-releases/2014/cb14-95.html) began keeping records over three decades ago. The cuts have[continued](http://www.cbpp.org/cms/?fa=view&id=4011) to the [present day](http://www.cbpp.org/cms/?fa=view&id=4216).
**Games Corporations Play to Take Our Education Funding**
A Good Jobs First [report](http://www.goodjobsfirst.org/sites/default/files/docs/pdf/shellgame.pdf) describes how companies play one state against another, holding their home states hostage for tax breaks under the threat of bolting to other states. Incompetent or complicit governors simply play along.
A related [report](http://www.goodjobsfirst.org/sites/default/files/docs/pdf/taxestotheboss.pdf) explains the personal income tax (PIT) subsidy, through which employers simply take the state tax paid by their workers. States are pressured into such agreements to keep corporations from moving out. Employees, as a result, are effectively "paying taxes to the boss."
**Americans Suffering Everywhere** -The effects of state tax avoidance are seen all around the country, with impacts on schools and pensions and housing. Illinois, perhaps the most [financially troubled](http://www.msn.com/en-us/money/savingandinvesting/the-5-best-run-states-in-america-and-the-5-worst/ss-BBgvqGl?ocid=mailsignout#image=11) of all states, cut [education spending](http://www.cbpp.org/files/9-1-11sfp.pdf) per student by a greater percentage than any other state in 2012, and in 2013 it was third-worst in [cuts per student](http://www.cbpp.org/files/9-4-12sfp.pdf). As Illinois was shutting down 50 public schools last year, 12 of the state's largest corporations were paying about [a third](http://www.payupnow.org/20150105_TaxPercentsIL_2011-13.doc) of their required state taxes.
In Pennsylvania, which according to the [CTJ report](http://www.ctj.org/corporatetaxdodgers50states) received [less than a third](http://www.payupnow.org/CTJ_StateTaxesFor265Corps.xls) of its required state taxes, schools and parents [sued](http://www.commondreams.org/news/2014/11/11/schools-parents-sue-pennsylvania-over-educational-caste-system) the state for failing to provide the resources needed for public education. In [Kansas](http://www.nationofchange.org/2014/12/26/states-redistributing-wealth/), Governor Sam Brownback proposed to cut pensions to compensate for lost revenue from corporate tax cuts. And in California, where Apple [dodges](http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html?_r=1) state taxes by declaring itself a Nevada resident, and where [Cisco](http://www.sec.gov/Archives/edgar/data/858877/000085887714000029/csco-2014726x10k.htm) paid less than half of its required state taxes over the past three years, no money was available to house [San Jose's homeless](http://www.alternet.org/some-sort-hell-how-one-wealthiest-cities-america-treats-its-homeless) residents.
**Hypocrisy: Taking without Paying** -In Brown vs. the Board of Education (1954) Chief Justice Earl Warren said: "Education is perhaps the most important function of state and local governments. It...is a right which must be made available to all.."
Education in the 1950s and beyond trained the engineers and medical specialists and mathematicians who built our technology and health care and financial industries. But with the help of failed government, corporations are doing whatever they can to avoid the responsibility of sustaining our public school system. They are starving the children instead.
*(Paul Buchheit is a college teacher, an active member of US Uncut Chicago, founder and developer of social justice and educational websites UsAgainstGreed.org, PayUpNow.org, RappingHistory.org, and the editor and main author of "[American Wars: Illusions and Realities](https://www.amazon.com/dp/0932863566/ref=as_li_tf_til?tag=commondreams-20&camp=0&creative=0&linkCode=as1&creativeASIN=0932863566&adid=1MCNFWDB21VVWVVFPEW5&)". He can be reached at . This piece was posted first at [CommonDreams.org](http://CommonDreams.org))*
*-cw*
*CityWatch*
*Vol 13 Issue 2*
*Pub: Jan 6, 2015*
[  ](https://www.citywatchla.com/component/banners/click/107 "LA DWP | Save $4K, Green | Priority Ad")
[  ](https://www.citywatchla.com/component/banners/click/114 "McKinney Campaign")
[  ](https://www.citywatchla.com/component/banners/click/82 "LA DWP #2 (Power Savers)")
[  ](https://www.citywatchla.com/component/banners/click/98 "Donna Tryfman - HS1-1")
[  ](https://www.citywatchla.com/component/banners/click/97 "Home - LA DWP #2 (Pay Water Bill Help)")
[  ](https://www.citywatchla.com/component/banners/click/111 "David DeJute Campaign")
[  ](https://www.citywatchla.com/component/banners/click/112 "Anna Reitano Vertical R. Col")
## Get The News In Your Email Inbox Mondays & Thursdays
First Name
[  ](https://www.citywatchla.com/component/banners/click/113 "Rhonda Haymon campaign")
[  ](https://www.citywatchla.com/component/banners/click/110 "Something You Should Know")
---
## Featured CityWatch Stories
[  ](https://www.citywatchla.com/election-2024/33543-karen-bass-matters-stop-the-dsa)
### [Karen Bass Matters - Stop the DSA](https://www.citywatchla.com/election-2024/33543-karen-bass-matters-stop-the-dsa)
I WON’T BE SILENT - Full disclosure: I can’t vote for mayor of Los Angeles because I live in Beverly Hills. But I am as…
[  ](https://www.citywatchla.com/voices/33562-marissa-roy-the-other-face-of-gascon)
### [Marissa Roy: The Other Face of Gascón](https://www.citywatchla.com/voices/33562-marissa-roy-the-other-face-of-gascon)
Los Angeles voters rejected George Gascón's progressive prosecution experiment in 2024. Now, a City Attorney candidate…
[  ](https://www.citywatchla.com/los-angeles/33573-airbnbs-funding-of-mayor-bass-raises-the-specter-of-a-pay-to-play-ploy)
### [Airbnb’s Funding of Mayor Bass Raises the Specter of a Pay‑to‑Play Ploy](https://www.citywatchla.com/los-angeles/33573-airbnbs-funding-of-mayor-bass-raises-the-specter-of-a-pay-to-play-ploy)
ELECTION 2026 - Los Angeles has been shaken by a powerful corporation pouring money into Mayor Karen Bass’s campaign in…
[  ](https://www.citywatchla.com/election-2024/33548-do-we-want-a-governor-or-an-underground-pawn-in-sacramento)
### [Do We Want A Governor, or An Underground Pawn, in Sacramento?](https://www.citywatchla.com/election-2024/33548-do-we-want-a-governor-or-an-underground-pawn-in-sacramento)
ALPERN AT LARGE - Let’s be honest—Steve Hilton wants Californians to learn more about what he proposes, and Xavier Bece…
[  ](https://www.citywatchla.com/housing/33564-adus-a-new-weapon-for-landlords-to-create-turmoil-and-hardship-for-tenants)
### [ADUs: A New Weapon for Landlords to Create Turmoil and Hardship for Tenants](https://www.citywatchla.com/housing/33564-adus-a-new-weapon-for-landlords-to-create-turmoil-and-hardship-for-tenants)
ADU'S - Renters Are at Risk of Losing Their Vital Parking Spaces A new and expanding issue is emerging for renters thr…
---
## [ ARCHIVE ](https://www.citywatchla.com/archive)
[  ](https://www.citywatchla.com/archive/15339-early-intervention-and-jobs-are-key-to-stemming-chronic-homelessness-in-los-angeles)### [Early Intervention and Jobs are Key to Stemming Chronic Homelessness in Los Angeles](https://www.citywatchla.com/archive/15339-early-intervention-and-jobs-are-key-to-stemming-chronic-homelessness-in-los-angeles)
### [Tucker Carlson and Gay Rightwinger Blame California Wildfires On Hiring LGBTQ People](https://www.citywatchla.com/archive/18755-tucker-carlson-and-gay-rightwinger-blame-california-wildfires-on-hiring-lgbtq-people)
### [Anti-LGBTQ Veep Just Can’t Stop Talking about Mayor Pete](https://www.citywatchla.com/archive/17690-anti-lgbtq-veep-just-can-t-stop-talking-about-mayor-pete)
[  ](https://www.citywatchla.com/archive/15316-news-pulse-corrupt-system-reason-for-not-voting-in-2018-majority-wants-more-than-two-parties)### [NEWS PULSE: ‘Corrupt System’ Reason for Not Voting in 2018 … Majority Wants More Than Two Parties](https://www.citywatchla.com/archive/15316-news-pulse-corrupt-system-reason-for-not-voting-in-2018-majority-wants-more-than-two-parties)
[  ](https://www.citywatchla.com/archive/10245-dead-dog-set-on-fire-sparks-fears-for-strays-in-los-angeles)### [Dead Dog Set on Fire … Sparks Fears for Strays in Los Angeles](https://www.citywatchla.com/archive/10245-dead-dog-set-on-fire-sparks-fears-for-strays-in-los-angeles)