The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation [Hardcover]

Greg LeRoy (Author)

Book Description

Publication Date: July 15, 2005

Almost every city and state in America has been slammed by a multilevel scandal, one that involves taxes, jobs, and corporate and political accountability. Under the guise of "economic development," big companies have gotten extraordinary tax breaks, from property tax abatements to land write-downs. Promises of job creation in exchange for these tax breaks have proven hollow, with companies continuing to downsize and outsource at record levels. Government officials are no help - they're well compensated major players in this troubling drama. This timely book explores these abuses in depth, but also offers hope with a series of commonsense reforms that would give taxpayers powerful new tools to reverse this situation - and redirect monies in ways that will really pay off. By popularizing these grassroots reforms - which are already taking hold - this book is taking a movement that is percolating in the states and putting it on the national stage.

Editorial Reviews

From Publishers Weekly

Founder and director of the nonprofit center Good Jobs First, LeRoy offers a parade of damning case studies showing why communities should not woo corporations with subsidies. Corporate tactics, he finds, include quickly shuttered subsidized facilities, union busting and jobs that pay below the poverty line. Rewritten tax codes, which focus on sales taxes but ignore payroll and property taxes, as well as other tax abatements, undermine schools; most stadiums and convention centers further bleed public monies. Moreover, subsidies generally support suburban sprawl rather than accessibility to public transit used by the poor. Some corporate location consultants work both for companies and governments—"a sad reflection" of a disorganized public sector. On the corporate minus side, tax incentives to relocate, he shows, are dwarfed by labor, transport and utility costs. The upshot? Corporations are paying 28% less in state and local taxes than 20 years ago. LeRoy's suggested reforms include greater disclosure about subsidy deals; money-back guarantees if companies don't fulfill their pledges; requiring subsidized jobs to meet local average wages; closing corporate loopholes; and making sure every deal is approved by elected officials rather than appointed ones. (July)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

About the Author

Greg LeRoy has more than 25 years experience, directs Good Jobs First, a national resource center he founded in 1998 to promote corporate and government accountability in economic development and smart growth for working families.

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Product Details

• Hardcover: 290 pages
• Publisher: Berrett-Koehler Publishers (July 15, 2005)
• Language: English
• ISBN-10: 1576753158
• ISBN-13: 978-1576753156
• Product Dimensions: 9.5 x 6.4 x 1.1 inches
• Shipping Weight: 1.3 pounds (View shipping rates and policies)
• Average Customer Review: 4.8 out of 5 stars  See all reviews (13 customer reviews)
• Amazon Best Sellers Rank: #105,231 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

30 of 33 people found the following review helpful:

5.0 out of 5 stars Exposing Corporate Extortion of Taxpayers, July 7, 2005

By 

Perri Morgan (Raleigh, NC) - See all my reviews
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This review is from: The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation (Hardcover)

Across the country, state legislatures appropriate millions of taxpayer dollars each year on "corporate jobs incentives" under the guise of "economic development and job creation". Greg LeRoy manages to shed light on the fallacy of these programs, using real life examples to prove that "incentives" are simply corporate welfare schemes that do little more than pad the pockets of hugely profitable corporations - while providing photo ops for politicians.

As a longtime advocate for small business owners, who are responsible for the vast majority of new job creation despite their lack of eligibility for taxpayer subsidies, I have been frustrated by the ridiculous and baseless defenses used by lawmakers to justify using taxpayer dollars in this egregious manner. LeRoy narrows down a comprehensive study of the issue into an illuminating and ultimately readable treatise, wading through the many different forms that subsidies take - from outright cash hand-outs to Tax Increment Financing (TIF's) - and ultimately providing ample evidence that the "if you build it, they will come" approach is NOT responsible for new job creation in America.

This book is a public policy manual for our time; required reading for elected officials at every level who have voted - or are thinking about voting - for targeted tax subsidies. These lawmakers are creating an escalating "Economic War Between the States" at the expense of lower taxes, fair competition, and improved public services for all.

For citizens (and taxpayers), LeRoy will enlist your outrage.

For lawmakers who have voted against such disgraceful scams, he provides all the evidence needed to defend that vote in the face of a society which has been brainwashed to believe that "incentives = jobs".

Nothing could be further from the truth, and Greg LeRoy proves it.

13 of 13 people found the following review helpful:

3.0 out of 5 stars Good Material, but Too Long!, December 19, 2005

By 

Loyd E. Eskildson "Pragmatist" (Phoenix, AZ.) - See all my reviews
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This review is from: The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation (Hardcover)

LeRoy reports that job scams cost governments about $50 billion per year in lost revenues. The most common scams include:

1)Create a bogus competitor (another town or state) vs. wherever the company wanted to locate in the first place.

The intent is to create a "bidding war" over the freebies offered.

2)Job "blackmail" in which a company threatens to move (or locate elsewhere) unless it gets the subsidies/tax relief it wants.

Easily enhanced by overestimating the job increase - LeRoy cited examples from Connecticut in which only 9% of forecasted jobs materialized, leading to a cost of $367,910 per new job. Exaggerations are typically followed up by failure to track or publish actual results.

3)Entice a firm that pays "poverty" wages, and stick the taxpayers with hidden costs (eg. employee and family healthcare).

Wal-Mart is the most notable example.

4)Exaggerate "ripple effect" benefits - eg. the number of supplier jobs, and those created by employee spending.

(LeRoy cited an example where one city used a low multiplier to downplay jobs lost when a company left, and a high multiplier to play up the potential gain from another moving in.)

5)"Bust the union" in which the company uses Federal funding (eg.

CDBG grants from HUD) to move, and thereby break an existing union.

Obviously any and all these machinations can be combined.

Mayor Giuliani was cited as a prolific scam-"victim" - giving up $350 million in tax revenues between '94 - '01.

Small wonder N.Y. also ended up with a large deficit.

LeRoy points out that "nobody wants to be the mayor/governor who lost ______," and that fear impels leaders and legislatures to succomb.

In reality, however, taxes make up only 4-5% of location costs according to a consultant cited, and only 1.2% of total costs according to the IRS.

Similarly, convention centers are oversold (overall convention business is DECLINING - thus, new centers being built are extremely unlikely to be financially successful), and sports stadiums.

Meanwhile, LeRoy points out that a recent survey of civil engineers found that America's infrastructure needs greater funding. (My life as a truck-driver provides daily evidence of the substantial repairs and enhancements needed for our Interstates.)

The "bad news" with this book, like many others, is that to justify book printing, it ended up considerably longer than necessary - at least 2X, and probably 3X.

20 of 22 people found the following review helpful:

5.0 out of 5 stars An Important and Compelling Book, July 17, 2005

By 

Peter S. Fisher (Iowa City, IA) - See all my reviews
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This review is from: The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation (Hardcover)

I hope the people who really need to read this book do read it--the state legislators and local officials who have been seduced by the arguments of the "job scammers," as Greg LeRoy calls them. As an academic economist who has been researching state economic development policy for many years, I know how hard it is to get the attention of policy makers and convince them they are wasting vast sums of tax money on corporate incentives, and in the process harming, not helping, their state's long term growth. I think Greg LeRoy has written the book that can cut through the nonsense in this debate and actually make a difference. Its readable, its colorful, its compelling, yet at the same time it is based on exhaustive, careful research. Here is finally the documentation for what many of us suspected has really been going on in the "incentive wars." My advice: buy a few extra copies and send them to your state representative or city council member. Then call them up a month later and ask them how they liked it.