December 2005

Susan Chenelle

nonfiction

The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation by Greg LeRoy

Disputes over development happen every day in communities all over the country. Yet the phenomenon as a whole rarely gets discussed in a broad, comprehensive way at the national level, because each particular project involves its own web of local laws, interests and implications. This past summer saw one brief moment of widespread debate following the Supreme Court’s decision in favor of eminent domain. While the ramifications of that decision remain to be seen over the coming years, the local and regional battles continue, and more and more communities are organizing, fighting back and winning a few victories.

Greg LeRoy’s The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation is an invaluable new resource in that struggle. He reveals in straightforward, engaging prose the methods by which corporations pressure and manipulate local and state governments in order to get millions of dollars in subsidies and tax breaks. Such giveaways on such a grand scale have become so commonplace that they not only have taken great tolls upon local economies and infrastructure, but they have also, as LeRoy argues, begun to threaten the overall health of the American economy in the long term.

Politicians love to tout the jobs they attract to their districts come election time. And so they make it a big priority to court corporations that might bring new facilities to their areas. Corporations in turn demand massive concessions in the form of tax deferments and abatements, zoning and regulatory easements and the like, often playing one state or town off against another in order to wrangle the best deal. Many of these arrangements directly drain precious tax dollars out of municipal budgets for basic infrastructure and government services, especially public schools.

However, as LeRoy illustrates, such agreements, supposedly forged to create new jobs, rarely hold companies accountable for doing so. Corporations have a terrible track record for creating or retaining the number of jobs they say they will, and governments almost never seek compensation in that regard, for fear that the company will threaten to leave the area altogether. Furthermore, these new factories or megastores inflict immediate negative impacts on local economies as well, by driving down wages, which causes citizens to rely more on social services, and by driving local merchants and manufacturers out of business, to the point that rather than creating the much-ballyhooed new jobs, they just move the already existing low-paying jobs around.

One of the great strengths of this book is that LeRoy succeeds in elucidating the abstruse tax-break mechanisms by which corporations fleece local governments in such a clear, compelling and accessible way. He then illustrates his explanations with anecdotes about one boondoggle or another, at least one of which is sure to have occurred within the vicinity of, or to resonate in some other way with the experience of just about every reader.

But what is even more remarkable is that through interviews with various corporate officers and relocation consultants, LeRoy reveals that such deals are almost never the determining factor in a company’s choice of location. It’s not the tax breaks and other bribes that win them over; it’s an area’s fundamental resources, like a well-educated workforce and a good public transportation or road and highway system, which attract them. Ironically, these are the very qualities that become more difficult to sustain when government coffers are drained by so many giveaways.

In his concluding chapter, LeRoy does what so many books exposing lies and corruption fail to do. He offers concrete things to do about it, outlining a series of reforms and measures, some of which already exist in certain municipalities, which would shed light on such deals and allow communities and governments to combat them.

The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation by Greg LeRoy
Berrett-Koehler Publishers, Inc.
ISBN: 1576753158
290 Pages