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Editorial: God bless taxes

"I have a bold suggestion of my own for how businesses can help improve education," writes Editor Dennis Pierce: "Pay their fair share of taxes."

Default Lines column, June 2011 edition of eSchool News—The Institute for a Competitive Workforce, an affiliate of the U.S. Chamber of Commerce, has issued a new report calling for urgent action to improve U.S. math and science instruction.

Called “The Case for Being Bold: A New Agenda for Business in Improving STEM Education,” the report makes a series of common-sense recommendations that reformers have heard before: rethink teacher hiring and training practices, redesign schools for the 21st century, use technology to personalize instruction, create opportunities for local professionals to help teach students part time … and so on.

Those are laudable goals. But I have a bold suggestion of my own for how businesses can help improve education: Pay their fair share of taxes.

In lobbying for tax reform, the Chamber of Commerce and other members of the business community have long argued that the corporate tax rate in America is the highest in the world. Although that’s true of the top statutory rate, which is 35 percent, very few large corporations pay that much—and many pay far less.

A report issued in February from the Center on Budget and Policy Priorities shows that the average corporate tax rate—that is, the share of profits that U.S. companies actually pay in taxes—is about 13 percent. What’s more, “when measured as a share of the economy, U.S. corporate tax receipts are actually low compared to other developed countries,” the report said.

General Electric made headlines earlier this year when it was revealed the company earned $14.2 billion in profits in 2010 but didn’t pay a dime in U.S. taxes, thanks to crafty accounting practices that took advantage of existing—and perfectly legal—tax loopholes.

But GE is far from alone. As the tax filing deadline for 2011 approached, independent Sen. Bernie Sanders of Vermont published a list of 10 hugely profitable corporations that have managed to avoid paying U.S. taxes. ExxonMobil topped the list, having made $19 billion in profits in 2009. ExxonMobil not only paid no federal income tax that year; it actually got a $156 million tax rebate from Uncle Sam, according to SEC filings.

These figures should prompt outrage at a time when state legislatures are taking away the right of educators to collectively bargain and other benefits, and when governments and local school systems are slashing educational programs—in the name of balancing budgets.

As we’ve reported, lawmakers have killed a $100 million federal program dedicated to advancing school technology as part of about $1 billion in overall reductions to education spending for 2011. Supporters of the Enhancing Education Through Technology (EETT) program fear its demise could threaten the progress that schools already have made in using technology to enhance teaching and learning.

As ed-tech advocates have noted, it doesn’t make much sense for policy makers to clamor for reforms that will keep U.S. schools competitive with their global counterparts—and then shutter the one federal program that is dedicated to encouraging 21st-century instructional practices.

If corporations really are serious about preparing today’s students for the jobs of tomorrow, the first step they should take is to make an adequate investment in the nation’s future, so that federal, state, and local education programs aren’t trampled in the rush to reduce the deficit.

Business leaders understand the importance of investing in their operations in order to be successful. The reason Intel Corp. was able to come out with a revolutionary new computer chip design that will keep it ahead of its rivals (see story) is because it invests millions of dollars per year in research and development. Well, think of public education as the nation’s R&D arm; without it, we don’t stand a chance of competing in the global economy.

Although it’s true that corporations spend millions of dollars in charitable programs, many of which support education, those dollars are funneled to specific projects that match the funder’s interests. Where there are grant winners, there are also losers. In contrast, investing in our nation’s government by paying taxes ensures that the money is spread out more equitably among schools.

Taxes are the price we pay to live and work in a civilized, safe, and prosperous society. We can debate what constitutes a “fair” share of taxes, or what those funds should be spent on. In fact, that’s our right as Americans. But it’s just plain un-American to avoid paying taxes whatsoever, and—even worse—to collect record profits while sticking the American public with the bill. It does no good for the nation’s fiscal health, or its future stability.

We recently reported on dismal results from a recent national exam testing students’ knowledge of civics. But these results can hardly be seen as a surprise, when the nation’s own captains of industry—the role models for today’s students—have failed so miserably at the topic themselves.

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Dennis Pierce

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