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Want to Support Public Schools? Stop Cutting Taxes

By Nicholas Brake — April 26, 2018 5 min read
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As a district superintendent, I am often asked the question by community leaders about how business can best support public schools.

For a long time, I answered this question by thinking about partnerships, philanthropy, or other programmatic ways businesses and communities can help public schools. But lately, my answer has tended more toward the policy front. I tell them the best way to support education is to support a fiscal policy that focuses on investments rather than taxes.

In the Kentucky district I serve, where nearly three out of four students live in poverty, I have seen the ill effects of the growing inequality and eroding middle class in our society. In the five years that I have served as superintendent, our district has had to do more with less to serve the needs of our students and families.

BRIC ARCHIVE

Earlier this month, Kentucky lawmakers overrode the governor’s veto to pass a controversial tax overhaul that unfairly targets middle- and lower-income Kentuckians with a service-based consumption tax while cutting taxes on the corporations and the most affluent. The new budget uses a modest revenue increase in per-pupil education funding as window dressing to distract from sharp cuts to textbook and professional-development funding. As bad as this plan is, the governor’s proposed budget would have been even more draconian, prompting the Kentucky Education Association and other education advocates to support this tax plan. In my district, we will at best break even, if not lose funding.

That is particularly a concern because the U.S. poverty rate for school-age children is far higher than most other advanced industrial nations. A majority of public school children in 20 states and the District of Columbia were eligible for free or reduced-price lunch in the 2014-15 school year. As a region, Southern states, including Kentucky, have the greatest percentage of total student population represented by children from low-income families.

Compounding the problem, the achievement gap between children from high- and low-income families has grown 30 to 40 percent worse among children born in 2001 compared with those born 25 years earlier, according to Stanford University researcher Sean Reardon.

Behind this achievement gap is a funding gap that is growing wider. Public education in America is not so much broken as it is under-resourced to educate all children—especially the most disadvantaged. It has become especially acute in recent decades as growing inequality and increased poverty combined with insufficient resources that are inequitably distributed.

Although state tax revenue has recovered to above 2008 levels in most states, the majority of states still provide less total school-funding support for elementary and secondary schools than before the Great Recession, according to an analysis by the Center on Budget and Policy Priorities. Kentucky’s 15.8 percent drop in per-pupil funding since 2008 ranks the third worst cut in the nation.

This persistent underfunding of public education has grave implications for teachers and students alike. Average salaries for public school teachers declined by 1.3 percent in constant dollars, from the 1999-2000 school year to 2014-15, according to the National Center for Education Statistics. Kentucky teachers, much like educators of several other states, have rallied in the state capitol over the past several weeks protesting proposed cuts to education, as well as newly passed pension reform legislation that weakens the benefits for future teachers.

In the five years that I have served as superintendent, our district has had to do more with less to serve the needs of our students and families."

Many states have continued underfunding their public K-12 education systems in pursuit of tax breaks. Research shows, however, that investments in K-12 education, higher education, and public infrastructure are more beneficial to a state’s economy than offering tax incentives, according to a 2014 report from the Center for Tax and Budget Accountability.

Reams of evidence from other states are equally unsupportive of the supply-side notion that tax cuts boost growth. Several states recently experimented with tax cuts with little obvious success. The most notorious case is Kansas, where then-Gov. Sam Brownback promised that a moderate tax cut for individuals and a big tax cut for businesses would stimulate the economy. Since the 2012 tax cut, which slashed the top personal income tax rate by 25 percent, Kansas’s economy has lagged behind neighboring states, and the state’s budget has been in tatters. In the face of poor growth and spending needs, the Republican-led state legislature reversed much of Brownback’s original tax cuts last year.

Minnesota provides an interesting contrast to Kansas. They raised income taxes in 2013, investing heavily in education. While the unemployment rate in Kansas fell at a slower rate than the national average following the state’s tax cuts, Minnesota’s drop in unemployment was above average.

In fact, a 2013 Institute on Taxation and Economic Policy study found that states with high tax rates are outperforming no-tax states, particularly in per capita gross state product: 8.2 percent per capita growth in gross state product compared with 5.2 percent in no-tax states.

A 2015 study by the Center on Budget and Policy Priorities found similar results. “In the last two decades,” the report concluded, “a number of states have cut taxes deeply in hopes of spurring economic gains, with unimpressive results.”

The fiscal policies being pursued in many states—and at the national level with the tax plan recently signed by the president—are damaging public education at the expense of tax breaks and tax cuts benefitting the wealthiest individuals and businesses. The latest attempt at “tax reform” in Kentucky follows this same model.

Prior to my tenure as superintendent, I served as a local economic development professional and worked closely with business leaders for more than seven years. I recognize the importance of a competitive rate for business, but the evidence simply does not point to tax policy as the driver of economic growth. Instead, we must invest in three areas: K-12 education, higher education, and public infrastructure.

Business leaders know the value of a good investment. Fiscal policy that supports strong public investments will benefit our economy more in the long run than tax cuts.

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A version of this article appeared in the May 02, 2018 edition of Education Week as Want to Support Public Schools? Stop Cutting Taxes

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