by Félix Pérez
Thanks to the dogged determination of the Mississippi Association of Educators and a tireless group of education funding and tax experts, one in Alabama and the others a thousand miles away in Washington, D.C., tens of millions of dollars in uncollected tax revenue from out-of-state corporations will flow to Mississippi’s students and schools.
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“It’s a matter of basic fairness,” said Susan Kennedy, former lead counsel for the Alabama Revenue Department and manager for Education Funding and Revenue at the Alabama Education Association. “Small businesses pay all their taxes. Legislators understand when you explain that it’s hurting our communities when we don’t collect fairly from everybody. It really comes down to being fair to all citizens.”
MAE and the National Education Association enlisted Kennedy in 2010 to prepare a report for Mississippi legislators detailing how the state could raise additional revenue without raising taxes but instead by closing tax loopholes. These loopholes, tax records showed, were enabling out-of-state corporations to escape paying any or next to no taxes.
It was during her meetings with state Department of Revenue staff that Kennedy discovered the department’s ability to collect taxes was significantly hampered by an insufficient number of auditors, namely auditors who specialize in reviewing the tax returns of out-of-state corporations.
As a result of Kennedy’s meetings with legislators and Revenue Department staff and her fact finding, members of the appropriations committee voted to add $3.5 million to the Revenue Department’s budget. The department was then able to collect an additional $80.9 million from corporations in back taxes over the amount collected the previous year. The vast majority of the additional revenue went to the state’s general fund, which is the state’s largest source of funding to public schools for everything from instructional staff and textbooks to classroom supplies and technology.
According to Richard Sims, chief economist at the National Education Association, “That money means your child will have smaller class sizes and more resources, and schools will have the ability to attract and keep the best and brightest educators.”
An added benefit, continued Sims, is that businesses consider the quality of public education and the skills possessed by the local workforce the number one factor when they are choosing a site. Home values are directly tied to the quality of public education as well, added Sims. “The return on the investment [to students, businesses and communities] is tremendous.”
Now, said Kennedy, it’s up to MAE and its members to advocate with state elected officials for how the additional revenue should be spent. “My grandmother used to say, ‘The people who help make the pie get to eat the pie.’ ”
Meanwhile, MAE and Kennedy, with the ongoing assistance of NEA Research’s Strong Schools Team, have not lost sight of their original objective to generate additional revenues by closing corporate tax loopholes. “It’s about leveling the playing field. I tell legislators, ‘You’re treating your small businesses unfairly,’ ” said Kennedy. “I’m optimistic we’ll have some success.”
Kennedy’s missionary zeal isn’t confined to Mississippi. She travels to various states to “open people’s eyes” to what she calls her “gospel.” Said Kennedy:
It’s extremely gratifying professionally to achieve what we did in Mississippi when you see that we struggle every day to get resources to kids. The more [this information] is out there, the more opportunities there are for others to do likewise.
For its part, NEA Research’s Strong Schools Team continues its work of providing technical assistance to state education associations to help them develop and implement strategies to increase state and local revenues for education and other vital public services.