Letter to the Senate Budget Committee on Deficit Reduction
March 04, 2013
On behalf of the more than three million members of the National Education Association we wish to offer the following views in connection with the March 5 hearing, “Reducing the Deficit by Eliminating Wasteful Spending in the Tax Code.”
For too long, the burden of deficit reduction has fallen on those least able to make sacrifices. Funding for discretionary programs like education took a $1.5 trillion hit in the Budget Control Act and recent funding bills. Even before the $85 billion in across-the-board spending cuts triggered on March 1, non-defense discretionary funding was at the lowest level on record as a share of our nation’s economy or gross domestic product (GDP).
Nationwide, more than 50 million public school students will feel the blow of the cuts to education programs and services. Fewer educators and reading coaches, ballooning class sizes, no after-school tutoring—all will be felt by students. Among the first affected will be educators who work on Department of Defense bases and the students they teach—the sons and daughters of the men and women in uniform who keep our nation safe.
Instead of balancing the budget on the backs of those who struggle the most, Congress should eliminate wasteful corporate tax breaks and loopholes. The share of federal revenues coming from corporate taxes has shrunk by two-thirds in the last 50 years. The increasing erosion of the corporate tax base has brought us to the point where, measured by either corporate taxes as a percentage of GDP or corporate taxes as a percentage of overall tax revenues, the United States ranks substantially below other OECD nations.
Our inequitable tax code allows wealthy households to benefit disproportionately from deductions and other tax benefits—the top one percent of taxpayers receives nearly 25 percent of the benefit from these provisions. And as many as two out of three U.S. corporations paid zero in federal income taxes over much of the previous decade, according to the Government Accountability Office (GAO).
Over the coming decade, the federal government could gain $600 billion in revenue by closing the loophole that allows corporations to defer taxes on offshore profits—nearly twice the $337 billion needed to fully fund the federal share of the Individuals with Disabilities Education Act (see attachment, “Corporate Loopholes & IDEA”)( PDF, 307 KB, 2 pp.). The amount of U.S. taxes avoided indefinitely by shifting U.S. profits to foreign tax havens for just 10 companies represents the entire discretionary budget of the U.S. Department of Education (see attachment, “Corporate Loopholes & Education Funding”) ( PDF, 208 KB, 1 pg.).
As a matter of basic fairness, the wealthiest among us and corporations should pay their fair share. Instead of ending the numerous tax breaks they enjoy, some have proposed limiting the tax break for health benefits—in effect, shifting the lion’s share of deficit reduction to the poor and the middle class. Such an approach would only exacerbate the inequities of the current system.
Congress has an obligation to find a responsible, balanced, and permanent solution to avoid inflicting further pain on students, families, and communities. It is time to put politics aside, do what is right for our nation, and take the balanced approach to deficit reduction widely supported by voters.
Director, Government Relations
“Corporate Loopholes & IDEA”
“Corporate Loopholes & Education Funding”