Economics Justice Politics Washington State Politics

Lip-service investments in higher ed

Two weeks ago, Gov. Chris Gregoire convened a press conference with
corporate leaders from Microsoft and Boeing. They were celebrating a
breakthrough in higher education.

It was a breakthrough, all right — like 60,000 high school graduates
walking out onto thin ice and breaking through. The troika offered a
life ring for 1,000, through “Opportunity Scholarships.” The other
59,000? Let them swim … or sink.

Let’s consider what really happened to public higher education this
year. The Legislature cut out almost a fifth of funding for higher
education: $617.5 million. It raised tuition at the University of
Washington by 35 percent in two years, and by 25 percent at community
colleges.

Boeing and Microsoft? Gregoire was praising them because they
committed $5 million a year each, totaling 1.62 percent of the
shortfall. That contribution wasn’t free — the state, that is the
taxpayers, had to make a down payment of $5 million, moving money out of
public services and into a corporate-controlled nonprofit. And our
state will have to do that year in and year out in order to get the
corporate crumbs.

It shouldn’t be a surprise that the Legislature did not touch these
companies’ tax loopholes. Each year Microsoft gets to keep at least $26
million in sales tax deferrals and exemptions and business tax credits.
That money should go to fund public education. Instead, it pads
Microsoft’s profits, which stood at $19 billion last year. Microsoft’s
$5 million contribution — three one-hundredths of a percent of its
profit — is the equivalent of earning $50,000 and giving away $15.

If Microsoft was really interested in our state’s students, the
company would stop hiding its revenue by claiming its software sales are
conducted in a license and operations office in Reno, Nev. This little
sleight of hand has enabled the company to avoid paying more than $750
million in state taxes over the past decade and a half. Now Microsoft is
pushing the federal government to lower corporate taxes to 5.25 percent
on money they have been stashing overseas. That is $29 billion which
Microsoft has secreted away in other countries, hiding from taxation and
simultaneously withholding investment from job creation and research
and development that could be done in the United States.

What does Microsoft get for its $5 million contribution? A deduction
from its federal taxes. The company’s insistence of the development of a
whole new duplicative nonprofit administrative system, apart from the
state. And the right to determine which students get the assistance,
depending on their choice of courses. If students decide to focus on
areas of study that Microsoft deems important, then they may get some
help. If not, they won’t. Those who get assistance and do not complete
the “eligible education program” (for example, if they switch from
computer science to a liberal arts major, like history) may be forced to
pay back their grants. Their student loan indebtedness only grows
through this program. It is a mockery of opportunity.

And then there is the little problem that the UW just announced
tuition increases of 20 percent. So even with this new financial aid,
students next year will still have to come up with another additional
$1,000 on top of this year’s tuition of $8,700 just to take classes.

Boeing’s $5 million contribution represents fifteen one-hundredths of
a percent of their corporate profits. Recently the company announced
that it expects to receive a net tax refund of $137 million from state
and local governments for 2010. That same year, Boeing paid three-tenths
of a percent in federal taxes on its pre-tax profit of $4.5 billion.
They are skipping away from our state with $3 billion in tax credits
over 20 years, building a new 787 facility in South Carolina. Plus they
have shown the efficiency of corporate global outsourcing, with overruns
on the 787 now exceeding $12 billion.

But they want to appear loyal to higher education in Washington. And that $5 million gives them good cover.

Here is a better idea for good corporate citizenship: Pay your taxes.
You don’t even need to wait for the Legislature to act. You can just
get out your checkbook. Microsoft and Boeing should both start with $100
million a year. That still leaves them benefitting from tax favoritism.
It would give our children a bit of a tuition break, so they can
actually attend classes in our public community colleges and
universities.

That’s what we want, isn’t it? An educated, not a debt-ridden, workforce?

Originally published in the Everett Herald

Comments

comments