When we hear the term welfare, we think of public programs to help poor people. However, there are numerous public programs that provide welfare to corporations, most of whom are not poor at all. Corporate welfare occurs through so many subsidies and tax breaks that it is hard to keep track of them all. And it’s even harder to determine how much they are costing the federal and state governments.
Corporate welfare costs tens of billions of dollars – maybe $100 billion – per year. This means the federal and state governments have billions of dollars less to spend on education, public safety and defense, roads and bridges, and so forth. And it means that other taxpayers – you and me – have to pay more to make up the difference.
The corporate welfare goes mainly to large, often multi-national, corporations. They have the clout to bend government policies to serve their interests rather than the public interest. There are tax breaks and subsidies for the oil, coal, and gas industries ($37.5 billion per year [1]); for agribusiness; for the pharmaceutical industry; for the big Wall Street banks and financial corporations; for hedge fund managers; for international investors and multi-national corporations; etc.
This is crony capitalism: the private capitalists get their cronies in government to do them favors. They do this through campaign contributions and spending, through lobbying, and through the revolving door for personnel, which includes well-paying jobs in the private sector for public officials and employees when they leave their government positions.
For example, 288 of the Fortune magazine’s list of the 500 largest US corporations were profitable in every year from 2008 to 2012. But because of corporate welfare tax breaks, 26 of these large, profitable corporations paid no federal income taxes over those 5 years, including Boeing, General Electric, and Verizon. Furthermore, 93 of the 288 paid taxes at an effective rate of less than 10% over those 5 years – far less than the stated tax rate of 35%. [2]
Corporate welfare and crony capitalism need to end. Although the capitalists like to extol and advocate for the “free market,” our economy is anything but a free market. The large corporations have used their political clout to tip the scales in their favor. This is bad for the economy, for small businesses, for workers and the middle class, for governments and the public sector, and for democracy. Corporate welfare is unfair, inefficient, and wasteful; it needs to stop.
Ending corporate welfare is the sixth of the Ten Big Ideas to Save the Economy presented by Robert Reich and MoveOn.org. [3]
[1] Aronoff, K., July 2015, “The death of climate denialism,” In These Times
[2] Citizens for Tax Justice, 2/25/14, “The sorry state of corporate taxes,” http://ctj.org/ctjreports/2014/02/the_sorry_state_of_corporate_taxes.php
[3] You can watch the 3 minute video at: https://www.facebook.com/moveon/videos/vb.7292655492/10152770639760493/?type=1&theater
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