Seven Examples of Welfare for Corporations and the UltraRich

[Dominus Atheos]

Bill Moyers, edited by me.

There are thousands of tax breaks and subsidies for the rich and corporations provided by federal, state and local governments, but these 10 7 will give a taste.

1. State and local subsidies to corporations: An excellent New York Times study by Louise Story calculated that state and local government provide at least $80 billion in subsidies to corporations. Over 48 big corporations received over $100 million each. GM was the biggest, at a total of $1.7 billion extracted from 16 different states, but Shell, Ford and Chrysler all received over $1 billion each. Amazon, Microsoft, Prudential, Boeing and casino companies in Colorado and New Jersey received well over $200 million each.

2. Direct federal subsidies to corporations: The Cato Institute estimates that federal subsidies to corporations cost taxpayers almost $100 billion every year.

3. Federal tax breaks for corporations: The tax code gives corporations special tax breaks that have reduced what is supposed to be a 35-percent tax rate to an actual tax rate of 13 percent, saving these corporations an additional $200 billion annually, according to the US Government Accountability Office.

4. Federal tax breaks for wealthy hedge fund managers: Special tax breaks for hedge fund managers allow them to pay only a 15-percent rate while the people they earned the money for usually pay a 35-percent rate. This is the break where the multimillionaire manager pays less of a percentage in taxes than her secretary. The National Priorities Project estimates this costs taxpayers $83 billion annually, and 68 percent of those who receive this special tax break earn more than $462,500 per year (the top 1 percent of earners).

5. Subsidies to the fast food industry: Research by the University of Illinois and UC Berkeley documents that taxpayers pay about $243 billion each year in indirect subsidies to the fast food industry because they pay wages so low that taxpayers must put up $243 billion to pay for public benefits for their workers.

6. Mortgage deduction: The home mortgage deduction, which costs taxpayers $70 billion per year, is a huge subsidy to the real estate, banking and construction industries. The Center of Budget and Policy Priorities estimated that 77 percent of the benefit goes to homeowners with incomes over $100,000 per year.

7+. There are thousands of smaller special breaks for corporations and businesses out there. There is a special subsidy for corporate jets, which cost taxpayers $3 billion a year. The tax deduction for second homes costs $8 billion a year.

If you want to look at the welfare for the rich and corporations, start with the federal Internal Revenue Code. That is the King James Bible of welfare for the rich and corporations. Special breaks in the tax code are the reason that there are thousands of lobbyists in the halls of Congress, hundreds of lobbyists around each state legislature and tens of thousands of tax lawyers all over the country.

[energiewende]

While a good point is made,

1. State and local subsidies to corporations: An excellent New York Times study by Louise Story calculated that state and local government provide at least $80 billion in subsidies to corporations. Over 48 big corporations received over $100 million each. GM was the biggest, at a total of $1.7 billion extracted from 16 different states, but Shell, Ford and Chrysler all received over $1 billion each. Amazon, Microsoft, Prudential, Boeing and casino companies in Colorado and New Jersey received well over $200 million each.

bear in mind that much of this is subsidies for things like renewable energy. While Cato no doubt has no problem dumping those, I'm not so sure about everyone here.

5. Subsidies to the fast food industry: Research by the University of Illinois and UC Berkeley documents that taxpayers pay about $243 billion each year in indirect subsidies to the fast food industry because they pay wages so low that taxpayers must put up $243 billion to pay for public benefits for their workers.

Very grasping. Are they suggesting that if the US government did not pay public benefits, that fast food wages would rise by $243 billion?

3. Federal tax breaks for corporations: The tax code gives corporations special tax breaks that have reduced what is supposed to be a 35-percent tax rate to an actual tax rate of 13 percent, saving these corporations an additional $200 billion annually, according to the US Government Accountability Office.

4. Federal tax breaks for wealthy hedge fund managers: Special tax breaks for hedge fund managers allow them to pay only a 15-percent rate while the people they earned the money for usually pay a 35-percent rate. This is the break where the multimillionaire manager pays less of a percentage in taxes than her secretary. The National Priorities Project estimates this costs taxpayers $83 billion annually, and 68 percent of those who receive this special tax break earn more than $462,500 per year (the top 1 percent of earners).

6. Mortgage deduction: The home mortgage deduction, which costs taxpayers $70 billion per year, is a huge subsidy to the real estate, banking and construction industries. The Center of Budget and Policy Priorities estimated that 77 percent of the benefit goes to homeowners with incomes over $100,000 per year.

7+. There are thousands of smaller special breaks for corporations and businesses out there. There is a special subsidy for corporate jets, which cost taxpayers $3 billion a year. The tax deduction for second homes costs $8 billion a year.

Those are taxes that could be, but are not, levied. Would you say that if you pay a 20% income tax, the government has paid you a "subsidy" of 80% of your income? I would agree with a different claim - that these particular tax structures are regressive or produce perverse incentives - but they are not subsidies.

[Dr. Trainwreck]

Very grasping. Are they suggesting that if the US government did not pay public benefits, that fast food wages would rise by $243 billion?

In a sense, yes. If the collective wages of all burger flippers in America increased by 243bil, they would get out of the benefits level.

Translation for the stupid: if The Holy McDonalnds' Corporation raised wages, lots of people wouldn't need benefits.

Of course, the employers would have to be forced to do this. This might happen on its own, free market and all, should the state cut benefits; but it will take lots of time and human misery to happen, assuming they don't just fire everybody and replace them with migrant workers or whatever. Simply enforcing a minimum wage that is somewhere within livable will suffice, in theory. In practice, the corporations that pass their business expenses on to the taxpayer would fight it tooth and nail, and my impression is that they would win. Hell, the mere existence of this situation shows they've already won.

[energiewende]

Very grasping. Are they suggesting that if the US government did not pay public benefits, that fast food wages would rise by $243 billion?

In a sense, yes. If the collective wages of all burger flippers in America increased by 243bil, they would get out of the benefits level.

Translation for the stupid: if The Holy McDonalnds' Corporation raised wages, lots of people wouldn't need benefits.

But that's a different claim: the government may be choosing to pay people benefits that they do not "need". The article implies that without that level of income fast food workers would starve to death or something, but fast food wages are much higher than those of low paid workers before these benefits existed.

It may of course be desireable to pay people benefits they don't need anyway, but that doesn't make it a subsidy to businesses if they would not otherwise have had to pay that cost themselves.

[Dr. Trainwreck]

The article 'implies' nothing: it flat out states that fast food employers pay such total shit that their workers qualify for welfare. Your hypothesis is all wrong.

[energiewende]

The claim the article makes only follows if the wage plus welfare income is required to perform the job, which is probably not true. If the government paid bankers an extra $1m/year out of tax revenue it doesn't follow that banks would "need" to pay bankers an extra $1m/year themselves if the government wasn't doing that.

[Crossroads Inc.]

Ok clarify this... By saying ""if the wage plus welfare income is required to perform the job"" Are going back to your assertion that people don't "Need" as much money to "live" ?
Are you saying if all of the extra government support was removed the workers would be just fine?

[energiewende]

They would have a lower standard of living that is nonetheless still considerably above subsistence.

[Dr. Trainwreck]

The claim the article makes only follows if the wage plus welfare income is required to perform the job, which is probably not true. If the government paid bankers an extra $1m/year out of tax revenue it doesn't follow that banks would "need" to pay bankers an extra $1m/year themselves if the government wasn't doing that.

The reasonable thing to assume is that fast food employees receive benefits because they qualify for them, and they qualify in the first place because their income is so low. I am sorry if this peeves you.

[Edi]

No profit in replying to the troll, since he has been banned.

[Crossroads Inc.]

Yeah just noticed that… You really outdid yourself on the show trial Edi
Gave me much amusement, I guess we all should have seen that coming however.
Alas another chew toy is gone.

[Guardsman Bass]

I've never understood the rationale* of the "Wal-Mart welfare" argument, either. If there was no such thing as SNAP, Medicaid, or TANF, it doesn't follow at all that Wal-Mart would have to pay higher wages than they do now. Instead, their workers would just be that much poorer - possibly even with lower wages, since now they'd be even more desperate to get any sort of job and would take lower pay.

* I'm aware that it's not the actual thing at work here. What it's really about is anger that people are working a full-time job and still making so little money that they have to rely on welfare assistance. I personally find that rather strange, since the whole point of these programs was that people weren't earning enough to make a living and thus needed assistance "over the top", but I can see where that's coming from.

[Dr. Trainwreck]

No profit in replying to the troll, since he has been banned.

So, he was given the Emperor's Mercy. The last month or so was just him getting kicked up and down all over the board.

[Welf]

No profit in replying to the troll, since he has been banned.

Somewhat pity. It was interesting to see what pampered sociopaths think.

For example that it's suddenly not subsidy when tax rates are lowered.

[Magis]

Bill Moyers, edited by me.

There are thousands of tax breaks and subsidies for the rich and corporations provided by federal, state and local governments, but these 10 7 will give a taste.

...

7+. There are thousands of smaller special breaks for corporations and businesses out there. There is a special subsidy for corporate jets, which cost taxpayers $3 billion a year.

This claim is complete nonsense. For starters, the projection is $3 billion over 10 years, not $3 billion / year, so the author already misreported the cost by a factor of ten. Secondly, it's not a subsidy at all, and the "$3 billion" in tax savings only arises through what is essentially an accounting technicality, and isn't repeatable every decade.

The issue it hand is the depreciation schedule for private jets. Tax deductions for depreciation is not a subsidy, it's not a giveaway and it's not a loophole. Companies writing off asset depreciation is totally reasonable.

Currently, corporate jet owners can write off 20% of the cost of the jet every year for five years. What Obama is proposing is that it change so that corporate jet owners can write off 1/7th the cost of the jet every year for seven years. How does this affect the steady-state year-to-year write-offs for corporate jet owners as a group? It doesn't. But because of how the transition period works, there would be a reduction in total tax deductions over the first six years after the change in depreciation schedule goes into effect. Starting on year 7, the total amount of tax deductions each year becomes exactly the same as it is already. So in other words, not only is it not a subsidy, and not only does it not cost taxpayers $3 billion / year, but it doesn't even cost $300 million / year! The proposed change only saves a one-time amount of $3 billion spread over a 6 year period after the depreciation rules change were to change from five years to seven.

[Welf]

The article may not be completely right, but this (apparently) is a massive tax deduction.
Disclaimer: I'm not familiar with US tax law, only with general tax law.
I assume deduction for taxes are supposed to represent life span. Air crafts have a useful life of about 20-40 years, and with that amount of time 5 to 7 years of deduction is a massive tax break. You can reduce tax burden now and have to pay more taxes later, but less in real terms because of the effect of inflation and interest. You need to calculate a bit, but with those long time spans the interest effect is quite big.