Jan 20, 2003
Corporate welfare is defined by the Cato Institute as "any government spending program that provides unique benefits or advantages to specific companies or industries." Although transfer payments in general (to the extent they redistribute the earned incomes of labor and capital) are morally wrong, corporate welfare is the worst transfer payment of all because it constitutes stealing from the poor in order to give to the rich. Examples of such giveaways can be found online at the Banneker Center's corporate welfare shame page.
The federal government currently spends roughly $93 billion a year on programs that provide subsidies to private businesses. Not only does this give big business an unfair advantage over smaller competitors, it gives politicians an excuse to deny much-needed tax relief to the bottom 75% of taxpayers -- those who, according to the Tax Foundation, make less than $55,226 a year.
Specifically, the bottom 75% (over 96 million people) pay approximately $156.8 billion a year in federal income taxes -- with those who make below $27,682 (the bottom 50%) paying a little over $38.3 billion, and those who make between $27,682 and $55,225 paying the rest.
Thus, if we eliminated corporate welfare, that alone would allow for the income tax to be reduced by nearly 1/2 for those making between $27,682 and $55,225, and abolished entirely for those making below $27,682. This would benefit wage-earners enormously by offsetting the regressive nature of the payroll tax, and would benefit small businesses by eliminating the anticompetitive nature of corporate welfare spending.
© 2003 Todd Altman
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