End Corporate Welfare

With unemployment at 9%, Washington needs to invest in jobs. But Tea Party Republicans are demanding trillions in budget cuts - even privatizing Medicare.

Of course we could tax the rich to reduce the debt, but Republicans are adamantly opposed. So here's another option: ending Corporate Welfare.

If we just closed the spigot of dollars flowing to corporate treasuries, hundreds of billions of dollars could be saved - and directed to job creation, protecting Medicare, and reducing the deficit.

We offer a modest menu of corporate welfare cuts that deficit-obsessed politicians can choose from - cuts that would not require a single dime slashed from Medicare, social programs, schools, or other people-oriented investments.

Estimated savings from enacting the whole list: over $2 trillion

End Deferral of Taxes on Income of U.S.-Controlled Corporations Abroad
2011-2015 savings: $199 billion (Citizen for Tax Justice estimate). Encourages off-shoring of work and capital.

End Accelerated Depreciation on Equipment
2011-2015 savings: $141 billion (CTJ estimate). Accelerated depreciation can result in a very low, or even negative, tax rate on profits from a particular investment.

End Deduction for Domestic Manufacturing
2011-2015 savings: $76.7 billion (CTJ estimate). Provides virtually no benefit to the economy and is blatant corporate welfare.

End Last-In, First-Out Accounting (LIFO)
2011-2015 savings: $24.2 billion (CTJ estimate). Corporations use LIFO to hide their true profits.

Cut Subsidies to Big Agribusiness: $52 billion (Taxpayers for Common Sense). Small farms are disappearing while big agri-business racks up huge profits—with corporate welfare support.

Permit Government to Negotiate Drug Prices for Medicare. Savings 2012-2021: $157.9 billion. (Congressional Progressive Caucus). Barring government involvement is an indirect corporate subsidy.

End Tax Breaks For Drug Companies. 2011-2020 savings: $50 billion (estimated based on figures from Rep. Jerold Nadler). Stops a $5 billion-a year annual tax break for direct-to-consumer advertising. We should pay for drug companies to market to us?

Enact A Financial Crisis Responsibility Fee. 2012-2021 Savings: $70.9 billion (Congressional Progressive Caucus). Imposed on largest banks as a repayment of corporate welfare extended via bank bailouts for financial crisis precipitated by banks.

Enact a Derivatives and Speculation Tax. 2012-2022 savings: $650 billion (Congressional Progressive Caucus). Wall Street receives indirect corporate welfare/subsidies via a regulatory system and infrastructure investment for which it pays virtually nothing. A very tiny transactions tax will end the corporate welfare.

Cut Military Budget 2011-2020 Savings: $550 billion (Sustainable Defense Task Force). According to the Task Force, weapons research, development, and procurement activities…“now routinely cost taxpayers over $200 billion a year. Procurement costs are up 110% in real terms since 2000. Setting aside war-related expenditures, DoD “peacetime” spending on research, development, and procurement has increased 75% in real terms.” This focuses only on the Task Force’s cuts that reasonably have a “corporate welfare” component, primarily weapons systems that don’t work and/or aren’t needed to fight an enemy that does not exist.

Do you have other examples of Corporate Welfare? We want to hear from you!

Impossible to end corporate welfare

Corporations now own the United States.  Since they are free to buy any election, nothing can be done without at least their tacit consent.  So there is no way to reduce corporate welfare.  The best we can hope for is to get things we want in exchange for the corporate welfare.  Maybe we can negotiate a deal to replace cap and trade with greenhouse gas emissions taxes.  Since what we really want is to persuade fossil fuel companies to turn themselves into sustainable energy companies, we could count both expenditures to control emissions from fossil fuel and investment in sustainable energy as payment of greenhouse emissions taxes.  Maybe we can get corporations to let us replace the deferral of off-shore income of US controlled corporations with a subsidy for their employing low-skill minimum wage workers phasing not out altogether but down to making up the difference between the measured productivity of the workers and the minimum wage plus payroll taxes.

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