Acton Institute Powerblog

Corporate Welfare: Why?

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I have yet to read a moral argument for why the taxes collected from working men and women should be redistributed to businesses. It’s called “corporate welfare.” This is the odd state of affairs where, business owners compete for government funding rather than exclusively competing for customers in the marketplace. In fact, many of the biggest recipients of corporate welfare are the same businesses that hire high-priced lobbyists to help write laws in Congress that protect them from competition. Why, then, do voters turn a blind eye to corporate welfare?

Bloomberg.com reports that:

The federal government directly spends between $75 billion and $100 billion a year on everything from farm subsidies to research grants. Include indirect benefits from things like tariffs and corporate tax exclusions, and the favors granted by local and state governments, and the total is much higher—probably more than $1 trillion.

Moreover, oil-and-gas industry subsidies account for $8 billion a year while $25 billion of federal spending goes to big agribusinesses—not to the family farmers who are used as pawns in the political theater to justify this form of welfare. The Department of Housing and Urban Development manages $16 billion in mortgage subsidies whose final destination is the revenue ledger of banks. To get us off the fiscal cliff, reports Bloomberg.com, Congress passed $40 billion in tax breaks for such worthy causes as filmmakers, rum distillers, and racetrack owners. Why do filmmakers need tax breaks?

The New York Times published a lengthy investigation last December examining and tallying thousands of local incentives granted nationwide and found that “states, counties and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains.” The newspaper highlighted 48 companies that have each received over $100 million dollars since 2007:

General Motors: awarded at least $1.77 billion ($1.76 billion since 2007) from 208 grants in 16 states.

Boeing: awarded at least $338 million ($327 million since 2007) from 81 grants in 11 states.

Sears: awarded at least $163 million ($150 million since 2007) from 26 grants in 10 states.

Fresh Direct: awarded at least $131 million ($128 million since 2007) from 9 grants in 1 state.

Apple: awarded at least $119 million from 3 grants in 3 states.

Bloomberg.com is calling for a reduction in corporate welfare programs by forming a “corporate welfare commission” that could “operate much like the military base-closing commissions, examining which corporate welfare programs are worthy and which have outlived their purpose.” While this might be a good first step toward reducing the corruption, negative externalities, sustaining of inefficiencies, and the introduction of disincentives to properly respond to shareholders introduced by corporate welfare; it might be a better idea just to end it altogether taking their lobbyist in Washington, D.C. with them. Why do I say this? Because there is neither an economic nor moral reason for tax payers to subsidize any business. None whatsoever.

Anthony Bradley Anthony Bradley, Ph.D. is Associate Professor of Theology and Ethics in the Public Service Program at The King's College in New York City and serves as a Research Fellow at the Acton Institute. Dr. Bradley lectures at colleges, universities, business organizations, conferences, and churches throughout the U.S. and abroad. His books include: Liberating Black Theology: The Bible and the Black Experience in America (2010),  Black and Tired: Essays on Race, Politics, Culture, and International Development (2011),  The Political Economy of Liberation: Thomas Sowell and James Cone of the Black Experience (2012), Keep Your Head Up: America's New Black Christian Leaders, Social Consciousness, and the Cosby Conversation (2012), Aliens in the Promised Land:  Why Minority Leadership Is Overlooked in White Christian Churches and Institutions (forthcoming, 2013). Dr. Bradley's writings on religious and cultural issues have been published in a variety of journals, including: the Atlanta Journal-Constitution, the Detroit News, and World Magazine. Dr. Bradley is called upon by members of the broadcast media for comment on current issues and has appeared C-SPAN, NPR, CNN/Headline News, and Fox News, among others. He studies and writes on issues of race in America, hip hop, youth culture, issues among African Americans, the American family, welfare, education, and modern slavery. From 2005-2009, Dr. Bradley was Assistant Professor of Systematic Theology and Ethics at Covenant Theological Seminary in St. Louis, MO where he also directed the Francis A. Schaeffer Institute.   Dr. Bradley holds Bachelor of Science in biological sciences from Clemson University, a Master of Divinity from Covenant Theological Seminary, and a Doctor of Philosophy degree from Westminster Theological Seminary.  Dr. Bradley also holds an M.A. in Ethics and Society at Fordham University.