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Corporate welfare is often used to describe a government's bestowal of money grants, tax breaks, or other special favorable treatment for corporations. It highlights how wealthy corporations are less in need of such treatment than the poor.
The definition of corporate welfare is sometimes restricted to direct government subsidies of major corporations, excluding tax loopholes and all manner of regulatory and trade decisions, which in practice could be worth much more than any direct subsidies.
"Privatizing profits and socializing losses" refers to the idea that corporations want to reserve financial gains for themselves and pass along losses to the rest of society, potentially through lobbying the government for assistance. This practice was criticized in the Wall Street bailout of 2008.
Subsidies considered excessive, unwarranted, wasteful, unfair, inefficient, or bought by lobbying are often called corporate welfare. The label of corporate welfare is often used to decry projects advertised as benefiting the general welfare that spend a disproportionate amount of funds on large corporations, and often in uncompetitive, or anti-competitive ways. For instance, in the United States, agricultural subsidies are usually portrayed as helping independent farmers stay afloat. However, the majority of income gained from commodity support programs actually goes to large agribusiness corporations such as Archer Daniels Midland, as they own a considerably larger percentage of production.
Alan Peters and Peter Fisher, Associate Professors at the University of Iowa, have estimated that state and local governments provide $40-50 billion annually in economic development incentives, which critics characterize as corporate welfare.
In 1990 the federal government spent 4.7 billion dollars on all forms of international aid. Pollution control programs received 4.8 billion dollars of federal assistance while both secondary and elementary education were allotted only 8.4 billion dollars. More to the point, while more than 170 billion dollars is expended on assorted varieties of corporate welfare the federal government spends 11 billion dollars on Aid for Dependent Children. The most expensive means tested welfare program, Medicaid, costs the federal government 30 billion dollars a year or about half of the amount corporations receive each year through assorted tax breaks. S.S.I., the federal program for the disabled, receives 13 billion dollars while American businesses are given 17 billion in direct federal aid.
In 2015, Kevin Farnsworth, a senior lecturer in Social Policy at the University of York published a paper in which he claimed that the government was providing corporate subsidies of £93 billion. This amount includes the role of the government in increasing trade, tax relief for businesses that invest in new plants and machinery (estimated by Farnsworth at £20 billion), not charging fuel duty on fuel used by railways or airlines, green energy subsidies, a lower corporation tax rate for small companies, regional development grants and government procurement for businesses (which Farnsworth suggests often favours British businesses even when these are not the best value option available). However, The Register wrote that Farnsworth's figure for tax relief for investment was incorrect and that he had made mistakes in his calculations, noting that he was not an accountant. It also stated that not charging businesses taxes under certain circumstances (when the reliefs applied) was not the same as giving them a subsidy. Fuel duty is not charged on airlines due to the Convention on International Civil Aviation (a UN agency) which specifies that aeroplanes should be exempt from fuel duties.
In 2015, Labour Party leaderJeremy Corbyn said he would "strip out" the £93bn of "corporate tax relief and subsidies" Farnsworth referred to and use the proceeds for public investment. Corbyn did not say which specific policies he would change. The Guardian wrote the policy "sounds wonderful, but careful scrutiny of 'corporate welfare' shows that it includes capital allowances designed to persuade companies to invest, regional aid to boost growth in rundown parts of the UK, and subsidies to keep bus and rail routes open - none of which Corbyn would presumably like to see stopped."
It was observed by The Wire that the Effective tax rate was low for the larger corporations which meant companies making smaller profits are competing in an unequal environment against bigger companies with substantial taxation benefits, with the gap in effective tax rates widening over the years. India's Union government's prime minister criticised this practice and said
"Why is it that subsidies going to the well-off are portrayed in a positive manner? Let me give you an example. The total revenue loss from incentives to corporate tax payers was over Rs 62,000 crore... I must confess I am surprised by the way words are used by experts on this matter. When a benefit is given to farmers or to the poor, experts and government officers normally call it a subsidy. However, I find that if a benefit is given to industry or commerce, it is usually an 'incentive' or a 'subvention'."
^Chapman, Roger (2010). Culture Wars: An Encyclopedia of Issues, Viewpoints, and Voices. M.E. Sharpe. p. 119. ISBN9780765617613.
^Harrington 1962, p.170, quote: "socialism for the rich and private enterprise for the poor"
^Engvall, Robert P. (June 1996). "The connections between poverty discourse and educational reform: When did 'Reform' become synonymous with inattention?". The Urban Review. 28 (2): 141-163. doi:10.1007/BF02354382.
^Michael Harrington (1962) The Other America, p.58, quote: This is yet another case of "socialism for the rich and free enterprise for the poor," as described by Charles Abrams in the housing field
^Stein, Sam (March 18, 2010). "Biden On The Bailout: 'Socialism For The Rich And Capitalism For The Poor'". The Huffington Post. Retrieved 2018. Pointing to the hundreds of billions of government dollars that have been spent to keep banks from failing, he recalled a "great expression" of his grandfather, Ambrose Finnegan: "It's socialism for the rich and capitalism for the poor,"" Biden said.
^Full transcript of the John Pilger speech at the Sydney Opera House to mark his award of Australia's human rights prize, the Sydney Peace Prize: "Archived copy". Archived from the original on October 14, 2010. Retrieved 2014.CS1 maint: archived copy as title (link)