What is a Corporate Subsidy?



Today I want to rant about something that Americans do, which is not a good way to have an economy.

You may have heard of corporations not paying taxes, and that is true. It is legal for them to set up tax shelters overseas and funnel the money through them in order to avoid giving a dime to the US government.

But, did you know that in addition to not paying taxes, they get money from our taxes?

Really, it’s true.

The government just gives out money to large corporations. With a tax base of 350 million Americans, there’s a lot of money to hand out. In 2002, the total amount of corporate subsidies jumped by $92 billion dollars.


So what is the excuse for this? Can there be a rational justification for giving away money to corporations?

Well, their excuse is that they need the money in order to stay in business, and they have to stay in business to employ people.

Let’s skip over the fact that most large corporations employ very few Americans because they have moved their factories overseas. I mean, that is a fact, but it’s a separate issue that we should also deal with (there can be more than one thing wrong at once.)

Anyway, let us pretend that they do employ lots of Americans. And, because of this, they claim that they need financial support from the government in order to stay in business.

If that were true, here is what should also be true:

1. The CEO makes only a small amount of money and no bonuses.

2. The stockholders in the company see ZERO return on their investment.

3. The business is in danger of immediate collapse.

However, none of these conditions hold true. The CEOs make lots of money and gets millions of dollars in bonuses per year. The stockholders do see dividends each quarter. The businesses are not in danger of collapse.

So in fact, they do not need the money. They just want it so they can funnel their profits into each other’s bank accounts while poor Americans pay the taxes that fund them.



But let’s say that the above conditions were met, and the business was in danger of failing.

So what?

Honestly, so fucking what?

Why is that a bad thing in a Capitalist society where weak businesses are supposed to fail so that better business models can evolve?

If the invisible hand of the market is suppose to eliminate companies that do poorly so that we can have a healthier overall economy, then we should absolutely be letting that happen.

Do you think, if Walmart disappeared, that no one would try to open a store that sold the same stuff as them? Do you think other, better companies that could support themselves without stealing from taxpayers would not appear?

Of course they would!

But right now, they are stifled. Nothing new can evolve. Because, how could a mom and pop business ever compete with a corporation that is getting billions of dollars from the government for free just because they exist?

They couldn’t.

So we have created a market without competition, and all the companies that provide goods and services have a monopoly, because there are no subsidies for small businesses that may be created in an attempt to compete.

The answer is obvious:

Treat corporations just like small businesses. Make them pay taxes, and do not give them subsidies.


I can’t understand why we as a nation can’t agree to see this as a priority. This is the biggest financial problem we currently face as a country, and no one even talks about it.

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