A New Era Of Corporate Welfare
We hear all the time about the corruption of the welfare system here in America. We hear all of the horror stories about people receiving public benefits when they really don’t need them. Or, receiving them and using them to purchase junk food and cigarettes. What a shame? But, we don’t hear enough from the media about corporate welfare. Yes, believe it or not, large, profit-laden corporations who have no business receiving taxpayer-funded handouts, get them all the same. Often, they then turn around and complain about their overly burdensome taxes. Well folks, don’t feel too sorry for them.
One of the most disgusting examples of corporate welfare is playing out down in the conservative safe haven of Georgia; Cobb County, to be exact. The Atlanta Braves recently secured $300 million in taxpayer dollars to help them build a new stadium in Cobb County. The Braves’ owner, John Malone, also owns Liberty Media. Liberty Media has investments in Starz, QVC, Encore, The Weinstein Company, Sirius XMAS Radio, the struggling Barnes & Nobles chain, scores of websites, and the list goes on. Their quarterly profit ending the 2011 fiscal year, was a cool $1 billion. Yes, that’s just a fiscal quarter. John Malone himself is worth $6.7 billion according to Forbes. But, apparently his wealth just couldn’t cover the $672 million the new stadium will cost. Thank heavens he has the Cobb County government to kick in $300 million. Meanwhile, the Cobb County school district faces an $80 million shortfall in 2014. Of course the agreement between the county and Liberty Media was made quickly and on the hush-hush.
It’s a sad state of affairs. Corporate welfare comes in many forms and it’s not just a federal issue either. Many corporate subsidies, like the Atlanta Braves construction grant, come from state and local governments on top of the benefits offered up by Washington. Wal-Mart gets an average of $7.4 million in subsidies from local governments to build a distribution center, and an average of $2.8 million for building a retail center. So, all three levels of government are offering up freebies to corporations.
Subsidies might not seem like a bad idea, if they were being given to companies who intend to develop such things as renewable energy sources, new and improved health care methods and devices, new methods for producing more food, in short, things that will benefit the future of America and society as a whole. But, as is, these subsidies are doled out without rules or caveats. They are nothing short of financial gifts. The most recent Supreme Court decision on campaign finance will help ensure the gifts keep on coming.
The biggest breaks corporations receive from the government come at tax time. See, we hear a lot about how the 35-percent corporate tax rate is the highest in the world. We must lower it. Before the tears start streaming, it’s important to note how we don’t hear much about the effective tax rate for corporations, which is around 12.6 percent according to the Government Accountability Office. The effective rate is the amount the government actually receives. That 12.6 percent is five percentage points lower than the corporate tax rate in Kazakhstan, and likely lower than your own rate. Many profitable companies don’t end up paying anything at tax time, just ask GE. From 2006-2011, GE’s net federal income taxes were negative $2.6 billion, despite raking in $39.2 billion in pretax U.S. profits, over the same time period.
Companies who pay low wages eat up public tax dollars in other ways, too. Rather than paying a living wage with adequate healthcare benefits, such companies, like McDonald’s, defer those wages and health benefits to Uncle Sam, who passes the bill on to future generations. I’m all for individuals and companies being successful, seeking profits and creating jobs. But, I cringe at the thought that those profits are coming at the expense of you and me, our nation, and our future.
James Bliss is an Ashville resident.