by Hershel Tucker

Created on: January 29, 2007   Last Updated: October 07, 2011

Imagine, for a moment, that the average American could build a new home, and that government grants would cover two-thirds of the cost. Imagine having an annual income in the billions of dollars and paying little or no tax on that income, perhaps even receiving tens of thousands in income tax returns. Of course, this type of scenario is impossible for the average American, but there is one type of U.S. citizen that is capable of obtaining this type of aid on Federal, State, and even local levels: corporations. They receive billions in tax breaks and government subsidies each year, and it all comes out of the pocket of the ordinary citizen. This is the world of corporate welfare, and it is damaging the working class of America by placing the tax burden upon average Americans.

It is generally agreed that the term "Corporate Welfare" refers to government programs that provide unique benefits or advantages to specific companies or industries (CATO, 2003, CATO Handbook For Congress). Proponents argue that these policies encourage job growth and provide money for new research and development that may not have occurred otherwise. A pretty theory on paper, but it is unclear whether this idea can be effective in actual practice.

In 1995, the state of Massachusetts gave Raytheon Corporation a $21 million tax break, cutting its tax contribution by three-fourths. The cuts came after Raytheon threatened to leave the state, taking nearly 115,000 jobs along with it. A mere three years later, however, Raytheon had reduced its workforce by 21%, or 4,100 people (Good Jobs First, 5-6).

This is just one of myriad examples where a company has been given massive tax breaks, in the unsuccessful hopes of retaining jobs. In fact, some of this country's most recognizable corporations have been beneficiaries of such fiascos. In the table below is a list of some of the most egregious examples of ineffective Corporate Welfare. As shown in Table 1, between the years of 1995 and 1995, the ten companies in the table received a total of $8.3 billion in tax subsidies while combining for a total of 134,450 layoffs. The effort to encourage job growth through the use of tax breaks seems to be an obvious failure. All too often, companies such as those in the "Layoff Ten," are receiving tax benefits, without holding to their end of the bargain. There are, however, other purported benefits to the policies of Corporate Welfare.

Table 1

http://www.ctj.org/images/layoffs/laysum.gif

Note: Citizens for

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