INCREASING TAXES ON SOME CORPORATIONS, SUBSIDIZING OTHERS
January 5, 1996
Federal tax policies siphon money from some corporations and then pump it into others. Current law would collect some $190 billion in federal taxes from corporations in fiscal 1996, but the Clinton administration wants $48 billion more.
Republicans have already given up on the accelerated depreciation provisions in their Contract With America, and may be forced to drop their efforts to liberalize the corporate minimum tax. So after the budget is agreed upon, overall corporate taxes will rise.
But businesses on the receiving end will prosper in subsidies.
- The Export-Import Bank will subsidize exporters -- mostly airplane and nuclear reactor manufacturers -- by $632 million.
- Power priced at below-market rates will be sold by the Tennessee Valley Authority and will cost taxpayers $1.2 billion.
- The government will subsidize mostly corporate farmers by $18 billion.
- Mining firms will get title to resources on federal lands for half-pennies on the dollar.
- Corporate ranchers will graze their cattle on public property at below market rates.
- And the Small Business Administration will make loans sensible lenders wouldn't touch.
- Over seven years, corporate welfare will cost taxpayers about $800 billion.
Some are suggesting that by eliminating these giveaways, the corporate income tax rate could be reduced from 35 percent to 19 percent -- weeding out the weak, subsidized business while allowing profitable, successful firms to generate even more new products and create new jobs.
Sources: Stuart Sweet (Capital Analysts Network, Inc.), "Will a Budget Deal Knife Business?", Investor's Business Daily, January 5, 1996.
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