Ever wondered how much is spent annually to feed the poor ‘lazy’ Americans? Three main programs needy families depend upon — Temporary Assistance for Needy Families ($17.3 billion), Food Stamps ($74 billion), and Earned Income Tax Credit ($67.2 billion) — cost $158.5 billion a year. That’s too much for the undeserving citizens who don’t pay taxes, right?
Well, they don’t pay taxes because they don’t have any money since all of the money is on the top. The wealthiest 400 individuals in America own more wealth than the bottom half of the country – a 150 million people. The top 1 % own 40% of the entire wealth of the nation, while bottom 60% own less than 2%.
Despite these shocking facts, tax payers’ money is spent on corporate welfare programs – just 10 of which cost $2.201 trillion a year. This means, America is spending about 14 times as much on corporate welfare and handouts to the top 1% than it does on welfare for working families struggling to make ends meet. Now, that’s too much.
For decades, the federal government has spent many billions of dollars each year on ‘assistance’ to business in the form of grants, targeted tax credits, loans, loan guarantees, and much more. America’s 14 richest individuals made more from their investments last year than the $80 billion provided for people in need of food. In the six years since the recession, for every $1 of safety net costs, $10 in new wealth went to the richest 10%.
Here’s a breakdown of the costliest entitlement programs for the top 1% and how much they cost the rest of the Americans and the middle and lower classes:
- Tax Breaks For CEO Bonuses
In 1993, when Congress capped the tax deductibility of executive pay at $1 million, it allowed multinational corporations to deduct performance-based pay – including stock options – from their federal income taxes. The companies have been exploiting the tax-deductible stock options to lower their Internal Revenue Service (IRS) bills. This means that CEOs’ salaries are ballooning thanks to tax breaks that turn rich executive bonuses into government subsidies for corporate America.
According to an Economic Policy Institute estimate, tax-deductible executive compensation cost the federal treasury $7 billion in revenue in 2010 and $30.4 billion over the years 2007-10. The fast-food companies, including McDonald’s, YUM! Brands, Wendy’s, Burger King, Domino’s and Dunkin’ Brands., racked up $64 million in tax savings by giving its CEOs big bonuses.
- Tax Cuts For Luxury Corporate Jets
Currently, companies can claim a huge tax deduction every year by writing off purchases of corporate jets, lavish cars, home security systems, 24-hour surveillance, and chauffeurs as “security” for their CEOs. Typically CEOs would have to pay taxes on these ‘benefits’, but if the benefit is classified as necessary for security purposes, “the chief executive will pay a reduced tax bill or sometimes no tax at all”.
Between 2008 and 2011, 26 major American corporations paid nothing in federal corporate income tax, despite making $205 billion in profits. A Bloomberg analysis from 2011 showed that these tax breaks for some of the wealthiest Americans cost the rest of the Americans $300 million each year.
- Big Oil Subsidies
New figures from the International Monetary Fund show that the US, which hosted the G20 summit in 2009, gives $700 billion a year in fossil fuel subsidies, equivalent to $2,180 for every American. The world’s biggest and most profitable fossil fuel companies are receiving huge and rising subsidies from US taxpayers. A Guardian investigation of three specific projects, run by Shell, ExxonMobil and Marathon Petroleum, has revealed that the subsidies are all granted by politicians who received significant campaign contributions from the fossil fuel industry. No wonder then for every $1 the industry spends on campaign contributions and lobbying in DC, it gets back $103 in subsidies.
- Big Pharma Subsidies
According to an analysis of corporate filings by Health Care for America Now, the 11 largest drug companies took $711.4 billion in profits over the 10 years ending in 2012. The pharmaceutical industry derived much of that profit from price-gouging the Medicare Part D prescription drug program for seniors and people with disabilities; it cost taxpayers roughly $270 billion a year (which comes to $1,914 per household in corporate welfare) as the companies bought patents for drugs that were largely developed with taxpayer-funded research, then jacked up the price by absurd amounts after cornering the market.
- Capital Gains Tax Breaks
According to an analysis by the Tax Policy Center, if capital gains were to be taxed as ordinary income, about 72% of the additional revenue to the government would come from the 0.3% of taxpayers with annual incomes above $1 million. Lower levies on capital gains are the main reason why the wealthiest Americans pay a smaller share of their incomes in taxes than those who earn less.
An analysis by the Center for American Progress conveys, the effective tax rate for the top 400 households is lower than for those earning between $74,700 and $102,900, and about the same as that owed by people making between $50,00 and $74,700.
The fiscal cost of taxing long-term capital gains at a low rate amounts to $38.5 billion in fiscal year 2012 and $256.3 billion over the five-year period from fiscal 2012 through 2016. If we taxed wealth like work, the extra $51 billion per year in savings could fund two-thirds of the annual budget for food stamps.
- Corporate Tax Subsidies From State And Local Governments
In 2012, The New York Times did an analysis of every existing tax break in each of the 50 states and learned that 1,874 programs cost taxpayers $80.4 billion every year for corporate welfare in their state. The cost of providing tuition-free public college to every student is a mere $62.6 billion.
- Handouts To Big Agriculture
In 2011, 26 farmers each got an annual subsidy of $1 million; the median income of commercial farm households was $84,649 in 2011 — 70% more than the average American household. In 2013, the US Department of Agriculture spent about $14 billion insuring farmers against the loss of crop or income. The government paid 18 approved insurance companies to run the crop insurance program, farmers to buy coverage and paid the bills when losses exceed predetermined limits. FYI, the farm and insurance lobbies spent at least $52 million influencing lawmakers in the 2012 election cycle.
- Welfare For Wall Street
In 2008, big financial companies in the United States were regarded as too important to fail. Therefore they received large amounts of government support, directly from the Treasury, through central banks and in other ways to prevent them from collapsing. The Federal Reserve allowed them to borrow at lower interest rates than other big banks. In 2013, the ten biggest TBTF banks suck up $83 billion per year in corporate welfare.
- Export-Import Bank Subsidies
The Export-Import Bank of the United States (Ex-Im Bank), the official export credit agency of the federal government which provides loans to overseas customers of US companies such as Boeing and General Electric, is under severe criticism for favoring special interests ahead of those of the US taxpayer.
- Federal Contracts In Lieu of Lobbying
According to the Sunlight Foundation, the top 200 companies spent a combined $5.8 billion on lobbying Congress between 2007 and 2012. And in those same years, those companies received $4.4 trillion in federal contracts. That $4.4 trillion is $100 billion more than what the US government spent on providing a basic income to the nation’s 50 million Social Security recipients.
Isn’t it ironic that the rich complain about entitlement programs that benefit the middle class and poor, when it is the attitudes and policies of/for the rich that have led to an increased need for such programs in the first place?
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