Tonight’s Open Thread: Who are the biggest recipients of Corporate Welfare?

Let’s start with:

Big Oil: $4B (see this)
Ethanol/Corn Growers $XX Billions
Defense Industry
Agribusiness
Banks

What specific legislation would you change? What tax breaks would you get rid of?

Let’s see who really is a deficit hawk and who is a deficit peacock…

Category: Bailouts, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

79 Responses to “Who Are the Biggest Corporate Welfare Queens?”

  1. Stav says:

    One of the more interesting things to come out of the Egyptian protests is that virtually all Foreign Aid to Egypt is for Defense spending which then goes to General Dynamics, GE, Raytheon, Boeing et.al. And those companies of course pass on a good portion of what taxpayers “gave Egypt” back to the politicians. What a circle mess.

  2. Guillermo says:

    Welfare extends to more than just hand-outs in cash. I’m going to quote Falkenstein since he said it pretty well.

    The Obama-McConnell tax bargain with an extension of a tax credit for ethanol that costs about $6 billion a year, and with an extension of a tariff on ethanol imports. Ethanol is so uneconomical that Congress supports it three different ways — with a mandate for its use, a tax credit to subsidize it, and a tariff to keep out competitors. Even Al Gore and Obama science adviser Stephen Chu now admit this is a boondoggle, but it continues. Sugarcane yields about eight units of energy for every one unit invested to grow, harvest and convert the cane into ethanol; corn is 1:1.4. So, of course, we put tariffs and quotas on the more efficient sugarcane to help American farmers. In October, the EPA approving an increase in the amount of ethanol — a hydrophilic, corrosive, low-heat-content fuel — that can be blended into the U.S. gasoline supply from 10 percent to 15 percent.

  3. NoKidding says:

    AIG
    GM
    FNMA

  4. nofoulsontheplayground says:

    End tariffs on imported ethanol. End subsidies for domestic ethanol as well as other farm programs.

    Reinstate Glass Steagall. Repeal the Commodities and Futures Moderinization Act. Ban all new credit default swaps unless backed like insurance policies, and wind down existing swaps over 5-years. Make current non-insured swap writers purchase insurance bonds covering 25% of the value of the swaps they’ve written.

  5. the bohemian says:

    do you mean Defense- as in the Defense Department (which is the government) or defense contractors?

  6. Chief Tomahawk says:

    I believe a big part of the reason the senior drug bill (passed in 2005) has gone parabolic in terms of cost is corporate America off-loading their retirees onto Uncle Sam’s back. Fox Business carried a piece with Caterpillar as an example.

    Okay, here I go quoting myself in an old post…

    “Chief Tomahawk Says:

    March 21st, 2010 at 2:41 pm
    Anyone see this gem Mish found yesterday?

    http://www.foxbusiness.com/story/markets/industries/transportation/nd-update-caterpillar-health-bill-cost-company–million/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+foxbusiness%2Flatest+%28Text+-+Latest+News%29

    Caterpillar objects to the Obama Healthcare reform because it will “cost their company $100 million.” Okay, sounds BAD for business. But the same article also explains how Caterpillar is sucking the government teat via subsidies obtained via the 2003 Rx benefit program:

    “The company said the potential extra costs would primarily come from provisions to tax the federal subsidies the company now receives for providing prescription-drug benefits to retirees and their spouses.

    Since the Medicare drug program was enacted in 2003, Caterpillar and more than 3,500 companies that already provided drug benefits for retirees have received tax-free subsidies from the federal government as an incentive to maintain their drug programs.

    The subsidies average $665 per person covered under a company-sponsored prescription program, according to benefits consultant Towers Watson, which recently completed a study on the health-care legislation’s effects.

    Watson Towers estimates federal taxes on the drug subsidies would amount to $233 per person receiving drug benefits under such programs.”

    No wonder the estimated costs of the senior drug program kept being revised upwards by the Government Accounting Office! Anybody and everybody has piled in to have the Feds foot the bill.”

  7. Moss says:

    Big Pharma most surely should be on the list. The US isn’t the most over medicated country on the face of the earth for nothing. Just look at Pfizer and the fines they have paid over the last 10-15 years. The rap sheet is astonishing.

  8. bigal says:

    Any corporation who pays less than 20% Federal income tax. Eliminate the loop holes that enable this.

  9. constantnormal says:

    If “corporate welfare” is defined as unhelpful (except to the recipients) government tax breaks AND spending in those areas, then Defense gets the prize, hands-down. We spend between 30% and 50% to the total GLOBAL national spending on “defense”, across ALL nations, and we have two nations (so far) concurrently occupied, with large troop commitments in many others. We pride ourselves on being geared up to fight multiple all-out wars at all times. We are probably the most aggressive nation on the planet.

    And yet has it made us safer?

    references:
    http://www.fas.org/man/crs/RL32209.pdf
    http://www.cato.org/pubs/handbook/hb108/hb108-48.pdf
    http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures
    http://www.globalsecurity.org/military/world/spending.htm

    In this era of WMD, a small nation (or even a terrorist group) can acquire enough firepower to inflict massive damage on any opponent, so comparisons based on fractions of the national GDP are not meaningful. What counts is the effectiveness that the military spending is producing.

    However, no spawn of the Congress will ever vote to reduce military spending in his/her own state, either through closing of unnecessary bases or shutting down contracts to local defense suppliers. Our national addiction to war is even greater than our addiction to oil.

    But all of the areas Barry has listed are leeches on our national wealth, sucking us dry with the eager complicity of our elected representatives.

  10. As Chief Tomahawk sez, where’s health care on the list? It is far and away the most heavily subsidized industry in America.

    But ethanol. Really, how is this still being subsidized? It’s nothing more than a huge transfer payment to agribusiness. But it must always be remembered, land is still the source of a great deal of power independent of how many voters happen to inhabit it. Iowa has farm land. New York has people. Iowans wish to crucify New Yorkers on a stalk of corn.

  11. DC says:

    Almost 30 years in DC left me more than a bit cynical. Much of that time was spent as a legislative aide, with the balance spent on campaigns and, yes, even some as a K Streetwalker.

    I fled to the hinterland a couple of years ago, convinced that nothing short of a scorched-earth flat tax can save the place. I’m a raving liberal on most issues, but on this one Steve Forbes is on the right track.

    While big-headline omnibus measures get the attention, a big chunk of the lobbying revolves around marginal mods to the tax code. If I win it’s “leveling the playing field.” If you win it’s a victory for “special interests.”

    The campaign money fuels the access of course. The ex-Hill/Admin staffer who now reps the corporation writes the language for the draft legislation, hands it to the fresh-faced staffer to codify, then a few years later the fresh-faced staffer goes to work for the lobbyist, and the beat goes on. See you at the fundraiser!

    Flatten the code. Dramatically, drastically slash subsidies to everyone: farms, defense, oil, telcos, etc.

    Forget campaign finance reform. Focus on killing the golden goose first. The rest will follow. (Ain’t gonna happen….)

  12. TerryC says:

    July 27, 2010

    State and Federal Tax Collections on Oil Industry Exceed Oil Industry Profits

    full study online at http://www.taxfoundation.org/publications/show/26555.html

    Washington, D.C., July 27, 2010 – With Members of Congress calling for punitive new tax laws against U.S. oil and gas companies in response to the BP oil spill, the Tax Foundation has released a new analysis showing federal, state and local taxes remitted by the oil companies have exceeded their corporate profits by 40 percent.

    “Governments at all levels in the U.S. and abroad are dependent on the substantial taxes paid by oil and gas firms,” said Tax Foundation President Scott A. Hodge, author of the new Tax Foundation Special Report, “Oil Industry Taxes: A Cash Cow for Government.”

    The new study, available at http://www.taxfoundation.org/publications/show/26555.html, shows that in recent decades, state and federal governments have “profited” far more from the oil industry than companies have.

    “Governments have collected $1.95 trillion in taxes from the oil industry since 1981,” said Hodge. “That’s far more than the profits of major U.S. oil companies during the same period.”

  13. profoundlogic says:

    Pharma, Agra, Oil, Insurance Companies, Banks and of Course The Military Industrial Complex. Virtually anything with “Inc.” attached at the end. Corporations are sucking the economy dry and leaving the unsuspecting public with the leftover crumbs. As the recent chart on the parabolic rise in food stamp use shows, the system is collapsing. Washington can ignore the facts all they want, but the quiet rebellion is already underway.

  14. Steven Donegal says:

    For all public companies, make taxable income equal to GAAP income.

  15. ottnott says:

    I’m going to be provincial here and consider only my state.

    The big welfare queens in California are the corporate and other non-human entities who pay property taxes on only 10-30% of the market value of their property, thanks to Proposition 13.

    Even if a corporation itself changes hands, the real estate is conveyed in a shell so that the ownership of the property never changes hands by Prop 13 rules. As a result, huge amounts of land used for commercial purposes pays less than 2x the property tax today that it paid 32 years ago. That’s in nominal dollars.

    The result is slow strangulation of the state and underinvestment in vital services like education. We have atemp working for us who planned to finish up some classes this Spring to qualify for a new career. She’ll have to wait, because the community college offering the courses is underfunded and can’t begin to meet the demand. Her classes filled up in an instant, and she wasn’t one of the lucky ones. Multiply her experience by tens of thousands each year in California and you have a drag on the state’s future productivity and innovation.

  16. carleric says:

    I am torn in so many directions given the governmental handouts but if forced to choose: ethanol, defense, banks and then all the rest….I would short term settle for just banning all corporate lobbying. Fannie and Freddie can’t lobby and Goldman and their ilk can? How does that work? Any member of Congress who accepts any benefits from a corporation should just go directly to jail.

  17. Apinak says:

    Our whole country is a kleptocracy.

    We pay more than the rest of the world combined on our military with little or no accountability for how it is spent, we use 25% of the worlds energy for 5% of the population, and we pay almost twice as much per capita for health care than all other developed countries and still have 50 million Americans uninsured. Add a poor educational system, crumbling infrastructure, and a corrupt government and you have a perfect recipe for a declining empire.

  18. BR–An agriculture only comment: For perspective, I am closely tied to US production agriculture in grains and cotton, I’ve worked in on the structured products desk at one of the biggest (now defunct) players, and left there to form a business focused on agriculture investments. US farm policy is an incredibly misunderstood topic. The CBO estimated the five year cost of the current farm bill at around $280B at the time it was written. About $190B of that is “nutrition” which includes Food Stamps and school lunches. The most recent projection for 5 year total cost *of nutrition only* has now been raised to somewhere north of $300B, partly because of the American Reinvestment and Recovery Act. The other category exceeding projections is the crop insurance programs, which are about $6B over. Only about 15% of the Farm Bill outlays actually make it to the farm level, meaning to the actual farmers.

    Why farm subsidies that make it to the farmer inflame so many people is beyond me–when it comes down to it this money subsidizes food prices, not the farmer, much like Wal-Mart has been a subsidy to consumers everywhere. The view that food prices and not farmers should be subsidized can be directly tied back to Earl Butz, Ag Secretary under Nixon. Because of food riots in the ’70s, they abolished the ever-normal granary which supported farmer profitability and switched to policies which encouraged producers to grow as much as possible and thus keep food prices low. Low food prices have been the driver ever since, and Butz should be one guy who gets credit for actually accomplishing what he set out to do—post ‘70s the US has had the most affordable food in the world.

    Notable is the fact that the crop insurance expenditure has exceeded projections. While in theory crop insurance should pay out for the farmer during a disaster scenario just like a regular insurance policy, the policy actually encourages farmers to do the bare minimum to their crop in order to not void the insurance and then hope that the crop fails and they collect on the policy. If the crop does happen to do well despite fertilizing far less than they would otherwise, etc. then they have made an average crop while spending no money. It’s a win win. The point–this program does not encourage producers to maximize crop yield. The interesting part is that it seems that farm subsidies are perhaps not going to get any lower, they are simply going to shift away from the current policies which take heat from the media and WTO (though they maximize production and keep food prices low) and to the insurance program which will be viewed in a better light (but do not encourage maximum production). Combine that with ethanol policy and you could have US policy combo that will very much drive food prices higher.

    There is a particular focus on large “corporate” farms receiving the majority of ag subsidies. There is certainly a skewed distribution–but the distribution in total production is even more skewed, e.g. the top 5% of farmers may receive 80% of subsidies, but they also produce 90% of total ag production. The idea of a “corporate” farm is also largely a myth created in contrast to the nice, pastoral vision of agriculture in everyone’s heads. The USDA classifies farms as “corporate” by the amount of revenue, and it is something ridiculously small, maybe $2MM, which is about 2000 acres of revenue today depending on crop and region. Regardless, the trend toward larger farms is only going to increase. Depending on the region, today a 2000 acre grain farm would require around $2MM for machinery and operating capital (and that does not include any land rent or capital for a hedge account). $75/acre net profit * 2000 acres = $150,000 net profit / $2MM = 7.5% ROC. Hardly a good return for a capital intensive business, though a return that scales up tremendously with size. Meanwhile, the very large grain operation I am involved in has received less than 1% of total revenues in the form of government payments for the last three years. We can operate without them, and it would be better for us if they removed all support so that the 2000 acre farmer would go out of business and we could take over his operation. If the economics don’t drive farm size higher, demographics will. The average age of a farmer is now 57 and there are virtually no young people interested in agriculture—precisely why I left i-banking to get closer to ag.

  19. philipat says:

    @TerryC Says:

    “February 1st, 2011 at 5:53 pm
    July 27, 2010

    State and Federal Tax Collections on Oil Industry Exceed Oil Industry Profits

    full study online at http://www.taxfoundation.org/publications/show/26555.html

    Washington, D.C., July 27, 2010 – With Members of Congress calling for punitive new tax laws against U.S. oil and gas companies in response to the BP oil spill, the Tax Foundation has released a new analysis showing federal, state and local taxes remitted by the oil companies have exceeded their corporate profits by 40 percent.

    “Governments at all levels in the U.S. and abroad are dependent on the substantial taxes paid by oil and gas firms,” said Tax Foundation President Scott A. Hodge, author of the new Tax Foundation Special Report, “Oil Industry Taxes: A Cash Cow for Government.”

    The new study, available at http://www.taxfoundation.org/publications/show/26555.html, shows that in recent decades, state and federal governments have “profited” far more from the oil industry than companies have.

    “Governments have collected $1.95 trillion in taxes from the oil industry since 1981,” said Hodge. “That’s far more than the profits of major U.S. oil companies during the same period.”

    More spin from the Big Oil lobby. The COGS of oil is zero (Except of course for exploration and extraction) and it belongs to all the people of the country at issue. So it is reasonaable for Big Oil to pay the people a share of this resource in the form of a royalty. This should not be mistaken for a “Tax”, as Big Oil suggesst that we should believe.

    Corporate profits of Big Oil, in comparison to payments of what amount to royalties are irrelevant. However, what is relevant is how much Corporate tax Big Oil pays on those profits. And the answer is? Not much.

  20. Patrick Neid says:

    No corporate welfare of any kind to anyone for anything. Get the government out of social engineering through the tax code. No deductions for anything for businesses and individuals. No tax breaks for anything. 15% corporate tax, 15% all for individuals. If that is not enough money, cut spending. Cut defense spending 20% and government employment the same. Take the view that the whole US is a corporation that needs to restructure. No bailouts of any kind.

    You should be able to do your taxes on the back of an envelope.

    I realize no one will like these proposals so here’s a no brainer to balance the budget and pay down our debt. Freeze spending at 2006 levels for the next ten years. You want some bullshit program, cut some other one. I don’t care how you spend the money–waste it on anything you like. But the total spending of the US government cannot exceed 2006.

    Of course nothing at all will be done because both the Dems and Repubs, politicians in general, could care less about the debt. Oh really you think not? We ended up 100 trillion in debt by accident! Too funny.

  21. philipat says:

    @bigal Says:

    “February 1st, 2011 at 5:31 pm
    Any corporation who pays less than 20% Federal income tax. Eliminate the loop holes that enable this.”

    Agreed, there should be an AMT for all Corporations because tax minmisation, within a ridculously complicated tax code, is down to a fine art. Applying an AMT and eliminating all tax deductions would solve the problem nicely IMHO.

    Depending on what you mean by 20% (On Revenues, Gross Profits, EBITDA, Net profits?) there are very few Companies whcich presently comply.

    Of course, in the United Corporatocracy of America, such reforms are not going to happen, although Congree might be able to collect greater campaign contributions instead?

  22. Winston Munn says:

    They knew the risks when they bought their tickets – I say, Let ‘em crash.

  23. philipat says:

    Congress, although perhaps a member might be called a “Congree”?

  24. CentralIowaFarmer says:

    Big Oil: $4B
    Corn Growers $XX B
    Defense
    Agribusiness
    Banks

    So, I gotta defend the ethanol industry. The one that pretty much gets spread around this country, the USA. I would argue that the other four above don’t really spread their profits around like US Corn Growers. I pay twice as much as the others in SS, since I pay my half as employee, and my half as employer. Yeah, that’s right, I pay 2 times what you do in Social Security. Then, I hate to pay taxes, so when I get above $50K in income, I start purchasing machinery, all of which is made in USA. So, any “profits” I typically make, I shove back into the economy. Look at John Deere or CNH stock if you doubt that. Then, all of the ethanol produced goes into cars/trucks in USA. Making everyone who drives a recipient of that subsidy. Plus, all of that ethanol is made into two products, ethanol and Dried Distillers Grain, which is used to feed chickens, pigs, and cattle. So, that subsidy goes into making your food cheaper. Now, if you live in the USA and don’t travel and don’t eat meat, I’d agree that you are getting screwed. Sorry, local vegetarians. You’ve got a beef with me.

    Hey, drop all those ethanol subsidies. You can pay what other folks around the world do for meat and petrol. I’ll be fine. Your prices for food will fluctuate with the weather, but I’m sure you won’t mind. I can go back to grass feeding beef and the supply will basically get divided by two, since it takes twice as long to get a steer to market on grass alone. Unless you figure out someway to double the size of pasture in the USA.

    And, if it makes you feel any better, the trade deficit with China can get even worse. Those container ships that bring their products in will go back empty, instead of with the corn and soybeans that they love to buy. Or, they will purchase more of ours, now that they’ve let the price of the Yuan start to fluctuate, and your price of food will depend on how much the Chinese are willing to pay!

  25. ottnott says:

    “State and Federal Tax Collections on Oil Industry Exceed Oil Industry Profits”

    What a joke. That so-called analysis included the gasoline excise taxes you and I pay at the pump as part of the tax collections from the oil industry.

    ““Governments have collected $1.95 trillion in taxes from the oil industry since 1981,” said Hodge. “That’s far more than the profits of major U.S. oil companies during the same period.””

    $1.09 trillion of that $1.95 trillion was the gasoline taxes that motorists paid so that there would be roads so that people could burn gasoline.

    Another $113 billion was the fees charged by the governments to allow the oil industry to use public lands and extract oil from them. Where’s the Tea Party when you need it?

    If you go back only 5 years instead of all the way to 1981 (because, you know, it just might be that current numbers have some relevance to current policy discussions), profits easily exceed the State and Federal tax collections as counted by Tax Foundation.

    Clearly, Tax Foundation produces sludge, not knowledge.

    Even if we swallow the atrocious methodology used by the Tax Foundation, so what if taxes were more than profits? Is there a reason that the two should have some specific relationship? ROI is what drives investment, not P/T ratios.

  26. willid3 says:

    TerryC Says:
    not sure how a company pays more in taxes that in takes in. makes me wonder if they aren’t also including as taxes that which you and I pay as we buy oil based products.

  27. call me ahab says:

    The result is slow strangulation of the state and underinvestment in vital services like education.

    STFU with that nonsense . . .taxes are taxes . . .if the property tax is low (by statute) . . .then they will suck it from any and all other sources-

    tell your sob story to someone who gives a shit . . .

  28. MayorQuimby says:

    End all corporate welfare. It’s simply a means to keep CURRENT corporations in place and prevent competitors from mounting a bonfide challenge. If these companies didn’t receive subsidies and tax breaks, they’d:

    a: Move
    b: Make less money.

    Both are opportunities for other companies to rise up and take their place.

  29. Greg0658 says:

    nice drag out .. I’ve been checking out the suggested articles on Corn-ethanol and am coming round to seeing the need to switch to another base material to digest .. but I’m still in the camp for R&D to digest a renewable material to create fuel to displace OIL – for security and replacement needs .. and I might add that the subsidies assist farmers displace oil based gas prices in the cost of growing and hauling the grain out of the fields … back to round’n’round

  30. dss says:

    DC,

    Please elaborate more and often! So much of that process is hidden and needs to be made more transparent.

  31. call me ahab says:

    . . .as if education is a service . . .like the water department . . .or the fire department-

    and it’s just a bitch when there aren’t enough slots available in the tax payer funded community college . .

    unbelievable . . .

  32. dss says:

    I would get rid of most of the corporate welfare as the original purpose intended is most likely gone.

    Our most profitable corporations, some of them the most profitable companies in the world economy, and they need corporate welfare?

  33. ilsm says:

    The socialized military is nearly largest welfare queen. Just behind the medicine-insurance complex.

    Take away the 30% of pentagon spending going to military personnel, including pensions and health care for retirees and dependents. The DoD spends nearly$560year a year for stuff from the civilian economy.

    Compared to the DoD is its near equal social security which takes 20% of the federal outlays, about the same as DoD.

    I recall medicare and medicaid take something less than DoD in federal outlays, say 15% to 17%.

    Taxpayer provided venture capital, DoD contractors are paid to “design” weapons and after getting paid twice or thrice are paid to build them, none of which is done well. Good thing the Chinese need footage from “Top Gun” to show how good their interceptors are, if they were the real thing they could roll over the socialized companies supplying the US all volunteer force.

    The empire costs the US nearly as much as the rest of the world spends on military stuff. And unlike the reason for the Roman army, the US empire does not pay for anything.

    Much small than DoD welfare is the money spent to keep the “family farm”alive.

    In the US (and Europe) the family farm (and mega agri biz) is a public good, in Europe health care is (and not in the US) a public good.

    However, since the US subsidizes (tax benefits to employers) health insurers who skim about 2% of GDP, with the federal outlays for medicare and medicaid run a few ticks over DoD.

    As Barry pointed out the UK spends about 7% and declining with austerity on war while the US spends 20% of central government outlays, the Germans less than 4%.

    The few beneficiaries of the US war economy are on a pretty municifent dole.

  34. philipat says:

    Even the environmentalists have now come down against corn ethanol. Sorry can’t locate the reference immediately.

    If ethanol is so important, just import it from Brazil where production from sugar cane is economically viable without subsidies, won’t cause US environmental damage and doesn’t consume something that can be eaten. Lack of sugar is not a prominent feature of the US diet?

    ;-)

  35. BusSchDean says:

    Is there a corollary question? Which firms/industries seem to continue to innovate and provide useful products and services without bellying up to the gov’t trough?

  36. budhak0n says:

    I second what dss said. Dc’s comments in this current limited scope were the most interesting.

    Everybody however made their same mostly stellar contributions. I’d like to read more from DC however.

    With the current split congress is the 86 Tax Code even on the table? Because it definitely should be but who knows at this point? I think everyone’s pretty much expecting typical gridlock.

  37. Fred C Dobbs says:

    The first duty of government is to use its monopoly power to protect its citizens from enemies, foreign and domestic, using military forces externally and police internally. Leave Defense alone. Government has no business being in “business,” whether directly or indirectly (using its rule-making monopoly power to favor one or another business enterprise), for reasons obvious to everyone except socialists, communists, and national socialists. To leave Agribusiness, Corngrowers, and Oil alone. Take away their Government support, and the Market will adjust and allocate resources efficiently. Honestly mark-t0-market Bank assets, and if they don’t have enough legal capital to engage in business, seize them, just like the FDIC does weekly, and parcel them out whole or in pieces to those banks that do have enough legal capital. It is manifestly unfair to those who play by the rules, and run their banks prudently to be forced to compete with banks propped up by Government, and, propped up, can engage in business imprudently, as they have done.

  38. Andy T says:

    Patrick Neid@7.01pm:

    “No corporate welfare of any kind to anyone for anything. Get the government out of social engineering through the tax code. No deductions for anything for businesses and individuals. No tax breaks for anything. 15% corporate tax, 15% all for individuals. If that is not enough money, cut spending. Cut defense spending 20% and government employment the same. Take the view that the whole US is a corporation that needs to restructure. No bailouts of any kind.”

    Well stated, sir.

    It bore repeating.

    Think about how many accountants and tax lawyers will need a new line of work. Think about the 100′s of billions we spend each year on these folks just to help us decipher the Tax Code or attempt to minimize our taxes. It’s why the mantra from the left: “Just raise taxes on the rich people…they need to pay their ‘fair share’” is such bullshit. Really rich people can always find a way to avoid/minimize their taxes.

    The only way to get everyone to really pay their “fair share” is to ditch 99% of the Tax Code.

  39. TerryC says:

    @ philipat:

    More spin from the Big Oil lobby. The COGS of oil is zero (Except of course for exploration and extraction) and it belongs to all the people of the country at issue.

    Huh? Oil companies pay thousands of dollars an acre for the drilling rights on land and offshore to state and federal governments as well as individual mineral owners. Then, if they are lucky enough to produce from this acreage, they pay anywhere from 1/8 to 1/4 of all revenue from the oil and gas to the mineral owner (government or individual). Then, if they have profit left after all other expenses, they pay taxes to local, state, and federal governments. They also pay property taxes, ad velorum taxes, etc.

    Out here in the Permian Basin, a typical 18,000 foot gas well costs about $10 million for all drilling and completion costs. This is before a dime of revenue from production (if any). In 30 years I’ve seen a lot of operators go belly up (I guess they were in Vegas blowing all of their tax savings). Funny how no one remembers $9/bbl oil in 1998. Or $10/bbl oil in 1986 (lost my house on that one). If you can name me a riskier business when it comes to making money offshore, in hostile environments, overseas, in politically unstable countries, then bring it on.

    @willid3:

    not sure how a company pays more in taxes that in takes in. makes me wonder if they aren’t also including as taxes that which you and I pay as we buy oil based products.

    They paid more in taxes than in profits, not revenue. I’m sure you have heard of many businesses who have tax accountants and attorneys who know how to minimize their taxes. That’s called capitalism and being a smart businessman.

  40. Andy T says:

    DC@5.49

    Great stuff there.

  41. gman says:

    Faux capatilism= not allowing prescription drug reimportation from canada. In any market that would be lucrative ARBITRAGE. Hey dont worry it is just the tax payers getting jammed.
    Talk about “free markets” v. “socialism” debate getting turned on its head!

  42. gman says:

    Government paying inflated prices for prescription drugs. Import them from Canada for a fraction of the price. Canadians live longer. In most other businesses it is called arbitrage. In this case it is illegal. The “free market” and “anti-socialism” crowd is keen to prevent this type of arbitrage from ever happening! It kinda turns the meaning of those terms upside down.

  43. ironman says:

    Hands down, the winner of the title of biggest corporate welfare queen is America’s ethanol producers. Some quick numbers:

    Direct subsidies received: $5.4 billion (through a tax credit of 45 cents per gallon of ethanol produced). That for the 12 billion gallons the EPA mandates to be added to motor gasoline in 2011, which will rise to 15 billion gallons in 2015 and 36 billion gallons per year in 2022.

    Indirect subsidies: $6.48 billion (through a 54 cent per gallon tariff on imported ethanol – this is how much higher over the world price of ethanol that U.S. consumers are being required to pay to support U.S. fuel ethanol producers.)

    Something to note – of all aid given by the federal government to politically-favored industries, U.S. fuel ethanol production (primarily ethanol produced from corn) is the only industry that receives all three kinds of government “assistance” (required use, tax credit subsidy, tariff protection from more economical foreign producers).

  44. Greg0658 says:

    “power to protect its citizens from enemies, foreign and domestic” .. is this what we are talking about – the ability to thrive when there is no viable way to take on supercorporations with free enterprise .. or are we talking about avian flu & offensive smells from your neighbors back yard:

    Batavia authorities are ready to start talking again about chickens -
    The city council’s city services committee will discuss whether residents should be allowed to raise cluckers in their backyards, at a meeting at 7:30pm
    http://www.dailyherald.com/article/20110131/news/701319876/

  45. billmasi says:

    “Every gun that is made, every warship launched,
    every rocket fired signifies, in the final sense, a theft
    from those who hunger and are not fed, those who
    are cold and are not clothed.
    This world in arms is not spending money alone.
    It is spending the sweat of it s laborers, the genius
    of its scientists, the hopes of its children.
    The cost of one modern heavy bomber is this: a
    modern brick school in more than 30 cities.
    It is two electric power plants, each serving a
    town of 60,000 population.
    It is two fine, fully equipped hospitals.
    It is some 50 miles of concrete highway.
    We pay for a single fighter with a half million
    bushels of wheat.
    We pay for a single destroyer with new homes
    that could have housed more than 8,000 people.
    This, I repeat, is the best way of life to be found
    on the road the world has been taking.

    Five Star General, Supreme Allied Commander during World War II and President of the United States, Dwight D. Eisenhower, pointedly illustrating the ruinous consequences of money funneled into the military rather than directed to society as a whole.

  46. ilsm says:

    Fred C Dobbs,

    What Ike said in 1953, quoted by billmasi, added to his military industrial complex speech 50 years ago this past January.

    The US empire is not defending any US citizen. Forward defense is malarky.

  47. ZedLoch says:

    “Two out of every three United States corporations paid no federal income taxes from 1998 through 2005, according to a report released Tuesday by the Government Accountability Office, the investigative arm of Congress”

    http://www.nytimes.com/2008/08/13/business/13tax.html?_r=2

    That’s both incredible and indefensible. I pay my share and I’m friggin broke!

    My favorite stat is Exxon Mobil’s effective tax rate in 2009 was ~47% worldwide, but 0% in the USA. WTF?

  48. TripleB says:

    Radical idea – shift all the subsidies for corn, sugar, big agribusiness to small organic vegetable, fruit and grain farmers. Make a healthy diet competitive in price with fast-food or junk-food alternatives.

    Then see what happens to your health care costs in 20 years.

  49. ToNYC says:

    I like IKE. Demanding the cleanest Domestic Energy is being not-needy. With love and imagination, anything is possible.

  50. philipat says:

    @TerryC

    In response, I quote as follows:

    @ZedLoch Says:

    “February 1st, 2011 at 9:28 pm
    “Two out of every three United States corporations paid no federal income taxes from 1998 through 2005, according to a report released Tuesday by the Government Accountability Office, the investigative arm of Congress”

    http://www.nytimes.com/2008/08/13/business/13tax.html?_r=2

    That’s both incredible and indefensible. I pay my share and I’m friggin broke!

    My favorite stat is Exxon Mobil’s effective tax rate in 2009 was ~47% worldwide, but 0% in the USA. WTF”

    I rest my case. You must be a lobbyist for BigOil?

  51. jeg3 says:

    Cut all corporate welfare and let God sort out the resulting hypocrites panic.
    Corporate welfare and consolidation (lack of competition) stifles innovation.

  52. Lyle says:

    Re: Central Iowa Farmer people who do W-2 work pay the same amount as you do its just that their employeer pays directly for 1/2. The employer then pays the worker less to make up for the difference so for self employed its just a different way of paying the same amount. (Do you think employers don’t include the employer share in figuring out how much an employee costs?)

  53. louis says:

    Win in Iowa = Ethanol

    When do we get a NOL Provision ?

  54. Lyle says:

    In general given that so much work is spent to game the corporate income tax do the following. Abolish it, first then the dividend and capital gains tax breaks can go away, second a vat is imposed to make up the difference. Since in reality corp taxes are either paid by the shareholder or by the customer, lets be explicit about it. Also then companies have to pay the full cost of expense account lunches etc.

  55. RuffRednSore says:

    Based on the comments so far it appears the big oil and big ag interests are well represented here, and each firmly believe they deserve their welfare because they are just too important.

    And those freeloading megacorporations who skillfully avoid paying taxes should be assessed a war tax – retroactively too.

  56. obsvr-1 says:

    Problem #1 and the biggest welfare queens (whores) is the FIRE industry — $T’s

    Most insidious and harmful welfare queens – Crime & Corruption — Strengthen the budgets and expand law enforcement, white collar crime investigations and prosecutions. Declare a “War on Fraud” and “Corporatized Crime” — $B’s to recover in SS, Medicare/Medicaid, Pharma, Financial Industry, MIC fraud.

    End ALL gov’t subsidies — Let a competitive free market reign supreme

    Repeal 16th Amendment – End Income Tax — enact consumption tax e.g. fairtax.org
    — This gets rid of all tax deductions and credits and all of the lobbyist/special interest that influence tax code
    — No corporate tax, no corp welfare through the tax code; repatriate $ held in foreign banks

    Repeal FRA 1913 — End the FED (see problem #1); Return to sound money (ultimately gold standard) to restrain gov’t spending (no more money out of thin air creation); End TBTF, no gov’t backstop – no lender of last resort (this will end FRB as bank investors will be exposed to leverage risk); enable competitive banking – no TBTF cartel.

    End all Dept of State Nation Building, Foreign aid budgets

    Restore Dept of Defense to DEFENSE — end imperialism, world policing and the “War on Terrorism”, pull out of Iraq, Afghanistan, close majority of bases WW – Cut budge accordingly (likely 30-50%) —

    Regress gov’t agencies to pre 9/11 levels — the huge run up in gov’t bloat, Executive Branch power , DHS occurred post 9/11

    Reduce regulatory burdens, not be deregulating but efficient and appropriate regulation.

  57. TerryC says:

    @philpat:

    No, I’m a geologist. I also spent 12 years teaching high school chemistry and physics in the 80′s and 90′s in between “obscene oil company profits”. Lost a house, started over, was luckier than most in that I was able to return to the industry 10 years ago. If you think oil companies make too much money, why don’t you go to work for one and join in? Or better yet, sell all your possessions, leverage to the hilt, and buy oil company stock? You should be a multimillionare in no time.

    I remember when General Motors was the largest corporation in the world. Then, after decades of brilliant management, they managed to increase the corporate net worth to zero. If you hate capitalism so much, get a government job-or better yet, work for GM (same thing).

    Remember, no corporation in the history of the world ever paid a dime in taxes-PEOPLE pay taxes. Where the hell do you think all that oil company revenue goes, anyway? Employees, stockholders, taxing entities, suppliers,
    and everyone else suckling at private enterprises’ teats.

    For a financial blog, there sure are a whole lot of socialists who comment on here about how much they hate capitalism (except, of course, for their own business/industry).

  58. roger erickson says:

    Which legislation & tax breaks should we jettison? Why, it’s perfectly well dictated by the hierarchy you showed!

    conclusion? we absolutely have to close down Soc Sec!

    or at least extend the retirement age for poor people!

    [why isn't the hierarchy below repeated on the front page of every media outlet in the USA, for a year?]

    deficit hawks vs deficit peacocks? phooey, you left out the biggest category – the Deficit Dodos

  59. ShakyShot says:

    The Banks beat all others by Trillions of indirect costs. My behavioral-based opinion is that “Wall Street” was the root cause of the financial boom-bust, with all other “causes” being symptoms of the the Wall Street “capture” of the Government and Fed. Add in the cost of the resulting recession, and the cost of the repeat financial crash that will occur in a few years, and soon your talking real money.
    Eliminate the Bank’s lobbying, campaign contributions, rotational hiring of Gov. employees, etc. to remove “our” officials from the pockets of the banksters. And break banks into sizes “small enough to fail”.

  60. Ivana Puke says:

    You misspelled Whore with a Q.

  61. socaljoe says:

    The federal government spends several trillion dollars per year… primarily in the non-productive form of welfare and warfare. What is significant about $4 billion tax break to the oil industry? What constitutes corporate welfare anyway? Is the home mortgage tax deduction a form of welfare?

  62. Hey You says:

    Lest we forget the stranglehold the NEA and the teacher’s unions have over the US population. Billions are dumped into funding a loser educational system. “Educators are without a doubt the biggest welfare queens. The problem is compounded with the idiocy of the public who actually believe that giving the welfare queens more money is going to improve American Education.

  63. philipat says:

    @TerryC

    You’re picking on the wrong guy. I’m a Libertarian who retired to Bali at age 50 having left big Corporations then bought and sold a Company.

    I am a capitalist who believes in FREE markets. My issue is that “We the people” have lost the plot. The US is now a Corporatocracy with Congress in the pockets of the same Corporations.

    Corporations should, IMHO, pay Federal taxes in the US just as the little guy has to do, and XOM would be a very good example. For Corporations not to share the tax burden is neither capitalism, nor is it indicative of free markets. It;s hard to understand where you are coming from but please feel free to defend XOM’s free ride.

    Democracies always fail when the majority realise they can vote or lobby for a free ride. That’s my concern.

    Incidentally, yes I do have several Energy Companies in my portfolio in addition to various Energy and Commodity ETF’s. Like I said, I’m not a Socialist, but I do see a lot wrong with the United Corporatocracy of America with Congress as a wholly-owned subsidiary of the Corporations.

  64. rktbrkr says:

    We desperately need functioning antitrust, big banks, big oil, defense contractors – all have a hammerlock on the government teet.

  65. rktbrkr says:

    Dow above 12K, I guess high oil prices and political turmoil in the middle east is just what the doctor ordered.

  66. doug86 says:

    @TerryC: “Remember, no corporation in the history of the world ever paid a dime in taxes-PEOPLE pay taxes.”
    - And no corporation has ever been given 1st amendment rights, like PEOPLE HAVE, until now…

    “Where the hell do you think all that oil company revenue goes, anyway? Employees, stockholders, taxing entities, suppliers…”
    - You forgot one; contributions to elections.

  67. number2son says:

    CentralIowaFarmer: you sound more like an corn/ethanol lobbyist than a farmer. But how ’bout applying some of your analysis to what might happen to food and energy prices if we removed tariffs on sugar cane and lifted the trade embargo on Cuba?

  68. number2son says:

    Educators are without a doubt the biggest welfare queens.

    Among all the piles of bullshit I encounter on this blog, this gives off the most steam.

    This rather reflects the level of critical thinking we might expect from future generations if trends in education remain on their present course – that is, increasing class sizes to the point where instruction moves down the list of priorities below crowd control, or cutting “non-essential” programs like music, art, wood shop, sports (the last to go), or reducing teacher pay.

    Another big obstacle is overcoming the cultural aversion we have to learning math and science – it’s only for the nerds or the children of the Tiger Mothers we’ve heard so much about lately. For most everyone else, school is something to endure until it’s time to move on to the real world, where a lack of preparation leaves our public-educated kids a choice between low level office work or the military (forget about decent blue collar jobs, those are a thing of the past).

    Indeed, the landscape of primary public education in this country is becoming increasingly barren, a perfect reflection of the sentiment expressed in the comment quoted above.

  69. number2son says:

    Remember, no corporation in the history of the world ever paid a dime in taxes-PEOPLE pay taxes

    Are you joking? In fact, and believe it or not, corporations are actually supposed to pay takes.

    And who here is against capitalism? The question we should instead be asking is when the U.S. will once again become a functioning republic.

  70. wally says:

    Bosenhoofels

  71. curbyourrisk says:

    First off…..I review OIL companeis all the time for commodity busienss that we do here. They all pay LARGE amounts in taxes. Most of them in excess of an effective tax rate exceeding 40%. I am sick and tired of hearing shit about OIL companies not paying taxes. I also review MOST of the big industrials, like GE…..what was GE’s effective tax rate last year? Go look it up. We don’t do business with most of the investment banks (I mean bank holding companies – what a joke) BUT, we do some commodity trading with a few of their divisions so I get to see thier balance sheets and income statements before we set the trading limits. Go look at their effective tax rates.

    It is all bullshit……… The games the play are insane.

  72. curbyourrisk says:

    @ Steve Donegal: “For all public companies, make taxable income equal to GAAP income.”

    No one reports GAAP income, they all report Non-GAAP income. We thought we did away with Pro-forma accounting post Enron. Bullshit….we just changed the name.

  73. budhak0n says:

    “Educators” ?

    Well I think Mr . Wilde handled that for us quite well.

    “Education is an admirable thing, but it is well to remember from time to time that nothing that is worth knowing can be taught.”

  74. Bob A says:

    The healthcare industry OF COURSE.

    Health insurers and Pharmaceutical companies spend billions on advertising to make even more billions on Medicare reimbursements convincing people they have diseases they probably dont have and need medications they probably dont need.

    Just count the pharmaceutical ads on any network nightly newscast.
    You pee too much.
    You have restless leg syndrome.
    Your digestion doesn’t work properly.

    4b to oil companies? NOTHING

    The most important change we could make to improve the American healthcare
    system and bring down costs is to outlaw television advertising for prescription drugs.

  75. Fred C Dobbs says:

    Some think Eisenhower’s warning in the ’50s means we should unilaterally disarm today, partially or completely. This is nonsense. His warning was made in another age. Sure, the US and the USSR had nuclear weapons, but no one had the ability to send them in missiles from one continent to another, or pack them in suitcases and smuggle them to a place to detonate. Nuclear proliferation and advances in bomb design has changed the game. The tolerance of Muslim governments for their citizens’ extremist attacks on others, whether they be Hindus in India, Buddhans in China, or Christians elsewhere, in the Philippines, France, England, the US etc. has also changed the game. Just as we needed military presence in Asia and Europe during the Cold War, we need an external presence now to do the job the tolerant Muslim governments are unwilling or unable to do themselves. We need beefed up domestic security to catch the extremists, foreign and domestic, that want to kill us. Jihad Jane just plead guilty, and she is domestic. The silly underwear and shoe bombers are foreign. I, for one, don’t want the US to cut military spending until the nuclear and muslim threats are under control. Unilateraly disarmament is for the foolish, weak, and confused.

  76. pjschgo says:

    Hey, TerryC,

    I wasn’t familiar with Tax Foundation, so I did a little research, and it took me all of about 30 seconds to learn that was founded in part by Standard Oil, and has ties to Koch Industries and Exxon Mobil. I’m sure that report you’re quoting is completely fair and unbiased.

  77. [...] A few weeks ago, I asked readers “Who were the biggest recipients of Corporate Welfare?” [...]

  78. CentralIowaFarmer says:

    how ’bout applying some of your analysis to what might happen to food and energy prices if we removed tariffs on sugar cane and lifted the trade embargo on Cuba?

    I’d be all for removing tariffs on sugar cane. Sure, the US might get a lot more ethanol via S. America, but lifting the trade embargo on Cuba has been a major point of most farm groups for YEARS! The biggest cost for most consumer items (food, fuel in particular) is the cost of transportation. The US ethanol industry would be hurt by the above moves, since the east coast would get more fuel via S. America. In the end, corn prices would move downwards, which would east the price of land, which is expensive for any beginning farmer. I am farming ONLY because I’m the third generation in my family to farm. No way could I afford the capital costs without having two generations to lean upon. Ag subsidies go to #1) landowners, and #2) companies like ADM, which get their products a little cheaper via the subsidies. They pass these profits onto shareholders, and it does help to make food cheaper. Travel the world and see if food is any cheaper anywhere else in the world. Rice is cheaper other places, but in general, any meat, fruit, or vegetable is MUCH more expensive around the world.

    I’m a farmer and I’m all for eliminating the ag subsidies. As long as we end oil companies subsidies, and the US military subsidies that allow those companies to operate in middle east dictatorships…