Nearly $100 billion in federal subsidies is given annually to U.S. businesses. If this was done away with, personal income tax could be reduced 10 percent across the board or capital gains and death taxes could be eliminated.
Yet another reason to eliminate business subsidies is they don't provide jobs or help small businesses, according to Hoover Visiting Fellow Stephen Moore in "Welfare for the Well-Off: How Business Subsidies Fleece Taxpayers", a Hoover Institution Essay in Public Policy.
Federal subsidies take many forms, including direct grant payments, below-market insurance, direct loans and loan guarantees, trade protection, contracts for unnecessary activities, and tax code loopholes. Some government programs that receive taxpayer support are the Export Import Bank, the Overseas Private Investment Corporation, and the Commerce Department's Advanced Technology Program.
In his essay, Moore criticizes the Clinton administration for consistently requesting that more tax money be budgeted for corporate gifts. He also finds fault with congressional Republicans who haven't followed through on attempts to reduce business subsidies because, in his view, these programs undermine the free enterprise system.
Moore concludes that Congress should stop providing financial aid for businesses and instead cut taxes, or reduce the national debt, or both.
Stephen Moore wrote this essay when he was a visiting scholar at the Hoover Institution. He is a contributing editor to Human Events and National Review. His book, Still an Open Door? Immigration Policy for the Twenty-first Century, co-authored with Vernon Briggs, was published by the American University Press in 1994. He is the director of fiscal policy at the Cato Institute.
Copies of this Essay are available for $5 each from the Hoover Institution Press, 1-800-935-2882.
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