Are you saying that as a negative? Who has a higher corporate tax burden than the US? Extremely few countries. $0.02 Do we want business growth or not?
If it is tax incentives, it isn’t welfare. Not even sometimes. TARP is a fair point and I did think of that before I went to bed last night. Another one might have been GM. I think the bigger problem was that the winners and losers were picked somewhat arbitrarily, but I don’t agree that the goal was to pass relief to consumers. A huge part of it (banking, not auto) was maintaining solvency / liquidity / reserves thus precluding any idea of “trickling.” The point was exactly to “increase the size of the portfolio” (and reduce risk!). I would have let them fail myself, FWIW. It would have been very messy, but new institutions would have emerged. The consumers got plenty of relief via other mechanisms. Having said all that, these aren’t the companies I see most of the “Corporate Welfare” bemoaners bemoaning.
What you call tax “incentives”, I call shifting the tax burden from the corporate payer to the individual. Higher corporate profits, simply from tax relief is not necessarily desirable. There are examples of countries (such as Germany), which have stronger economies per capita, and higher standard of living by every significant measure of social well being, and with higher tax rates. In fact, the US consistently ranks in the lowest quartile of the OECD countries, where countries such as Germany, Sweden, the Netherlands and Japan rank in the top tier. The story is far more complicated than just looking at tax rates. But that is a troubling part of the picture.
Here is another example of what I would call corporate welfare. A large percentage of big box shopping, fast food, and hospitality workers use food assistance and government provided medical assistance to survive at the poverty line. Why should Walmart (or others) benefit in this way, on the backs of the ordinary taxpayer? Why should they not pay their fair share, for the benefit of being the wealthiest company (or nearly so) in the US? Would they not still be profitable enough? Would not leveling the playing field through legislation help them to accept their social obligation (as I see it), while keeping them competitive with other similar businesses?
It was first documented by “The Economist”, and has been further substantiated that the states in the US which have the highest tax rates are also the most productive. With a few exceptions, it is the so called “blue states” which are the net income producers to the Federal Treasury, and the “red states” which drain the Treasury. So, there is not necessarily a relationship between tax rates and productivity. President Reagan tested the theory, and failed. He ended up have to increase military spending by 30%, when his plan of economic stimulus through tax reduction failed. The trickle down theory has been tested, and it failed to benefit the middle class. Of course, it was part of the unprecedented accumulation of wealth at the top, which did not trickle at all. Ironically, the wealthy in the US are less well off by every measure other than their bank balances than are the wealthy in other countries. So, simply accumulating money is not enough.
We know, for example, the government spending on healthcare in the US is on a par per capita as in Germany. This is easy to show, just by looking at the numbers. Also, private spending on healthcare in the US is on a par with public spending. Cutting through all the excuses and politics, these numbers suggest that we could eliminate private healthcare spending, and have pretty good medical care for everyone in the US, without raising taxes, by following Germany’s example. Personally, I don’t think that insurance companies add much in the way productivity to our economy, as compared to some other sectors. Yet, even when healthcare reform was in the spotlight, we ended up with a “solution” crafted by the insurance lobby. There is an essential corruption in governance which is supporting tremendous inefficiencies in our economy, and undermining our social welfare.
Some say that the US is in a second “Guilded Age”. If the first was characterized by the building up of the Industrial Capitalist society and economy, the second is the Finance Capitalist economy, which is characterized by the tearing down of what was built in the first guided age. The new poverty is no longer from abuse by employers, as it is by underemployment due to technology changes, and the outsourcing of labor.
A critical question is, “how long will people acquiesce?” Will we see the kind of activism that arose from the 1870’s to the 1930’s. One point I would make, is that those people at the end of the 19th century remembered an alternative to Industrial Capitalism, and until the mid to late 20th century, democracy (with individual rights) and capitalism (with corporate incentives) were often viewed as opposing interests which had to be balanced. Today, there is a conflation of capitalism with democracy, which I think is erroneous thinking which leads to the erosion of personal rights, which are aggregated to the corporation.
As an example, I would cite the “Citizen’s United” decision. I have yet to encounter a person who understands its ramifications, who does not also view it as an abortion of the Constitutional protections of free speech. The examples are numerous, but this post is getting longish for this forum anyway.
But to summarize, I don’t believe in unregulated capitalism. Even Adam Smith would agree with me, along with Thomas Jefferson. Hamilton, might too, but probably not. Presidents from Abraham Lincoln onward periodically took the corporate influence to task. We have not had a president since the mid 20th century who has done so. What has happened to the conscience and values of our political leaders?
Economists constantly publish contradictory studies using quite nebulous terms such as that.