Table of Contents
Corporate welfare
Corporate welfare is an assistance of any kind given out by the government thus making a private firm to have an advantage that other businesses lack. In US, these assistances are favors that in each year cost many billions and given to corporations by the federal government. These favors include breaks from tax, grants given directly to corporations and several other forms of treatments that are very favorable. These given to selected corporations.
There is a comparison of the welfare payments the poor get and corporate subsidies. Thus comes up with a conclusion that corporations do not need as much treatment as does the poor. Corporate welfares are subsidies considered excessive, wasteful, unwarranted, inefficient, and unfair or lobby buying. Peter Fisher estimates that the state and local governments every year in economic incentives that characterized by many critics as corporate welfare provide $40-50 billion.
Groups and many other individuals oppose the concept of other welfare. However, all welfare as well as the corporate welfare considered unconstitutional by the federal government. The constitution provides that there should be no money collected through taxation that is redistributive with an aim of subsidizing businesses or even individuals by the congress since the congress's spending power is limited and detailed. (Nader, R., 2000).
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Difference between corporate welfare and other welfare
The government solely provides corporate welfare to the corporations in various forms that could be payments via monetary means, vouchers and subsidies, housing or health services as opposed to other forms of welfare that are provided by government or organizations that are nongovernmental differently or both at once. In these other forms, social insurance models, governments, or the members of the scheme of the welfare could fund the welfare. This other kind of welfare offered to those who do not have employments, those sick, disabled, the old, veterans etc.
Many people are not familiar with the corporate welfare as they are with social welfare that deals with the well-being of individuals in the community. As opposed to corporate welfare, the social welfare concerns it self with the needs of the children, the old and those individuals in the community who are not able to take care of themselves fully rather that taking care of developed, stable and sufficient businesses as corporate welfare does. It is thus very different from these other forms of welfare since it does not concern it self with the poor but with the well established businesses and not individuals in the society. (Slivinski, S., 2007)
A business prefers a subsidy embedded in the tax code as opposed to receiving direct financial support from the government.
Subsidy embedded in the tax code are preferred by a business rather than receiving direct financial support from the government since such businesses are given a step up in the market place that is competitive. The money collected via taxation utilized in very many functions. When there are tax cuts the businesses progress very well and this makes the businesses favored by the reductions in taxes. There will be newer jobs generated since there will be decreased tax liability, and the businesses are more likely to expand rather than when they get financial support from the government. This is because the burden of tax will be reduced thus making plans for expansion to execute very fast. Profits of the business will also be increased as well as the labor cost thus more employment will be evident since there is stability in tax liabilities and expenses from employees. In conclusion, employment in America will be at the highest level if subsidies embedded in the tax code are made available to the businesses and this will mean that the times will be better. There will also be a recovery in economy for US due to its relationship with the confidence of the investors in the conditions of business that should be stable and predictable in the future. (Helium, Inc., 2011).
Political lessons learned from the episode
It is very clear that subsidies and other protections for trade stem from the political influence and not from the logic of economics. When influenced by the politics, the taxpayers pays billions of dollars and the public does not benefit. the social welfare programs are also facing threats to be cut for individuals as well as the assistance gotten for treatment of alcohol and drugs, help for the handicapped and the old, those who are retarded mentally, immunization and vaccination programs clean ups for the environment, food stamps, and other protections. This is the influence the politicians have to have whereby more corporate welfare as opposed to social welfare for the people in the community. This is also the kind of contribution they have even in the arena of the government budgets so as to stem corporate welfare.
The budgeting process by the president and the congress at each end of the year made very difficult by the corporate welfare and the lobbyists who contribute such that there is no balancing of the budget as an attempt made to reduce the deficit by the federal. There is no proper appropriation of funds to the various programs in the federal government as well as other operations.