Dear Editor:
Yes, the poor get Medicare, food stamps and housing assistance. They get government subsidies. But so do the rich.
If you buy a share of stock for $80, wait a year and sell it for $100, you pay a capital gains tax of 15 percent to 20 percent on the $20 profit. If you work at Wal Mart and make $20 you likely pay 25 percent as tax on ordinary income, which is taxed at a higher rate than capital gains. The rich get better tax treatment. That's a subsidy.
Corporations, which are largely owned by the rich, get a whole slew of subsidies. Google corporate welfare to read about them. Here are some examples.
Oil and gas companies can deduct from their taxable income intangible drilling expenses (surveys, land clearing, etc.). These deductions cost the government around $3.5 billion a year in foregone revenue. That's a subsidy. There is also an oil and gas depletion allowance, another tax deduction which costs the government around $1 billion a year. Another subsidy.
The big banks, the ones regarded as too big to fail get a huge subsidy. The markets believe these banks are so big the government won't dare let them fail; it will always step in and pay their debts if necessary. Because of this government backstop these banks can borrow money at cheaper rates than other banks. Bloomberg estimates that in 2013 the 10 largest banks benefited from this to the extent of $80 billion. That's a subsidy.
Big exporters like Boeing and Caterpillar sell goods overseas. To help them with their sales government programs like the Export-Import Bank and the Overseas Private Investment Corporation make loans to foreign buyers of airplanes bulldozers, crops, pharmaceuticals and many other goods. In addition to making loans the government also guarantees loans that buyers take out with private lenders. These programs are massive subsidies to big corporations.
These are just a few examples of corporate welfare programs. There are many many such programs involving differential tax rates, tax deductions, tax credits, direct government loans, loan guarantees etc. Yes, the poor get some subsidies but so do the rich.
Next up, the so-called Fair Tax. It's a re-jiggered sales tax that its proponents (led by St. Louis billionaire Rex Sinquefield) want to use to replace the income tax in Missouri. It's another subsidy for the rich, this time hiding under a phony name.
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