The Corporate Welfare State

Conservatives in North America identify Europe (Scandinavia in particular) with its high social safety net, health care systems and high tax rates as “welfare” states. A welfare state is a country where the government provides for the well-being of its citizens, the objective is to create greater economic equality and ensure a certain minimum standard of living.

On the other side of the pond, Conservative politicians in the United States are quick to criticize the countries that care for their poorest citizens and decry those who wish to see the US follow the same path. I wonder if they see the hypocrisy.

You see, the United States does have elements of these so called “welfare” states, such as welfare, social security and unemployment. Far right conservatives are trying to do away with these important programs, but at the same time they continue to subsidize corporations who don’t need it.

These same people, who supposedly believe in the free market as much as they believe in Jesus, prefer to give billions in tax subsidies to oil companies, weapons manufacturers and farmers, rather than giving it to those who actually need it. After all, these companies are “job creators”, the less they pay in taxes the more jobs they create right?

I saw an interview about a week ago featuring Honeywell CEO David Cote. During the interview he was asked what he thought the effective corporate tax rate should be; Cote to no one’s surprise said zero, he argued “jobs come from companies and if we wanted to create the most effective foreign direct investment pipeline you’ve ever seen, we would have the lowest rate possible.”

Well… as it turns out, between 2008-2010 Honeywell received $1.75 billion in federal tax subsidies making their effective tax rate -0.7%, better than Mr. Cote could have dreamed.

With that kind of tax rate Honeywell must have created lots of jobs, right? During that same time period their jobs gain was -996 and managed to use loopholes in the law to fire hundreds of union workers and replace them with cheaper labour.

With all these negative numbers, Honeywell must be struggling to stay afloat right? Actually they profited $4.9 billion over that time period and David Cote himself got paid $37 million last year for his efforts.

Honeywell’s example of corporate welfare can be compared on a lower level to a personal welfare recipient who sells drugs on the side. Conservatives desire to shut down the entire welfare program because of individuals who cheat the system. Why then do they continue to subsidize companies who are not only on their feet, but flying over everyone?

The answer is simple: lobbying. From 2008-2010, Honeywell spent $17 million to lobby politicians and received $1.75 billion in tax subsidies for their hard work. For every dollar they spent, they received a hundred back. Do you think if I gave Prime Minister Harper a $1000 donation I could get $100 000 back on my taxes?

The type of corporate welfare we have in North America is the product of corporate influence over politicians; money buys power and therefore benefits the wealthy at the expense of the poor who have no money and consequently no say in the goings on in government.

It’s a reverse Robin Hood if you will. Whether it’s the tar sands in Alberta or the oil, corn and arms industries in the US among others, government subsidization of profitable corporations creates more wealth for the already wealthy and increases government debt. It does absolutely nothing for the common man.

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