Stopping Corporate Welfare
OverviewAt the local, state, and federal levels of government, the well-connected few receive special benefits at the expense of the rest of society. The result is a two-tiered system that features handouts for favored individuals and groups and the destruction of opportunity and prosperity for most Americans.
This form of government-granted privilege, commonly called “corporate welfare” or “cronyism,” often falls within four major problem areas:
- Spending Subsidies: Government often directs targeted payments or other forms of benefit to favored individuals or groups. Spending subsidies can take the form of direct funding, loans or loan guarantees, or bailouts to certain businesses or industries. They are a direct transfer of wealth from one group (taxpayers) to another (special interests).
- Tax Preferences: There are special carve-outs in the tax code given by politicians to their favorite groups—often benefiting the well-connected. Tax preferences allow government to guide investment decisions rather than letting individuals decide what’s most valuable to them. These preferences also make the tax code more complicated and costly to administer, giving the advantage to those individuals and businesses who can afford experts to navigate the tax code for them.
- Regulatory Preference: Government officials often write special rules in favor of chosen beneficiaries, which undermines consumer choice. Some regulations benefit big businesses over small ones; some require burdensome costs and training for certain jobs, making them less accessible; and some mandate that government approve or certify new businesses or individuals before they can participate in the market. Regulatory preference often creates barriers for those seeking employment or trying to start a business.
- Protectionism: Government officials also restrict international trade, limiting global competition to assist a few, well-connected businesses or industries. By imposing barriers like tariffs and quotas, government stifles innovation and harms consumers who benefit from increased competition and choice.
From the Blog
By Editorial Team | June 6, 2017
In an op-ed for RealClearMarkets, Charles Koch Institute senior research fellow Dana Wade explains how rooting out cronyism in agriculture policy benefits taxpayers: President Trump’s new budget sent a clear message on agricultural subsidies: The time has come for Congress to stop subsidizing wealthy farmers. The administration planted the seeds for next year’s farm bill […]Read More
By Editorial Team | March 24, 2017
The Charles Koch Institute gathered a panel of experts in Manchester, New Hampshire for a conversation on occupational licensing. Occupational licenses—or government-issued “permission slips” to work—are becoming mandated for a growing number of professions. A significant hurdle to job flexibility, these licenses affect various professions, including interior design, floristry, hair braiding, and even fortune telling. […]Read More
By Editorial Team | March 20, 2017
In an op-ed for the New Hampshire Union Leader, the Charles Koch Institute’s vice president of research and policy Will Ruger and senior research fellow Dana Wade discuss occupational licensing in New Hampshire and how reforms can help promote economic liberty: It should come as no surprise to most Granite Staters that their home state […]Read More
By Editorial Team | March 20, 2017
In an op-ed for RealClearMarkets, Alison Acosta Winters, managing director of research and policy at the Charles Koch Institute, writes about the good and the bad of President Trump’s proposed budget: President Trump’s “skinny” budget was released last week and you’d think the world has already ended because it includes cuts to a number of […]Read More
By Editorial Team | March 15, 2017
Dana Wade, senior research fellow at the Charles Koch Institute, writes in the Sun Sentinel about how taxpayer-funded business incentives rarely create the economic growth they promise: State programs that provide taxpayer-funded incentives to businesses consistently underperform. Despite this, the state of Florida continues to spend hundreds of millions of dollars on these sorts of […]Read More