Aid to dependent corporations: exposing federal handouts to the wealthy

Aid to Dependent Corporations

The government of United States is incurring heavy revenue loss on account of the corporate sector subsidies and other special rebates. The friendly policies of the government aimed at promoting a positive business climate are sadly being exploited. In their interests to evade tax, businesses today are taking undue advantage of the favorable federal policies. In this regard I feel that our governments tax policies and corporate procedures need to be reexamined in order to eliminate the loopholes in them and at the same time support the common welfare schemes. Let us analyze the scenario in a little detail so that we can better appreciate the situation.

One by one our leading business corporations are reeling under accounting scams. I need not mention how well such a giant corporation like 'Enron' managed to disguise its financial information from the government and the stockholders. In the prevailing scenario I agree with the author that the government needs to exercise care before granting corporate privileges. Businesses are exploiting the loopholes in tax laws by clever manipulations. One such debatable issue is the 'Foreign tax credit' scheme. The government of United States has lost billions of dollars from multinational corporations in the name of deductions for taxes paid to other nations. A case in point is the ARAMCO oil corporation's tax evasion. [Chuck Collins]. The result is the loss of millions of dollars in tax revenue for the U.S. government. I attribute this to the flaw in our approach in assessing the profits pertaining to the U.S. operations of these concerns. But again this is indeed a bit complicated, as it requires careful monitoring of all transactions to and from the country. However we need to fix this and have to adhere to a standard procedure to ascertain all business dealings of these multinational concerns. One more significant factor is the huge disparity between the salary of the top most executive and the average labor of the company. (In some companies it is 1:140) The problem is that these high salaries are classified as expenses to the company intending to reduce the tax while in truth they are actually profits of the company which are covered up as deductible expenses.

Another questionable issue is the government's spending of billions of dollars of ordinary taxpayers money for research purposes only to give away the findings and the resultant profits to private firms. I feel that government should not handout its entire stake in such important scientific research programs into private hands. In the ultimate consideration it is the common people who are the suffering lot. The problem with such a trend is that these private firms which buy the technical knowhows from the government exploit the people. For example the exorbitant costs of anti-cancer drug 'Taxol', which was developed at great costs by the government (using the average tax payers money) and handed over to the private firm 'Bristol-Myers Squibb', defeats the whole purpose of 'people welfare' and stands out as a typical case of 'Corporate Wealthfare'.

As far as my reasoning goes I feel that such important issues, which have great implications for the people, should be handled in a better way. Firstly the government should not sell away all its intellectual properties and with it its say in the operational details of the companies who deliver the services to the public. There should be some kind of supervision and control which the government should exercise to make sure that these vital medical facilities are easily obtainable to the layman instead of their being exploited by the purely profit oriented approach of the private firms. (As was the case in 'Bristol-Myers'). In this way the government can ensure that the ordinary taxpayer would receive the benefits rather than being at the mercy of these profit mongering organizations.

Another contentious issue is the exploitation in the name of subsidization. Though subsidization is offered to boost business I am sure that we have reached a point where it is being used as a means of exploitation. From the past statistics it is plainly obvious that subsidization has resulted in a gross misappropriation of federal resources and loss of revenue. For example in 1995 the government lost around $67 billion in tax in the form of subsidies given to the poor people (which is justified) and what is even more astounding is the fact that in the same period government's subsidy to corporate sectors and the affluent community exceeded $242 billions. [Chuck Collins] I really agree with the author that subsidization has only helped the wealthy people become wealthier. It is thus clear that the government needs to carefully assess all these important considerations before sanctioning aids and special privileges to business corporations.