How corporations protect the rich

There are a multitude of tax breaks and subsidies provided by federal, state and local governments which protect the financial interests of rich corporations. These include direct federal subsidies to corporations which allegedly cost taxpayers over $100 billion each year.

(Image Source)

In addition to federal subsidies, many corporations also receive state and local subsidies. Louise Story calculated that state and local governments provide at least $80 billion in subsidies to corporations, with over 48 major corporations receiving over $100 million each.This is mainly due to the fact that state and local governments fear these major corporations will move their jobs overseas if they do not receive subsidies from the US. In turn, corporations have exploited these fears, manipulating local government officials in order to reap the financial benefits. Corporations similarly use this threat of overseas job migration to receive federal tax breaks. The tax code grants corporations special tax breaks which reduce the expected 35% tax rate to an actual rate as low as 13%, thus saving corporations in the region of $200 billion each year.As is the case for corporations, federal tax breaks are also lucrative opportunities for hedge fund managers, who receive special breaks enabling them to pay only 15% rates whilst others pay upwards of 35%. This system results in multimillionaire hedge fund managers, who are the in the top 1% of US earners, contributing a lower percentage in taxes than their secretaries! The National Priorities Project has calculated that this irregularity costs taxpayers in the region of $83 billion each year.

(Image Source)

Home mortgage deductions are another area wherein the rich heighten their profits. This completely legal strategy is recommended by business coaches including Wilson Luna and Robert Kiyosaki (of ‘Rich Dad, Poor Dad’ fame). The home mortgage deduction offers exorbitant subsidies to real estate, banking and construction industries, costing taxpayers $70 billion a year. Furthermore, The Centre of Budget and Policy Priorities has estimated approximately 77% of the benefit is given to homeowners who possess incomes exceeding $100,000 per fiscal year.

Corporations scrutinise major pieces of legislation to discover new sources of welfare for their rich employers. The Boston Globe investigated these measures, unearthing that in early 2013, emergency tax legislation passed by Congress contained forty three business and energy tax breaks, worth a total of $67 billion. As well as this broader legislation, there are a wealth of minor breaks which corporations use to protect and consolidate the authority of the rich. These include subsidies for corporate jets as well as tax deductions for second homes. These subsidies even include the rich benefiting from taxpayer funded farm subsidies, from which fifty billionaires received $11.3 million in the past twenty years!

Furthermore, corporations protect their wealthy employers from the repercussions of illegal transactions by affiliating financially with the government. These underhand agreements have been unearthed most recently in the case of JPMorgan Chase. They agreed a preliminary $13-billion mortgage settlement with the US government, yet were allowed to write off a majority of the deal as tax-deductible, thereby saving the corporation $4 billion. Corporations hire a comprehensive team of tax lawyers who scrutinise federal Internal Revenue codes in order to secure financial loopholes for the rich, such as in the case of JPMorgan Chase. By discovering breaks within these tax codes, corporations are able to exponentially reduce their tax rates. It is because of these breaks that there are so many lobbyists within the halls Congress and surrounding state legislature, in order to ensure that the rich remain rich.