Some Economic Numbers That Will Make You See Red, Part II

In an earlier post, we learned that as corporate profits have soared, the average American household has actually lost ground — to the tune of more than $7,000 per year less income. Hate to tell you, but it gets worse. Not only are American corporations (and by extension the very wealthy who hold most of their stock) raking in record profits at the expense of workers’ wages, these bastions of “free-market capitalism” are collecting billions of dollars each year in subsidies from American taxpayers.

$6,000.

That’s over and above our payments to the big companies for energy and food and housing and health care and all our tech devices. It’s $6,000 that no family would have to pay if we truly lived in a competitive but well-regulated free-market economy.

The $6,000 figure is an average, which means that low-income families are paying less. But it also means that families (households) making over $72,000 are paying more than $6,000 to the corporations.

So we’re making $7,000 less and paying out $6,000? No wonder Americans feel squeezed.

Professor Paul Buchheit has corralled numerous studies and done the math to bring us a better understanding of the fiscal impact of corporate welfare on each of us. Below, I’ve summarized and commented on his findings. (You can read in more detail, with citations of his sources here.)

Corporate subsidy costs for each of the United States’ 115 million families (keep in mind that these are all conservative estimates, and the reality may be much higher):

• $870 for Direct Subsidies and Grants to Companies
  At the Federal level, taxpayers spend at least $100 billion per year on corporate welfare. This includes direct payments to big agriculture, big oil, and high-tech companies, as well as indirect spending on global promotion of U.S. industries.
• $696 for Business Incentives at the State, County and City Levels
  The drive for states, cities and counties to compete for jobs and industry has led them to give up over $80 billion each year to companies.
• $722 for Interest Rate Subsidies for Banks
  You’re going to love this one:  the “US government essentially gives the banks 3 cents of every tax dollar… research calculates a nearly one percent benefit to banks when they borrow, through bonds and customer deposits and other liabilities. This amounts to a taxpayer subsidy of $83 billion.” (Of which, the 5 largest banks receive three-quarters.)
• $350 for Retirement Fund Bank Fees
  The move from guaranteed pensions to 401(k)s was calculated not just to make Americans more sympathetic to and “invested in” Wall Street, but also to collect bank fees which eat up nearly one-third of your retirement returns.
• $1,268 for Overpriced Medications
  “government granted patent monopolies raise the price of prescription drugs by close to $270 billion a year compared to the free market price.” This is why Americans pay almost twice what consumers in other developed nations pay for the same drugs.
  
• $870 for Corporate Tax Subsidies
  Special corporate tax provisions cost taxpayers at least $100 billion per year. Some estimates are nearly twice that number.
• $1,231 for Revenue Losses from Corporate Tax Havens
  “The average 2012 taxpayer paid an extra $1,026 in taxes to make up for the revenue lost from offshore tax havens by corporations and wealthy individuals.”
  

Yes, we do an awful lot for corporations. $6,000 per each of 115 million households works out to something close to $700 billion annually in handouts, all while cutting their taxes in half over the last decade, and all while they’ve seen profits double. But what are corporations doing for us? Certainly not raising wages; not hiring; not keeping jobs in the US; and not spending their hoarded cash to spur growth and jobs…

Now are you angry?

By: Sandi Behrns

Sandi Behrns is a noted policy nerd, new media & web developer, and consultant to progressive organizations and campaigns. She is a senior contributor to Liberaland, and the Executive Editor of Progressive Congress News.