$3.7 billion in tax breaks

[Janice Shields <jshields@essential.org>]

       TAX BREAKS FOR BUSINESSES AND WEALTHY INDIVIDUALS WILL TOTAL 
    $3.7 TRILLION FROM 1996 THROUGH 2002; CATO INSTITUTE ARGUES THAT
        GENERAL TAX BREAKS FOR BUSINESS ARE NOT CORPORATE WELFARE


     On May 2, 1996, Citizens for Tax Justice released its annual
report, "The Hidden Entitlements," detailing 122 "tax expenditures"
totalling $3.7 trillion over the next 7 years.  "Tax expenditures"
is the official term used to describe the vast array of government
spending programs that are implemented through the tax code in the
form of tax credits, deductions, deferrals and exemptions. 
According to the congressional Joint Committee on Taxation, "Tax
expenditures are most similar to those direct spending programs
which have no spending limits, and which are available as
entitlements."  Robert S. McIntyre, director of Citizens for Tax
Justice, argues "These tax subsidies aren't just hugely expensive,
many of them don't work."  "Many of these programs are targeted to
industries with lots of political clout," he adds.  

     Examples of tax expenditures that the study particularly
targets as generally both unfair and bad economics include:

     Tax breaks for multinational corporations, costing at least
     $95 billion over seven years.

     Business meals and entertainment write-offs, costing $44
     billion over seven years.

     Accelerated depreciation, costing $259 billion over seven
     years.

     Tax breaks for insurance companies and their products, costing
     $204 billion over seven years.

     Oil, gas and energy tax breaks, costing $21 billion over seven
     years.

     Tax breaks for timber, agriculture and minerals, costing $10
     billion over seven years.

     Tax breaks for banks and other financial institutions, costing
     $7 billion over seven years.


     On May 15, 1996, the Cato Institute released its report, "How
Corporate Welfare Won: Clinton and Congress Retreat from Cutting
Business Subsidies."  Cato identified $75 billion in annual direct
federal subsidies to businesses, including 35 that Cato calls "the
most expensive and unjustified corporate welfare programs in the
federal budget."  Examples of the 35 are: the Overseas Private
Investment Corporation, the Export-Import Bank, the Market
Promotion Program, the Manufacturing Extension Partnership, and the
Technology Reinvestment Project.  Interestingly, Cato claims that
"Tax provisions that are universally available to all companies and
industries, such as allowing faster write-off of capital equipment
[accelerated depreciation] are not forms of corporate welfare."  "A
general tax cut for business, which allows firms to retain more of
their own earnings, is not corporate welfare," the report adds.

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-----
Janice Shields
Coordinator, Corporate Welfare Project
Center for Study of Responsive Law
P.O. Box 19367, Washington, DC  20036
202-387-8030			|   Internet:	jshields@essential.org