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Issues > Free Markets > Corporate Welfare

Corporate Welfare


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Corporate welfare, often called ‘crony capitalism,’ occurs when the government provides subsidies, tax breaks, and favorable regulations to certain businesses and industries over competitors. Each year the federal government doles out tens of billions of dollars in corporate welfare to favored businesses and industries. Some examples of corporate welfare include farm subsidies, subsidies for Amtrak, the Export-Import Bank, and below-market loans, grants, and tax breaks for wind and solar power energy producers.

Corporate welfare tends to benefit companies and industries that are politically connected and influential, but offer either obsolete or inferior products and services that consumers don’t want, at least not at the price these uncompetitive businesses need to be profitable. It also hurts the economy as business investment flows into businesses and industries that would be more productive if it were put into companies that didn’t need subsidies.

Some corporate welfare is in the form of favorable regulations or burdens on competitors, such as the sugar tariff. While these policies benefit a small number of producers (U.S. sugar growers in this case), it harms other Americans, such as workers at companies that use sugar, like candy makers. Thousands of jobs in the candy industry have been lost in recent years due to the favoritism shown to U.S. sugar growers.

All corporate welfare should be eliminated, and businesses should be expected to compete based on how their products and services fare in a competitive market, not on political connections.

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