ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, August 23, 1996 TAG: 9608230036
SECTION: EDITORIAL PAGE: A-15 EDITION: METRO
SOURCE: DAN B. FLEMING
A HIGHLIGHT of the recent Republican Convention was the speech by military hero Colin Powell. While his remarks were very well-received, one statement was greeted with little applause: his call for ending corporate welfare.
Later in the same week, NBC News ran a piece on the large number of corporate jets bringing lobbyists to the convention to shower benefits on the delegates. The story pointed out that the same jets would soon be hauling the same lobbyists to the Democratic Convention. It is highly unlikely they were calling for reductions in corporate welfare, but instead wanted more tax breaks for their clients.
The presidential campaign is entering full swing and most of the focus on spending and tax cuts deals with entitlement programs such as Medicaid, Medicare and Social Security. Welfare has been taken off the table by passage of a welfare-reform bill that will cut some $50 billion of welfare expenditures over the next six years.
What does not seem to be receiving much attention is the corporate welfare mentioned by Powell and the entire area of hidden tax entitlements for the rich and corporations.
Robert S. McIntyre, director of Citizens for Tax Justice, agreed with Powell, stating, "A Congress that is eager to challenge low-income entitlements ought to be at least as tough - if not tougher - on welfare entitlements for the well-heeled and politically powerful if it truly wants to bring the budget deficit under control." According to a May report from the CTJ, entitlement programs hidden in the tax code are expected to cost the federal government $3.7 trillion over the next seven years.
A large portion of these hidden entitlements are business and investment tax subsidies. These corporate and high-income welfare programs include: multinational tax breaks; capital-gains tax loopholes; tax breaks for mergers and acquisitions; accelerated depreciation write-offs; tax benefits for insurance companies; oil, gas and energy tax breaks; tax breaks for timber, agriculture and minerals; tax breaks for banks and other financial institutions; and tax breaks for state and local bonds, particularly subsidies for nonpublic purpose bonds.
According to the CTJ, the well-off are the primary beneficiaries of these tax entitlements. For example, 97 percent of the benefits from the current special lower tax rate on capital-gains income goes to those with incomes exceeding $200,000. Most families get little or nothing from the tax-entitlement system because they neither earn tax-favored kinds of income nor itemize deductions.
Deficit reduction and tax cuts will be major issues in this fall's presidential campaign. The public should be aware that there are many places where federal tax dollars can be saved beyond slashing Medicare and Medicaid programs. While these programs need to be carefully reviewed and tightened up, including reducing fraud, hidden tax entitlements also need to be on the table in any discussion concerning tax cuts and budget reductions.
Dan B. Fleming of Blacksburg is assistant VOTE coordinator in the 9th Congressional District for the American Association of Retired Persons.
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