By Kenric Ward | Watchdog.org
The United States may have the highest corporate tax rate in the developed world, but large companies are reaping billions of dollars in subsidies from Uncle Sam.
And the biggest beneficiary isn’t even an American firm – it is the Spanish utility giant, Iberdrola.
Since 2000, the federal government has given $68 billion in grants and special tax credits to businesses, with two-thirds going to large corporations, according to a new report.
U.S. Rep. Dave Brat, R-Va., blasted the “corporate welfare programs,” saying, “Government subsidies create unfair competition among businesses, and they’re gambling with taxpayer dollars to do it.”
Iberdrola received nearly $2.2 billion, mostly stemming from investments in power generation facilities supported by federal stimulus programs. The lion’s share of those ventures involved heavily subsidized wind projects.
U.S. government subsidies in hand, Iberdrola announced last month it would buy UIL Holdings Corp., which serves electric and natural gas customers in Connecticut, Maine, Massachusetts and New York.
A handful of corporate players captured the most federal dollars. Two-thirds of all grants and tax credits were awarded to 582 firms. Twenty-one companies — primarily in the energy sector — netted more than $500 million each.
Ten of the 50 parent companies receiving the most lucrative federal grants and credits are based overseas. Most of the top subsidies were linked to energy projects.
The federal contractor with the most grants and allocated tax credits is General Electric, with $836 million, mainly from the Energy and Defense departments. Boeing received $64 billion in assistance from the Export-Import Bank.
Loans, loan guarantees and bailouts drove up even bigger numbers in the wake of the 2008 financial crash
The biggest aggregate bailout recipient is Bank of America, whose gross borrowing (excluding repayments) is just under $3.5 trillion. That includes the amounts for BofA’s Merrill Lynch and Countrywide Financial acquisitions.
Three other banks are in the trillion-dollar club: Citigroup ($2.6 trillion), Morgan Stanley ($2.1 trillion) and JPMorgan Chase ($1.3 trillion, including Bear Stearns and Washington Mutual).
Brat said, “Not only is it unfair for the government to pick winners and losers in the private sector, but the government also does a horrible job of it.”
The former Randolph-Macon College economics and ethics professor told Watchdog.org that government subsidies are “squeezing out many good businesses and even whole industries that don’t have connections in Washington. That’s totally antithetical to our American bedrock principle of equal treatment under the law.”
“We now see that big business dominates federal subsidy spending the way it does state and local programs,” said the report’s co-author, Philip Mattera.
Kenric Ward is a national reporter for Watchdog.org and chief of the Virginia Bureau. Contact him at (571) 319-9824. @Kenricward