B   M   W   E
JOURNAL
ONLINE VERSION VOLUME 107 - NUMBER 3 - APRIL 1998
Labor Party Program
Constitutional Guarantee to a Job at a Living Wage

Two Months Severance for Every Year of Service for Laid-Off Workers

Workers Rights to Organize, Bargain and Strike

An End to Bigotry; An injury to One is an Injury to All

Universal Access to Quality Health Care

Less Work with No Reduction in Pay & Mandated Time Off

Paid Family Leave

Access to Quality Public Education

An End to the Corporate Abuse of Trade

An End to Corporate Welfare

A Tax System Where the Wealthy Pay Their Fair Share

A Revitalized Public Sector

An End to Corporate Domination of Elections

A Just Transition Movement to Protect Jobs and the Environment

Worker Inspectors to Enforce Safety & Health Regulations

Worker-Sensitive Technology Development

An End to Corporate Welfare

We will end government give-aways to the corporations and the rich, oppose efforts to dismantle uniform labor and environmental standards across the country, and stop the tax-concession competition among the states.

These days, the politicians and the corporate media are excited about "ending welfare as we know it." In August 1996, President Clinton signed a bill into law which will eliminate the safety net for the poorest among us put into place by the New Deal legislation of the 1930s. On the other hand, the politicians and the corporate media hardly mention that other welfare check--the much larger one going to corporations and the rich.

What Is Corporate Welfare?

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Federal welfare to corporations has two parts: federal tax breaks and direct subsidies. In 1994, the federal tax breaks for corporations were estimated to add up to $53.3 billion.

Some tax breaks cost jobs. Workers at American Home Products (AHP) in Elkhart, Indiana lost their jobs because of a tax break for U.S. corporations with operations in Puerto Rico. Section 936 of the U.S. Tax Code provided tax breaks for drug companies amounting to $62,000 per worker hired in Puerto Rico. As such, it was a direct incentive for U.S. drug makers like AHP to shut down plants and move. The bill to Uncle Sam was $3 billion a year.

The other major category of Corporate Welfare, direct subsidies to corporations, totaled $50.9 billion in 1994. The vast majority of this went to Agribusiness, $29.2 billion, and the Savings and Loan bailout, $18.3 billion.

What About Corporate Welfare from State and Local Governments?

Corporations also receive tax breaks and subsidies from state and local governments. It is estimated that the amount ranged from $20 billion to $50 billion in 1994.

Efforts by states and cities to attract new industries or to keep existing industries by giving huge tax breaks and other subsidies often turn into costly nightmares. Four hundred union members in Madisonville, Kentucky leaned how vicious the competition between the states to provide corporate welfare can be. In 1991, during an attempt to get a first contract, the employer, York International, decided to shut down the Madisonville plant and move operations to Elyria, Ohio. In return, York received a $500,000 moving and renovation grant and a $71,000 training grant from the state of Ohio, and a tax abatement from the city of Elyria amounting to 81 percent, or $2 million over 10 years. This was in exchange for a "promise" to hire 350 additional employees in Elyria.

The competition between Elyria and Madisonville resulted in lower labor standards for both areas. When the company let it be know that they might move the plant at Madisonville, another union at Elyria agreed early to a five-year, weakened contract.

Why Ending Corporate Welfare is an Important Part of the Labor Party Program

Justice requires that corporate welfare be ended. One of the worst acts in the one-sided class war that has gripped our nation is the 1996 so-called welfare reform legislation signed by President Clinton. That welfare system never has been a socially healthy replacement for an abundance of good jobs at good pay and a publicly financed daycare system, but to attack welfare for poor people while wholly ignoring the welfare for the corporations and the rich, which is so much greater, is a travesty.

Tax breaks and subsidies to wealthy corporations must be ended because they are at the core of the transfer of wealth that has happened in our country. The reason is that consumers, wage-earners, homeowners and small businesses are forced to pay higher taxes to make up for large corporations' deal-making tax dodges. Add direct subsidies and we find the root cause for many states' and cities' chronic budget crises which undermine public education and other services. It is estimated that if the tax breaks for corporations alone were eliminated, the government would take in $250 billion a year. This is more than the entire budget deficit. Ending Corporate Welfare is not only just and equitable, but necessary.

The rationale for corporate welfare is not justified. The fundamental reason given by politicians and bosses for corporate welfare is job creation. Actual evidence of job creation is sketchy primarily because governments at all levels do not follow up on what happens after tax breaks and subsidies are granted. The Louisiana Coalition for Tax Justice studied ten years of industrial property tax exemptions and found that almost three-fourths created no jobs, while only 6% resulted in new construction and 87% of that went to high-polluting industries. Average lost taxes per new job: $41,500. Cost to the state's desperately poor school system: $941 million.

Corporate welfare must go because it creates competition between workers and lowers standards. The experience at York International provides a nasty example. In many cases it also becomes the rationale for deregulation as states vie with each other to provide the most profit-friendly environments. The result is general undermining of existing labor, health, human rights, civil rights and environmental standards in the competing states.

Steps to Take

First we must educate and agitate among our brothers and sisters about ending corporate welfare. The corporate media will not help and instead divert attention to the "evils" of welfare for poor people.

Then we must organize politically through the Labor Party to end corporate tax breaks and subsidies.

We must call for a standard community investment tax, wherever corporations go, to put an end to the budget-busting effects of the tax concession and subsidy war between the states.

We must organize to support strong national standards for labor rights, health, civil rights, human rights and the environment so that corporations can no longer force states and cities into brutal competition for jobs at any cost.

Join the Labor Party Today.

Washington office: P.O. Box 53177 Washington, D.C. 20009 Tel: 202/234-5190

New England office: 197 Friend Street, 9th Floor Boston, MA 02114 Tel: 617/531-0901

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