
During every political election, the topic of welfare is bound to come up. The dangers of welfare, some candidates say, is that it goes to people who don’t need it, making programs like food stamps and Medicaid wasteful and requiring high scrutiny. While social welfare gets caught in the crossfire, there’s another form of welfare that comes out of each election unharmed: corporate welfare.
Corporate welfare is any financial benefit granted to a specific business or class of businesses that is not generally available to all businesses or taxpayers.[1] Unlike the need-based requirement tethered to social welfare, corporate welfare mostly goes to companies with large profits.[2] The goal of corporate welfare is to encourage these large companies to stimulate economic activity and provide for job creation; but the funds are often distributed with no strings attached, and benefits may never materialize.[3] The fear of no return on investment from feeding hungry children or providing elderly citizens with crucial medical services fuels political rhetoric against social welfare. Fortunately for billion-dollar corporations, freeloading off the taxpayer is not a concern.
One form of corporate welfare is direct subsidies, which are cash payments made directly to businesses.[4] These subsidies on the federal, state, and local level flow into corporations to the tune of $100,000,000 per year.[5] Rather than these government handouts going to underfunded budding competitors, they are reserved for the wealthiest and most dominant players in their respective industries.
For major pharmaceutical companies, a huge portion of research, development, and marketing costs is covered by the National Institute of Health (NIH), a taxpayer-funded organization.[6] From 2000 until present, these companies received hundreds of billions of taxpayer dollars to develop and market lifesaving medications.[7] The public is then forced to pay exorbitant prices for the same drugs they paid to develop.[8]
The government assisting with the development of medications seems logical, but is the money always being spent that way? Not necessarily. Between 2003 and 2012, Pfizer spent $59,000,000,000 on stock buybacks and another $63,000,000,000 on dividend payments to shareholders.[9] During this same period, Pfizer received over $100,000,000 of taxpayer dollars from the NIH.[10] The profits made by big pharma pose the question of whether these subsidies are needed at all; the same question applies to big agriculture.
Agricultural subsidies started in the early 1930s as a lifeline to small family farms to stay afloat during times of market instability.[11] Recently, however, these subsidies have favored big agricultural corporations.[12] The design of these federal programs tends to favor large landowners,[13] leaving small local farms behind. Since 2020, agricultural subsidies have surged to at least $46,000,000,000 annually.[14] Nearly seventy-five percent of these subsidies, in 2023, went to the top ten percent of the largest landowners and wealthiest farmers.[15]
Bail outs are another form of taxpayers coming to the rescue of those who need it least. Government-funded bailouts are intended to prop up those corporations deemed “too big to fail” in times of economic instability.[16] Instead of bailouts being limited to the cost of keeping employees on the payroll, executive payrolls have increased by staggering numbers of bail out recipients.[17] In fact, both bailouts from the Great Recession of 2008 and the recent Covid-19 pandemic created more billionaires than there were before.[18] Corporate bailouts have done less to benefit the average working family on Main Street and more to line the pockets of financiers and shareholders on Wall Street.[19]
Aside from direct subsidies, some large corporations are subsidized indirectly by having taxpayers take care of their own employees.[20] Huge corporations, particularly in the fast-food industry, pay their employees so little, as permitted by law, that many of their employees rely on federal welfare programs.[21] Between 2007 and 2011, working families relied on $243,000,000,000 in federal welfare programs.[22] The burden of low wages is not only carried by these working families, but by the entire tax-paying public.[23]
Corporate welfare does not happen by accident. Decades of corporate lobbying have resulted in these subsidies, as well as Congress lowering the federal corporate income tax rate by drastic measures.[24] The top corporate tax rate in history was almost fifty-three percent in 1968,[25] it is currently twenty-one percent.[26] But the corporations don’t stop there, a study of 342 large corporations found that they are paying an effective tax rate of less than fifteen percent.[27] Between 2018 and 2022, more than a dozen companies profited billions of dollars, paid no federal income tax, and even received a net tax return.[28] Meanwhile, for the working class, the median federal income tax rate has only slightly increased.[29]
While corporate welfare does little more than enrich executives and shareholders, social welfare has more positive effects on the economy.[30] Social welfare such as food assistance, housing subsidies, and working-family tax credits, has lifted 38,000,000 people above the poverty line, including 8,000,000 children.[31] Money spent on these programs generate more economic activity than what it costs.[32] Recipients of food assistance, for example, quickly spend their benefits, providing a rapid fiscal stimulus to the local economy.[33] When public funding is limited, choosing to subsidize wealthy corporations takes away the potential for funding other essential public services such as schools.[34] Social welfare programs have played a key role in bolstering the income of working families, which allows children to do better in school and increase their earning potential as adults.[35]
From the score of corporate welfare available, it ends up costing average families thousands of dollars each year.[36] Lawmakers that advocate for these policies often claim the benefits will trickle down to the rest of us. Decades of rationalizing what is good for big business is good for the consumer has led to us, the taxpayers, giving permission to substitute people welfare for corporate welfare. In pursuing the goal of economic prosperity, we should be more focused on reserving welfare for those who need it most rather than those who need it least; lifting from the bottom up, instead of pushing from the top down.

Evan Barth is a second-year law student at Western New England University. He plans to stay in the Western Massachusetts area after graduation and pursue a career in public interest law.
[1] Byron Schlomach et al., Multilateral Disarmament: A State Compact to End Corporate Welfare, Mackinac Ctr. for Pub. Pol’y 3 (2019), https://www.mackinac.org/archives/2019/s2019-04.pdf.
[2] See Subsidy Tracker Top 100 Parent Companies, Subsidy Tracker (last visited Dec. 23, 2024), https://subsidytracker.goodjobsfirst.org/parent-totals; see also Neil Gordon, Who Are the Biggest Corporate Welfare Moochers?, Project on Gov’t Oversight (Mar. 18, 2015), https://www.pogo.org/analysis/who-are-biggest-corporate-welfare-moochers.
[3] See Stop the Big Business Bailout, Taxpayers for Common Sense (July 8, 1999), https://www.taxpayer.net/budget-appropriations-tax/stop-the-big-business-bailout/.
[4] Chris Edwards, Special-Interest Spending, Downsizing the Fed. Gov’t (Apr. 2009), https://www.downsizinggovernment.org/special-interest-spending#:~:text=As%20these%20examples%20illustrate%2C%20corporate,five%20other%20types%20of%20damage.
[5] Id.
[6] Mariana Mazzacuto, How Taxpayers Prop Up Big Pharma, and How to Cap That, L.A. Times (Oct. 27, 2015, 5:00 AM), https://www.latimes.com/opinion/op-ed/la-oe-1027-mazzucato-big-pharma-prices-20151027-story.html.
[7] Fred Ledley et al., US Tax Dollars Funded Every New Pharmaceutical in the Last Decade, Inst. for New Econ. Thinking (Sept. 2, 2020), https://www.ineteconomics.org/perspectives/blog/us-tax-dollars-funded-every-new-pharmaceutical-in-the-last-decade.
[8] Bianca Silva Gordon et al, Insulin Prices in ESI Nearly Doubled from 2012-2021, Health Care Cost Inst. (Apr. 4, 2023), https://healthcostinstitute.org/hcci-originals-dropdown/all-hcci-reports/https-healthcostinstitute-org-hcci-research-insulin-prices-in-esi-nearly-doubled-from-2012-2021-with-effects-of-emerging-biosimilars-evident-in-recent-years.
[9] Mazzacuto, supra note 6.
[10] Pfizer Grant Funding Reporter, Nat. Inst. Health (last visited Dec. 23, 2024), https://reporter.nih.gov/search/0wovavKGXEWMHnrILoc63g/projects/charts?fy=2012;2003;2004;2005;2006;2007;2008;2009;2010;2011.
[11] Colin Gordon, We Don’t Have to Keep Shoveling Money to Big Ag, Jacobin (Jan. 9, 2021), https://jacobin.com/2021/01/big-ag-farm-subsidies-agriculture.
[12] See id.
[13] Id.
[14] Id.
[15] Annie Schechinger, Triple Dipping: House Farm Bill Increases Likelihood of Wealthy Farmers Raking in Billions Each Year, Env’t Working Grp. (May 21, 2024), https://www.ewg.org/research/triple-dipping-house-farm-bill-increases-likelihood-wealthy-farmers-raking-billions-each.
[16] See Richard Best, Why Bank Bail-Ins Are the New Bailouts, Investopedia (Sept. 5, 2023), https://www.investopedia.com/articles/markets-economy/090716/why-bank-bailins-will-be-new-bailouts.asp.
[17] Benjamin Landy, A Tale of Two Recoveries: Wealth Inequality After the Great Recession, Century Found. (Aug. 28, 2013), https://tcf.org/content/commentary/a-tale-of-two-recoveries-wealth-inequality-after-the-great-recession/.
[18] Alana Abramson, ‘No Lessons Have Been Learned.’ Why the Trillion-Dollar Coronavirus Bailout Benefited the Rich, Time (June 18, 2020, 4:13 PM), https://time.com/5845116/coronavirus-bailout-rich-richer/.
[19] See Allan Sloan & Cezary Podkul, How the Federal Reserve is Increasing Wealth Inequality, ProPublica (Apr. 27, 2021 6:00 a.m.), https://www.propublica.org/article/how-the-federal-reserve-is-increasing-wealth-inequality.
[20] See Robert Reich, How Corporate Welfare Hurts You, Am. Prospect (July 23, 2019), https://prospect.org/economy/corporate-welfare-hurts/.
[21] See Sylvia Allegretto et al., The Public Cost of Low-Wage Jobs in the Fast-Food Industry, U.C. Berkley Lab. Ctr. 1 (Oct. 15, 2023), https://laborcenter.berkeley.edu/pdf/2013/fast_food_poverty_wages.pdf.
[22] Id. at 5.
[23] See id. at 2.
[24] See Sarah Anderson et al., More for Them Less for Us, Inst. for Pol’y Stud. 11 (Mar. 2024), https://americansfortaxfairness.org/wp-content/uploads/NFTLFU-REPORT-March-12.pdf.
[25] United States Federal Corporate Tax Rate, Trading Econ. (last visited Dec. 23, 2024), https://tradingeconomics.com/united-states/corporate-tax-rate.
[26] Id.
[27] Anderson et al., supra note 24, at 2.
[28] Id. at 20.
[29] In 1968, the median income earner was taxed at nineteen percent whereas in 2021, the median earner is taxed at twenty-two percent. Historical Income Tax Rates & Brackets, 1862–2021, Tax Found. (Aug. 21, 2021), https://taxfoundation.org/data/all/federal/historical-income-tax-rates-brackets/.
[30] See Reich, supra note 20.
[31] Arloc Sherman & Tazra Mitchell, Economic Security Programs Help Low-Income Children Succeed Over Long Term, Many Studies Find, Ctr. Budget & Pol’y Priorities (July 17, 2017), https://www.cbpp.org/research/poverty-and-inequality/economic-security-programs-help-low-income-children-succeed-over.
[32] See Factsheet: What the Research Says About the Economics of Income Support Programs, Wash. Ctr. for Equitable Growth (Sept. 16, 2021), https://equitablegrowth.org/factsheet-what-the-research-says-about-the-economics-of-income-support-programs/.
[33] Hilary Hoynes & Diane Whitmore Schanzenbach, Strengthening SNAP as an Automatic Stabilizer, Wash.: The Hamilton Project 217, 218 (2019), https://www.hamiltonproject.org/assets/files/HoynesSchanzenbach_web_20190506.pdf.
[34] Hilary Russ, Corporate Tax Breaks Cost U.S. Schools Billions of Lost Revenue, Reuters (Dec. 4, 2018, 4:33 PM), https://www.reuters.com/article/us-usa-taxes-subsidies-education/corporate-tax-breaks-cost-u-s-schools-billions-of-lost-revenue-report-idUSKBN1O30B3/.
[35] Sherman & Mitchell, supra note 31.
[36] Paul Buchheit, Add It Up: The Average American Family Pays $6,000 a Year in Subsidies to Big Business, Common Dreams (Sept. 23, 2013), https://www.commondreams.org/views/2013/09/23/add-it-average-american-family-pays-6000-year-subsidies-big-business.