f more dollars into the hands of the federal government. American businesses are certainly over subsidized, but they are also overtaxed and over regulated. The last thing that is needed is a tax hike. Nevertheless, targeted tax breaks are certainly bad policy. Because they provide special treatment for politically powerful industries, such tax breaks run counter to the notion that all taxpayers should be treated the same. Furthermore, targeted tax breaks create distortions in the workings of the economy. Government steps in and creates an uneven playing field by granting tax breaks to particular industries. As a result, our economy's resources do not go toward their most efficient use, which makes it more difficult for America's businesses to be successful. While targeted tax breaks are not corporate welfare, they are bad public policy and should be eliminated. However, such tax reform should only be done on a revenue-neutral basis, or preferably as a net tax cut. That is, since closing loopholes broadens the tax base, tax rates must be correspondingly reduced to avoid an overall increase in taxes. The federal government currently spends roughly $75 billion a year on programs that provide subsidies to private businesses. Two years ago both Congress and the Clinton administration pledged to attack that pervasive corporate safety net. They have had very little success. Virtually every corporate welfare program that existed in 1994 is still squandering taxpayer dollars today. Many have had their budgets increased. If the size and cost of the federal government are ever going to be reduced, those taxpayer rip-offs must be eliminated.Categories of Corporate Welfare Working from the definition of corporate welfare as ``any government-spending program that provides unique benefits or advantages to specific companies or industries,'' we identify three main categories of corporate welfare. Direct Grants to Businesses Perhaps the most egregious e...
