Corporate Welfare – Employees Paying Taxes Directly To Corporations

taxes and income

Taxes have been a part of government for as long as there have been things to tax, and the general idea behind them is pretty well understood. The government takes a portion of everyone’s income and spends it in such a way as to improve things for everyone in one way or another. That could be defensive spending, such as military technology or troop wages, administrative costs will always factor in, educational funding, etc. And that’s the way it works in America. Or is it? In truth, corporate lobbyists have ensured that our convoluted tax code heavily favors corporations. The fact is that it’s even possible, if you’re employed by a large corporation, that you’re paying your taxes directly toward your employing company.

In his recent book, The Fine Print, Pulitzer Prize-winning journalist David Cay Johnston explains the laws that allow corporations to go to war with the American working class. In an interview with Alternet, he said the following:

It’s now up to 21 states. In 21 states, they’ve passed a law that says that taxes withheld from your paycheck, for the state, can be kept by the company. Now, every employer doesn’t get this windfall — you have to have to get a deal from the government to do it — 2,700 big companies, every big company you’ve ever heard of, General Electric, Procter and Gamble, Deutsche Bank, you name it, they’ve got these deals, where they get to keep the taxes. Billions of dollars are diverted this way. You know the best thing for the companies about this?

The workers don’t know, because once the taxes are withheld, the state government treats you as having paid your taxes. You paid your taxes. They just then give a credit to let the company keep the taxes. I’ve called journalists. I’ve called union people who negotiate union contracts. And they say, “What are you talking about?” I showed them the work I’ve done. They go, “Oh my God!” They have no idea that this is what’s happening, and the fact that it’s spread from the 16 states when I first wrote about this and it’s now grown to 21 – eventually, all of the 44 states with income taxes are going to allow this, if we don’t put a stop to it.

He also addresses the fact that a lack of regulation is actually limiting to competition when it comes to capitalism, as more successful businesses will rapidly form industrial monopolies and oligarchies:

I want more competition. Here’s what really goes on, however. We put up barriers to competition, and in fact, Wall Street has institutionalized this concept. Morningstar, they’re a big financial advice firm. They tell people that they should grade companies and decide whether to buy their stock, based on something called a “moat index.” Moat, like around a castle? A moat index asks, “What barriers has the government erected to keep anybody else from competing against that company?” Indeed, as I show in my book, you could get rich if you invest in those companies that have regulatory moats — where under the name of deregulation, we have insulated them from the rigors of the market.

This is the real welfare in America. Corporate welfare. Where the rich get richer, and they pay other people to convince Republicans how important it is to vote for conservative puppet politicians that will vote for laws that allow “the American people” to keep more of their income tax dollars — which really benefits the rich. In reality, it’s the Republican Party that is engaging in wealth redistribution. The difference in their version? They’re redistributing wealth to the top.


UPDATE: Sixteen states with programs like this are Utah, South Carolina, Ohio, New Mexico, New Jersey, North Carolina, Mississippi, Missouri, Colorado, Connecticut, Georgia, Illinois, Indiana, Kansas and Kentucky. We aren’t aware what the other five states in this group are at this time, and the article will be updated further when we have that information. Contact us if you are aware.

I would also like to add that the fight against corporate interests ruling our government is a bipartisan, because corruption reaches across the aisle. However, on this particular issue, conservative ideology promotes business interests no matter how harmful, and I think that the Democratic Party handles it slight better. Only slightly.


Political Writer, Justin Acuff Please join me on Facebook, or visit my home site.You can also follow me on Twitter.