President Obama tonight said he wants to end “corporate welfare.” Then he spoke about three policy areas that are pretty far from corporate welfare.
First, he spoke about “oil subsidies.” There are some oil subsidies in federal law, and Obama is correct that they should be ended. But most of the “oil subsidies” Obama points to are broad-based tax deductions that oil companies also happen to get. I wrote last year about Democratic rhetoric on this issue: “tax provisions that treat oil companies like other companies become a ‘giveaway,’ while a bill setting higher taxes for only five companies counts as fairness.”
Second, Obama picked on “corporate jets.” Again, there’s no big giveaway to corporate jets. Instead, some jets are depreciated over five years and others are depreciated over seven years. I explained it last year. When it comes to actual corporate welfare for corporate jets, the Obama administration wants to ramp it up — his Export-Import Bank chief has explicitly stated he wants to subsidize more corporate-jet sales.
Finally, Obama rolled out the canard about tax breaks for “companies that ship jobs overseas.” Romney was right to fire back that this tax break doesn’t exist. Instead, all ordinary business expenses are deductible — that is, you are only taxed on profits, which are revenues minus expenses. And how much money would Obama raise with his targeted tax hike? Less than one penny of every $100 collected in corporate income tax.
So, when Obama says “corporate welfare,” he really means “unpopular businesses being treated equally.”