Social Question

Paradox25's avatar

Why does the U.S government subsidize fast food companies?

Asked by Paradox25 (9900 points ) 3 months ago

The executives of these companies make large profits due to pocketing taxpayer’s money combined with paying their workers lower wages with little or no benefits. Moreover, many fast food workers have to use public assistance to get by, and the food isn’t even healthy.

Here’s a chart showing the fast food companies, their profits and their subsidies. You have to download the full page at the end of the short article to view this.

I know my question is a bit ‘slanted’, but I thought it was important to point the above issues out first. My question is whether there’s any justifiable reason/s for the American government to subsidize fast food corporations, and if there are any, what are they?

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23 Answers

ARE_you_kidding_me's avatar

Yet another reason not to eat that shit

Coloma's avatar

Well duh…so the government can kill off as many citizens as possible before they become a drain on the SS and healthcare system. Starve ‘em to death financially and clog their arteries by forcing them to consume cheap fast food because you can only buy one wimpy apple and 3 grapes for the price of a Big Mac.

Coloma's avatar

The latest recommendations of eating, at LEAST, 6 servings of fresh fruits and veggies a day is beyond the reach of many, singles or families. How many people can afford to spend $15 a day or more, buying quality produce? A fucking med. size Cantaloupe is $5.00 a melon, with maybe 3–4 servings. That is ONE serving of fruit for a family of 3–4.

Paradox25's avatar

@Coloma You do realize you’re hinting at a major conspiracy on an anti-conspiracy leaning Q & A site don’t you.

Paradox25's avatar

@jca That’s why I don’t understand the subsidies. I also don’t understand how many of these executives, including the chief ones, have very ‘conservative’ views concerning spending and social help programs, but then turn around and use the social safety net themselves.

Coloma's avatar

@Paradox25 LOL…nah, just my 2 cents worth, half humorous, half truth, like most conspiracy theories. ;-)

ragingloli's avatar

Because laws are written by corporate shills.

Cruiser's avatar

They technically are not “subsidizing” these companies anymore than any other corporation in the country who offers compensation incentive plans. These are legal “loopholes” that allow key employees to avoid paying the higher income tax rates and enjoy lower capital gains tax rates. Sarah is taking editorial license to attempt to spin this into a fast food subsidy. Don’t buy into her drivel.

JLeslie's avatar

@cruiser I think the problem is the same people who hate public programs and paying high taxes are the same people who think it is fine to pay employees low enough to cause them to be on food stamps. The two don’t go together. They are not putting two and two together.if we want to pay less in food stamps and other subsidies to low paid employees we need to pay them more. I am working under the assumptions they are working full time and still unable to pay for reasonable expenses to live.

Then there is the other question of if the lower tax rate for capital gains is fair. The people who make capital gains tend to be people with money, people who make less money don’t even get a chance to benefit from that sort of loophole.

Cruiser's avatar

@JLeslie Fair or not will never change the reality that hot shot executives that make things happen cost good money to get and retain and these compensation packages are part of doing business. These businesses generate massive tax bills and employ LOTS of people in the process. The Feds are aware of this dynamic and IMO would cause more harm than good if they started to target raising taxes on these compensation packages.

Judi's avatar

Because we are now an oligarchy which serves corporate interests over the interests of the public.

JLeslie's avatar

@cruiser Changing the capital gains tax doesn’t target those CEO’s. Many people utilize capital gains. I think capital gains tax was raised a little this past year on people making over $400k. Maybe I read it wrong and it didn’t pass. I don’t follow your logic. The packages are competitive in the market, the market has to be obedient to the tax laws, so the field is leveled. Is someone going to not work because their $10million dollar compensation package is now taxed at $25% instead of 20%? Or, Whatever the actual numbers are? I guess they don’t need a job then.

Cruiser's avatar

@JLeslie No it is the fact that if they raise the tax even incrementally on these bonuses then they will craft the compensation packages in different ways where the Feds now lose even more taxable income. Every time my taxes are raised I will work that much harder to shelter that income from Federal income tax. I will max out my safe harbor and take that money out after I retire at 18% income tax instead of the 40.5% I am taxed at today. If you paid anywhere near the taxes I paid this year you would probably feel the same as I do about the Fed and taxes. I actually don’t mind paying the taxes I just HATE how the Fed and my state wastes the tax dollars it does collect.

JLeslie's avatar

I hate wasted dollars too. HATE it. So we agree there. I also agree when the government makes rules if there is a way around it, people who can will go around. But, people in the highest income brackets already go around. I have no idea how much you paid, not asking, but I think on my tax question we paid around the same percent if I remember correctly? My memory might be wrong. I barely had any write off or capital gains. I don’t have any mortgage or property taxes to deduct. I didn’t really get back into the stock market. It happen to be a bigger than usual income year, because my husband changed jobs and some money came in up front that won’t happen going forward. I paid a lot this year. Most people making double what I make, well my husband) paid less I would bet in percentage. Double doesn’t come anywhere close to a million, so when talking about salaries like $10million I am not very empathetic. I am not saying the tax should be extremely progressive and overtax the wealthy, I am just looking for a more level playing field.

Cruiser's avatar

@JLeslie Level the playing field and you take away all the incentive to generate profits. You generate profits by growing your income/business and gains from investments. You shrink those margins and why bother? Why should I risk my whole life savings and gamble on buying a business in the worst possible economy? Even before I signed the loan in Jan 2011 Obama had raised my Fed tax rate, taken away the payroll exemption and Illinois raised my taxes so even before I took over the business I was further pressured with less cash flow and that almost blew my plan out of the water and I thought long and hard about this new added risk I was facing. Putting in place tax strategies only shelters the profits from taxation and does little to give back all that working capital I now lost before I even got started. Once you are in my seat for real and deal with the cause and effect of these tax the rich mantras you cannot possibly feel the effects even 1% increase can have on your bottom line. Thankfully for me I know our Congressmen and women are aware of this and why they fight so hard for and against just taxes for taxes sake. There are real and unintended consequences to each and ever known and hidden tax, fee whatever revenue generating code they pass and they know the breaking points of most if not all. Yes there are loopholes that a lot of taxable cash passes through….but like my profits most are deferred and just sit in bank accounts which will only do me good if I live long enough to realize and use them. Many don’t and the estate tax sharks are circling in the water just waiting for their day in probate court.

JLeslie's avatar

@Cruiser What I know is if you paid a lot of taxes you made a lot of money. That’s why people will still go into business, because it is still making a lot of money. You only get taxed on the profits/salary. I’m not saying tax people at 75%, I am saying consider taxing investment income the same as salaries, or at least at a closer rate. The owner makes more mney (hopefully) because he took the risks and had the ingenuity. But, should he pay less taxes as a percentage than the employee working hard every day? I’m not so sure. You already are making more money.

I know sometimes the owners are making nothing when business dips while they are still paying salaries to keep a business going, but if the business is down like that then so are profits and the tax is lower. Tax is dependent on actual profits and income.

Cruiser's avatar

@JLeslie Let’s keep this simple….If I make $100,000 profit, State and Fed will now get $40,500 I get to bank $59,500. How much more of that $59,500 do you think is fair. Remember I put up my house, my cars, my 401K and all my investments to make this happen. Let’s say you think 60% tax. Now State and Fed gets 60K and I get 40K…..That is a whole hell of a lot less incentive to take the risk. Grown the business is an easy solution. So IF I were able to double my profits under the current tax code I would get $119,000 now we are talking real money here…but if I were to go forward under a higher tax rate as you suggest working twice as hard I now only get 80K??? Can you see how higher taxes castrates ones incentive to work harder, longer with greater risk to boot? Plus under the current code the State and fed would get $81,000 if I doubled my profits instead of just $60K if I decided it was not worth it to work harder and just keep the business making $q00k in profits. Raising my taxes just lost the Fed and State $21,000 plus raising the taxes removes much needed working capital further preventing me from growing the business causing a greater net loss in potential tax revenue. The Fed knows this everyday man does not. The Fed does know that 3 x’s a 35% tax rate will generate much more tax revenue than 1x’s a 60% tax rate.

JLeslie's avatar

@Cruiser You said state and fed. I thought we were just talking fed? How much is the fed? You will have to help me with the tax law on profit, because I don’t know those laws. I do know people I know who own business often pay much much less tax than I do, but they are very small business, so it may not compare to your example. Are your also being paid a salary from your business? Or, you don’t have to use your business, it can be any typical business. I am not trying to get you to reveal your own financials.

Cruiser's avatar

@JLeslie I am an “S” Corp so my income is taxed against the graded income tax scale most wage earners are and my Fed top rate is 39.6% (granted only income over $457,600 is taxed that high) and IL State is 5%...so if anyone doesn’t think the 1% aren’t paying enough they need to take a closer look at the amounts the uber rich are being taxed at. 44.6% of their income when a majority of wage earners got money back in tax refunds. I am not saying that is wrong but I feel it is disingenuous when the people screaming the loudest did not pay a dime in income tax.

JLeslie's avatar

@Cruiser I pay more than a dime. I know you aren’t putting me in with those who scream the loudest or who don’t pay. I genuinely am interested in this topic, I am not trying to be combative.

The Fed top rate only starts to really be felt by people who are making much much more than $457,600 adjusted gross. Someone who is making say $600k adjusted gross, probably pays 30% for the very reason you stated, the tax amounts only apply to each bracket of money. I’d have to do the actual math to know the specific number, but you understand what I mean. Let alone that we are talking adjusted gross and the guy making $600k adjusted actually made more like $650k-$700k probably, putting as much as he could in an HSA account, and putting money away for retirement (wouldn’t a SEP plan apply for self employed? I think the limit is $50k now tax deferred) and some other write-offs like maybe his car, office space in his house, whatever else he can come up with. Depends on the business. This is the very reason I asked that question about how much are people taxed on their unadjusted income. Not to mention if he makes $700k from the business, he probably also has some other investments that he is only taxed at capital gains, so let’s say he actually is taking in $750—$800k and now his tax percent paid to the government on his unadjusted income is even lower.

Or, did I get the numbers wrong? I easily might be wrong. Like I said I am not that knowledgable on tax law.

Cruiser's avatar

@JLeslie You have the general idea about the tax calculations and correct about the other investment strategies. But there is only so much one can do to reduce taxes owed other than to give it away and that to me is a much better idea than giving it to the government.

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