Corporate Welfare

5 Ways Elon Musk and Other Billionaires Get Welfare for the Rich

Here's how to find it and put an end to it all.

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Tech billionaire Elon Musk is known for leading Tesla and SpaceX, as one of the visionaries behind PayPal, and for hyping bitcoin and a bold plan to colonize Mars.

He's not just the planet's richest person, he's one of its biggest recipients of government handouts, according to Lisa Conyers and Phil Harvey, authors of Welfare for the Rich: How Your Tax Dollars End Up in Millionaires' Pockets—And What You Can do About It. Conyers is a veteran journalist and co-author with Harvey of 2016's The Human Cost of Welfare. Harvey is a successful businessman and philanthropist who supports many libertarian organizations, including Reason Foundation, the nonprofit that publishes this website.

By 2015, they write, companies led by Musk had already gotten billions of dollars in subsidies, tax breaks, and other handouts. New York state even shelled out $750 million to build a factory for Musk's troubled SolarCity operation and then said the company would pay no property taxes for a decade, saving Musk another $260 million. "He seems to have a magic touch," says Harvey. "He's gotten so good at raising money from state governments, getting subsidies, tax abatements, and so on, that sometimes it seems as though the states are lining up to offer him money to come and do business."

Musk is far from alone. There are thousands of other immensely rich people who are constantly bilking governments at all levels for special perks, carveouts, and handouts.

Here are five of the very worst ways they do that.

1. Agricultural Subsidies

Since 1933, when Congress passed the first farm support bill, the government has been shoveling billions of dollars in the form of crop insurance, cash payouts, and other subsidies to the smaller and smaller number of American farmers. Recipients have included billionaire Penny Pritzker, who served as President Obama's commerce secretary and received $1.6 million in subsidies between 1996 and 2006, and Republican South Dakota Gov. Kristi Noem, who was part of a family business that got over $3 million in subsidies between 1995 and 2008.

2. Sugar Subsidies

If general agricultural subsidies aren't bad enough, the amount of government largesse specifically going to sugar producers is almost beyond comprehension. Because of protectionist tariffs and price supports, Americans pay around double the world price for sugar, thanks to efforts by billionaires like the Fanjul brothers, Alfy and Pepe, who were dubbed "the first family of corporate welfare" by Time magazine. "The Fanjul brothers give millions and millions of dollars to both sides of the aisle," explains Conyers. "That's how a lot of this stuff happens. You make friends on the Hill and you just make sure that your subsidy is renewed every year or every four years or whatever the case may be." 

3. Stadium Deals

The typical NFL, MLB, or NBA team owner is worth at least hundreds of millions of dollars but they rarely shy away from shaking down cities, states, and even the feds to pay for new stadiums. That explains why between 1997 and 2015, almost half of all construction costs for new NFL stadiums were covered by taxpayers. In the case of Raymond James Stadium, home to Super Bowl champs the Tampa Bay Buccaneers, taxpayers ponied up 100 percent of building costs. The team basically gets all revenue generated at the stadium too.

But it's not just big-league teams that rip off taxpayers. There's the case of the minor league baseball team the Hartford Yard Goats, who bilked that perennially broke city for a new home. The millionaire owners of the team convinced city officials to pony up for a new stadium in 2016, explains Conyers. "The stadium ended up costing the city $67 million," she says. "Which is exactly the amount of money that the city is in the hole right now."

4. Mickey Mouse Subsidies

Nobody will be surprised that Mickey Mouse's owner, The Walt Disney Company, is the heavyweight champ among theme park operators when it comes to sweetheart deals. Disney "holds assets worth over $92 billion, has a stock market value of $152 billion, and returned $2.3 billion to investors in 2017 alone," write Conyers and Harvey. "Bob Iger, chairman and CEO, earns $45 million a year." So of course Disneyland, located in Anaheim, California, needs handouts.

Twenty-five years ago, Anaheim built Disney a new parking structure that cost $108 million and then leased it to the company for the high price of $1 a year. In 2015, the city agreed to exempt the park from paying entertainment taxes for 45 years, and in 2016, it agreed to a $650 million tax rebate on a luxury hotel Disney built near "The Happiest Place on Earth."

5. Energy Freebies

As Conyers and Harvey note, the energy industry has been the best performing sector of the S&P 500 for many years, with revenues topping $238 billion in 2018. Over the past decade, Peabody Energy, the largest private coal company in the world, sucked up around $275 million in state and federal subsidies while generating $5.6 billion in revenue in 2017 alone. Exelon, a power company that specializes in nuclear energy, generated $34 billion in revenue in 2017, the year after it gulled New York state into giving it $7.6 billion to keep four aging and underperforming nuclear power plants going. And when it comes to renewable resources like wind and solar, Elon Musk's ability to make it rain with tax dollars speaks for itself.

All is not darkness, insist Conyers and Harvey, even as they catalog how the tax code, zoning laws, and other sorts of government policies routinely get revised to specifically and uniquely benefit the ultra-rich. One success story they point to involves residents in Louisiana who pushed back against the decades-long exemption from property taxes that major oil and gas producers like ExxonMobil had. The exemptions were a well-kept secret until a group of citizen activists stumbled across their existence and then kicked up a fuss that led to reform.

"They stumbled upon this little committee that was rubber-stamping requests for from these oil companies," relates Conyers. "They started a public education campaign just saying, 'Hey, you know, how much better would our schools be, how much better would our police forces be…how much better would our roads be if those guys would just pay their fair share?' They managed to get the law changed so that now when those companies go and ask for those tax breaks, they have to make presentations to local school boards and fire departments and police departments and say: 'Hey, we don't want to pay taxes and support you because we don't think we should.'"

The authors of Welfare for the Rich point to the growing number of websites such as Good Jobs First and Sunlight Foundation that track subsidies and handouts as places both to get energized by and to get information about how to claw back public dollars that are going to gild the pockets of mega-corporations and the billionaires who own them.

By the time Elon Musk makes it to Mars, hopefully he'll be paying his full fare.

NEXT: A SWAT Team Destroyed This Innocent Woman's House While Chasing a Fugitive. The City Refuses To Pay for Damages.

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  1. “Tech billionaire Elon Musk is known for leading Tesla and SpaceX, as one of the visionaries behind PayPal, and for hyping bitcoin and a bold plan to colonize Mars.”

    Not nearly as impressive as Charles Koch, the billionaire who funds Reason.com. Rising from humble beginnings, Mr. Koch and his late brother David started Koch Industries, a company so successful its founders eventually became two of the top 10 richest people on the planet.

    Crucially, the Koch Brothers never resorted to unethical methods like agricultural subsides to inflate their wealth. Instead, they invested in think tanks that promote unlimited, unrestricted immigration — the billionaires’ favorite tactic for depressing wages and increasing profits.

    #Libertarianism101

    1. I admire your commitment.

      1. I will not rest until Mr. Koch is back in the top 10 richest people on the planet.

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      Given their importance to your comments you should learn something about them.

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  2. Elon Musk might actually do something transformative for humanity. In fact he already has, but his end-goal is quite possibly the most important endeavor humanity undertakes this century, and he is the only guy making near-daily strides. That and his unwillingness to placate the P.C. Police mean I can’t really fault the man for taking money left on the table.

    1. Of course, Elon did a lot. But this is not only his merit, but also the merit of a huge team of people.

      1. Sure but you have to give the team leader some credit and he brings them near unlimited funds to play with.

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      2. Sure. But Elon’s value as a CEO and entrepreneur is the organization of labor he provides; specifically, the organization of labor to tackle expensive, existential problems that until recently seemed insurmountable by the private sector.

  3. This is boring, well connected people can corrupt politicians. BFD.

    Can we please talk about how the democrat controlled congress is trying to subvert border security, pass bogus wage and covid bills, force contractors into unions, and pretend that the pandemic is still a thing for most people. All while militarizing DC for no reason and pretending that the president is still cogent.

    Also that Senator from Arizona (not the ex navy cosmonaut gun grabber) is doing a great job at stymieing the above. Good girl.

    1. Easy on the eyes and with brains to boot…

    2. “trying to subvert border security”
      IOW, undoing the alt-right white nationalist policies of the Drumpf regime, which is a good thing.

      “pass bogus wage and covid bills”
      I don’t think Biden will disappoint his billionaire base by raising the minimum wage.

      “pretend that the pandemic is still a thing for most people”
      Biden is very close to shutting down the virus just as he promised during the campaign.

      “militarizing DC for no reason”
      Huh? Armed insurrectionists literally almost staged a coup. AOC barely escaped with her life! If anything the government’s response has been too timid.

      “pretending that the president is still cogent”
      #BidenIsAsSharpAsEver

      “Also that Senator from Arizona … ”
      I’ll have more to say about Sinema and how she’s proof of OpenBordersLiberal-tarian’s First Law soon. Don’t miss the next Reason Roundup!

    3. Can we please talk about how the trumpanzees gone apeshit want to replace democracy with mobocracy?

      1. Flag, refresh

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  4. Elon Musk for President or else king of Mars.

    1. I already staked my claim as God Emperor of Mars.

      1. In North Carolina in theearly Nineties, there was a John Carter who ran as a Republican candidate for the State Legislature. I always joked: “He’s my man! I want The Warlord of Mars to represent me!”

      2. Too bad it’s a ceremonial position, with no actual power.

  5. I expected to see the left’s risible complaint that welfare for low income employees is a subsidy to businesses. Glad I was wrong.

  6. Rich people are running to FL and TX to escape high taxes, but they will discover to their chagrin that the socialists follow them. So what should they do? Simple: create resort colonies where people can retire and advocate for their pet issues. The war today is online not in the streets or at the capitol. For example, they could have hired people to demoralize the socialists on business closures in NY and CA, which would have facilitated faster reopenings. This is in fact a full time job, and might be attractive to some people in return for housing, a small stipend and basic healthcare (i.e. very cheap). Ultimately the goal is for everyone to retire (who wants to) so only the robots do the work.

    1. John Mcafee had a pretty good run skipping out on taxes and government control.

      They finally caught up to him though. They nabbed him in Spain and he is awaiting extradition.

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  8. The 1-WAY ALL undeserving get rich off of welfare.

    UNCONSTITUTIONAL NATIONAL SOCIALIST POLICY (i.e. Nazism)!
    Good grief Reason writers sure like complicate the obvious.

    Has anyone found that ‘welfare clause’ in the U.S. Constitution yet?

    1. For anybody or anything OTHER than the United States (noun; federal government)?

    2. Still working on getting the right meds there?

    3. Article one, section eight, clause one.

      1. Awe the lefty generated popular deceitful manipulation of the taxing power. Chop off the context and apply our own.

        “general Welfare of the United States”

        Never-mind ‘federal’ government isn’t addressed anywhere in the entirety of the Constitution or that United States doesn’t even make sense anywhere else as anything but the federal government.

        Never-mind pretending that chopped context would VOID the entire enumerated powers.

        Corruption of the Constitution just like Corruption of the USA.

  9. I wish you wouldn’t conflate tax breaks, people not “paying their fair share”, with money extracted from taxpayers.

    They managed to get the law changed so that now when those companies go and ask for those tax breaks, they have to make presentations to local school boards and fire departments and police departments and say: ‘Hey, we don’t want to pay taxes and support you because we don’t think we should.'”

    Yeah, well maybe they were tired of being squeezed by the locals to pay for these things they didn’t seriously benefit from corporately.

    1. The Libertarian Case For Paying Your Fair Share.

    2. You skipped over the biggest point. State Taxes are nothing in comparison to federal.

    3. What businesses need to lobby State, City, and Local governments for is an atmosphere of low taxes, low regulation, and a rational civil court system for all businesses, not just their own. It is this idea of special cut-outs for one business and not others that runs against the libertarian idea of Equal Justice Before the Law.

  10. “Here’s now to find it”? It’s not hard to look for some of them, like #3. That’s the trouble: Stadium subsidies are overwhelmingly popular with the locals. Yes, borrow, please, on our credit, where we’ll be left with a white elephant by the time it’s paid off.

  11. “…By the time Elon Musk makes it to Mars, hopefully he’ll be paying his full fare.”

    And a pony.

    1. There probably are enough wild mustangs on Federal lands in the Western States for that proverbial pony for everyone. Domesticating them is where the work comes in, which where Bernie and Bros would tap out.

  12. It is easy to get government money for those things because it is all stuff people want. Sports, entertainment, affordable food and energy, cool rocket ships. So there is no backlash when you hand it out.

    We libs are not going to get a lot of votes telling people to pay for it yourselves or do without.

    1. It is far easier to threaten people with Gov-Guns to STEAL their money for one’s self until one realizes they’re the one being threatened by Gov-Guns.

  13. They get to pay lower wages because of Reason-supported open borders and/or lack of border enforcement. Lower wages means higher profits. More imported people who aren’t eligible to vote means more representatives beholden to fewer people, more easily influenced by billionaire money.

    Too bad Reason is part of the problem. You guys don’t want Americans to have power over our lives anyway. You mostly only care about mean tweets and fitting in with your swampy social circles.

    1. +1000; Reason really has gone down the sh*tter since Trump..

  14. So, what’s all this got to do with Musk?

    Agricultural subsidies? Sugar subsidies? Stadium deals? Mickey Mouse? Musk isn’t implicated in any of them.

    You might have a point with energy subsidies, he is into electric cars.

  15. Didn’t Simon Trinculo pretty much predict this in his book?

  16. Anybody who has read Simon Trinculo’s books already knows about this.

  17. I am sure that it will not take much to find even more examples of government directly or indirectly supporting businesses. I know that Microsoft cut a deal for software years ago with State of Wisconsin and as a results most of the states computers have Microsoft operating systems. I suspect this is the case in other states. Also the defense industry has a pipeline to government money. In an era of cyberwarfare, drones and cruise missiles, we are still paying for the development of new fighter aircraft. We are developing weapons for the last war to keep weapons manufacturers in cash.

    Anyone could carry this argument on and on, but lets get to some really important issue like how unemployment insurance might discourage work.

  18. Ron Baron sold 1.7 million Tesla shares and invested in two of the company’s biggest potential rivals, GM-owned Cruise and Amazon-backed Rivian, while paradoxically saying he expects Tesla shares to rise, eventually, to $2,000.
    https://worldabcnews.com/whats-weighing-the-stock-down/

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