They become political footballs when you do it wrong. If you make a tax credit for solar then it's partisan and the Republicans are going to try to get rid of it. If you make a tax credit for all manufacturing and some companies are using it to manufacture solar and lithium batteries then everybody still wants to keep it because there are also companies using it to manufacture trucks and gas turbines and mining equipment.
But that's the point isn't it? You can't (shouldn't?) subsidize all industries. That's unaffordable, and misses the concept of subsidizing things considered important to long term national security.
So subsidies, by their nature, are govt putting their finger on the scales, picking winners and losers.
And of course companies competing with those industries (coal versus solar) will lobby, and provide votes.
Bearing in mind of course that ultimately subsidies are just a tax on all citizens for the benefit of some.
All taxes are imperfect. The least distortionary one is a head tax and that's heinously regressive; it's basically a UBI with the sign inverted (which is also why a UBI is the least distortionary means of social assistance).
So the question then is, what are you going to tax and how much? The problem right now is that we're so bad at it. To begin with the government burns money like there is no consequence to it. Huge payouts to affluent retirees who don't need the money, defense contracts for things the military doesn't even want, etc. And yes, that means you need to stick your foot up the rear end of some lobbyists. Stop being the people who say it can't be done and start being the people doing it.
> You can't (shouldn't?) subsidize all industries.
If you stop wasting preposterous amounts of money then you could lower taxes across the board and remove the anti-subsidy. But taxes are also by category anyway.
So for example, don't lower the tax rate on dividends but create new credits and deductions and faster depreciation for capital investments, or make R&D fully deductible in the first year. In other words, if you make money and use it to buy a Ferrari, you're paying tax. If you use the same money to build a factory, you get to deduct it right away. Then you're effectively subsidizing all kinds of new factories or new construction, but not subsidizing purchases of imported products. Which is like a tariff in the sense that it makes domestic products relatively more attractive, except that it does it by making things less expensive rather than more expensive.
