What is the difference between a direct subsidy and a whopping subsidy?

What is difference between a tax credit and a subsidy?

  • Answer:

    Both are financial incentives. A subsidy could be cash or other financial liquid instruments (easy to conver in cash). Tax credit is an amount that you can deduct/subtract from your taxes, as long as you have a positive tax exposure. Without a positive tax exposure, you cant take advantage of it, unless you make a special agreement with someone else having tax exposure. Tax credit is much less liquid than a subsidy, so the latter is normally the most preferred assuming the other conditions unchanged.

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