definition of subsidy?

With the impending New York City subway fare increase (subsidy cut), it makes you think "what does the word subsidy mean?"

To Quote Noam Chomsky:

Well "subsidy" is another interesting word, kind of like reform. It's a subsidy if public funds are used for public purposes. That's called a subsidy. It's not called a subsidy when they go to private wealth. That's reform. So the -- so they're cutting down subsidies for public transportation. Well, that's just a tax. If you pay 20 percent more for getting on the subway, that's a tax. Same if you pay higher tuition at City College. And that's a highly regressive tax. So, who rides the subways, and who goes to City College?

http://www.chomsky.info/talks/19960413.htm

 

image credit: ny times