Big Oil Claims About Tax Subsidies Don't Hold Water

[one...two...tree 2,762]

House Republicans voted yesterday to expand coastal oil drilling, and no doubt felt pretty good about themselves. But it’s congressional Democrats who are on the offensive.

…House and Senate Democrats continued their push to repeal a variety of tax breaks enjoyed by the oil industry, some of them a century old and others that apply to all companies, not just petroleum concerns.

The Senate version of the bill would peel back $21 billion in such tax incentives over the next decade and devote the savings to deficit reduction. The House version would yield $31 billion in savings over 10 years and use the money for alternative energy programs and deficit reduction. Both bills apply only to the biggest multinational oil companies: Exxon Mobil, Shell, BP, Chevron and ConocoPhillips.

The chief executives of the Big Five are scheduled to appear before the Senate Finance Committee on Thursday morning to answer questions about their profits and to justify their tax treatment. One of the companies, ConocoPhillips, fired a shot in advance in a news release on Wednesday, calling the tax proposal “un-American” and saying it would discourage exploration and cost jobs.

That was an exceedingly dumb thing to say. It’s one thing for a highly-profitable oil company to demand taxpayer subsidies on top of their profits; it’s something else when that highly-profitable oil company says ending the subsidies is “un-American.”

Sen. Bob Menendez (D-N.J.) pounced, calling the comments “truly outrageous,” “not acceptable,” and “beyond the pale.” The Democratic senator added that he expects an apology.

Congressional Dems were also delighted to receive a report yesterday from the nonpartisan Congressional Research Service, which concluded that ending the existing tax incentives for the oil industry (a) wouldn’t slow oil production; and (b) would have a negligible impact on prices at the pump.

In other words, the main arguments from Big Oil and its allies just don’t stand up well to scrutiny.

All of this, however, is just a precursor to today’s Senate Finance Committee hearing, which should offer some compelling political theater.

It’s a tradition in Washington: the annual Capitol Hill version of the perp walk for Big Oil.

This time, Senate Democrats are hauling the top executives of five major private oil companies to the Finance Committee to rap them on the knuckles for making so much money — and benefiting from U.S. tax incentives — while charging hardworking Americans $4 for a gallon of gas.

It’s political theater at its best: Democrats get the visuals of the top execs standing and raising their right hands and can force them to explain why oil companies need billions of dollars in tax incentives and subsidies. Senate Majority Leader Harry Reid has already scheduled a test vote for next Wednesday on Democrats’ plan to repeal $21 billion in incentives over 10 years.

http://www.alternet.org/newsandviews/article/586263/big_oil_claims_about_tax_subsidies_don%27t_hold_water%2C_dems_pounce/

[Obama 2012 1,714]

There you go again. Incorrectly calling them subsidies.

[Mr. Big Dog 10,747]

If we can't reverse a tax incentive that adds $2 billion a year to the deficit while benefiting an industry that rakes in a hundred billion a year in profits, then we will never, ever get the budget in order. Reducing the deficit doesn't get any easier than this. And if the easy part can't be done, then there's no way to ever get the hard things done either.

[Obama 2012 1,714]

If we can't reverse a tax incentive that adds $2 billion a year to the deficit while benefiting an industry that rakes in a hundred billion a year in profits, then we will never, ever get the budget in order. Reducing the deficit doesn't get any easier than this. And if the easy part can't be done, then there's no way to ever get the hard things done either.

spending adds to the defecit, not a lack of tax money.

You can have $0 collected in taxes, but the only way you have a defecit is if the government chooses to spend money that they do not have.

I know it's easy to try and strike fear into people about the big bad evil people who make money, but this really isn't the way to do it. It's dishonest through and through.

[Mr. Big Dog 10,747]

spending adds to the defecit, not a lack of tax money.

Wrong. There are two sides to the equation: inflow and outflow. A deficit can be created by either increasing the outflow, reducing the inflow or both.

[Zero Sum 305]

Wrong. There are two sides to the equation: inflow and outflow. A deficit can be created by either increasing the outflow, reducing the inflow or both.

Two terms actually (I = inflow; S = outflow)

D = I - S

And that spells something too.

[Obama 2012 1,714]

Wrong. There are two sides to the equation: inflow and outflow. A deficit can be created by either increasing the outflow, reducing the inflow or both.

You couldn't be more wrong actually.

Spending should always adjust with income.

If you have a salary of $75k/yr. and your spending is based on that and then suddenly your salary drops to $70k/yr. you'd be expected to adjust your spending accordingly. The defecit wouldn't be created due to a $5k difference in income, it would be created by your unwillingnes to adjust to the situation at hand and downsize yourself. You make a choice to borrow and create a defecit in your budget.

The problem with Government is it 99.9% of the time refuses to make the adjustmnet. They are more than happy to increase their spending when there ie a large inflow of money, however when that decreases they do not adjust their spending.

As defecits are a choice, they cannot be effected by an increase or decrease in inflow. They can only be controlled by spending.

[Zero Sum 305]

You couldn't be more wrong actually.

Spending should always adjust with income.

If you have a salary of $75k/yr. and your spending is based on that and then suddenly your salary drops to $70k/yr. you'd be expected to adjust your spending accordingly. The defecit wouldn't be created due to a $5k difference in income, it would be created by your unwillingnes to adjust to the situation at hand and downsize yourself. You make a choice to borrow and create a defecit in your budget.

The problem with Government is it 99.9% of the time refuses to make the adjustmnet. They are more than happy to increase their spending when there ie a large inflow of money, however when that decreases they do not adjust their spending.

As defecits are a choice, they cannot be effected by an increase or decrease in inflow. They can only be controlled by spending.

No, he's right actually. Trying to inject what you think should be the case is another matter.

[Mr. Big Dog 10,747]

You couldn't be more wrong actually.

Spending should always adjust with income.

It cuts both ways. That's what you fail to see. You also fail to see that what should have happened didn't happen when we started two wars w/o raising a dime to fund them, when we added a trillion dollar benefit (Medicare Part D), w/o raising a dime for it and when we reduced revenues by 4 trillion dollars w/o making any cuts to the expense side of the ledger. And when we do all of that at once - as the GOP controlled Congress and the GOP President earlier this decade have done, then we end up where we are - with a giant deficit where we had a balanced budget before any of this happened. Now, if we want to close that deficit, then we should try to get back to the starting point correcting all the things that went so wrong. That would include a good amount of expense trimming and a good amount of revenue raising. This budget deficit cannot be tackled from only one side of the equation no matter how often you state the opposite.

[Obama 2012 1,714]

No, he's right actually. Trying to inject what you think should be the case is another matter.

I didn't 'think' anything and I explained it thoroughly.

[one...two...tree 2,762]

Makes you wonder what books and news sources Paul reads and how he is able to intellectually separate the wheat from the chaff.

[Mr. Big Dog 10,747]

I didn't 'think' anything and I explained it thoroughly.

You should have that tunnel vision checked and treated.

[Obama 2012 1,714]

It cuts both ways. That's what you fail to see. You also fail to see that what should have happened didn't happen when we started two wars w/o raising a dime to fund them, when we added a trillion dollar benefit (Medicare Part D), w/o raising a dime for it and when we reduced revenues by 4 trillion dollars w/o making any cuts to the expense side of the ledger. And when we do all of that at once - as the GOP controlled Congress and the GOP President earlier this decade have done, then we end up where we are - with a giant deficit where we had a balanced budget before any of this happened. Now, if we want to close that deficit, then we should try to get back to the starting point correcting all the things that went so wrong. That would include a good amount of expense trimming and a good amount of revenue raising. This budget deficit cannot be tackled from only one side of the equation no matter how often you state the opposite.

The problem always has been the spending.

Revenues did increase during Bush's years, that's a misconception. The PROBLEM however is the spending exponentially grew as well. They chose to run a budget defecit. A lack of revenue was not the cause however. Revenue is something that you cannot control. It's not a controllable factor. Just ask ANY business. The only thing you can control is your spending. You can't make customers come in the door. You can lure them there, but if they aren't your revenue stream is going to be lacking.

Current tax rates are designed in a thriving economy for the government to make a lot of money. However in a faltering economy, the revenues will decrease. If you choose not to decrease spending with the automated decrease in revenue, that's when you run into your budget shortfall.

Only one of the items is controllable. You cannot hold the uncontrollable instance accountable for a defecit. It's illogical. It's the same reason why a "fair tax" idea is lacking in substance at the end of the day. It's very much an uncontrollable source of revenue and very dependent on how the market is doing in driving people to spend money. Just as our income tax system is very much reliant on employment and salaries.

[Zero Sum 305]

I didn't 'think' anything and I explained it thoroughly.

You explained what you want things to be- not what things necessarily are.

But as to you not thinking something through...

Big Dog has his math and its common sense.

[Obama 2012 1,714]

You explained what you want things to be- not what things necessarily are.

But as to you not thinking something through...

Big Dog has his math and its common sense.

Unfortunately for you and Big Dog, you understand nothing about controllable and uncontrollable when it comes to monetary policies.

You can raise taxes and lower taxes all you want, but there's a X factor you have to take into consideration. You can raise taxes to 99.9% and still not make one more dime. That's the factor that you do not account for. Just as you can lower taxes and make a lot more as well. It all depends on that X factor. That factor is the source in which your revenue comes from. If that source in the case of income taxes isn't making money, then you don't make money, no matter what the tax rate is.