I’ll call Claire McCaskill and the Democrats out on an outright lie repeated constantly for the sole purpose of raising populist outrage over something that simply doesn’t exist. There are no, absolutely zero, taxpayer dollars going to oil companies*. This constant idea that oil companies are subsidized is an outright false statement that I’m sure many of you buy into.
Now, if the statement is that oil companies need to pay some tax or fee for pollution that they emit, I’ll buy that as at least an arguable statement. However, that is not what Democrats are saying. They are instead choosing to lie and say that oil companies are receiving payments to subsidize their operations. There is no truth to this.
Here’s my question. Why do Democrats feel the need to lie and continually make this claim? If you don’t feel like they are lying, please explain how they are not.
*If oil companies are engaging in operations outside of oil and gas exploration and production that does receive subsidies, I am not counting that. For example, if Chevron has a solar unit and receives subsidies for that, it is not a subsidy to an oil company.
Not buying your narrow definition of what a subsidy is. If oil companies receive tax breaks that are not extended to other industries, that is a subsidy.
Fine with me. I’m not narrowing the definition of subsidy to exclude tax breaks that no other company receives. First, I will state, they do not receive, like Claire McCaskill has undoubtedly lied about, taxpayer checks. Second, they do not receive tax breaks that other industries are not getting.
Manufacturing tax deduction: all manufacturing companies receive it.
Cost Depletion: identical in form and substance to all Depletion, Depreciation, and Amortization offered to every company in every industry.
Intangible Drilling Costs: not a subsidy in any possible meaning of the word. At worst, it is simply a timing issue on taxes that ultimately increases taxes paid by the industry.
Depletion Allowance: The only thing that can ever be considered a subsidy, and that is only under select instances. The problem of course is that only individuals and very small companies receive it. Large oil companies use cost depletion.
‘intangible drilling cost deduction’, ‘enhanced oil recovery credit’, ‘oil depletion allowance’. None of these exist, which is why Republicans are fighting so hard to keep them.
sub·si·dy
/ˈsʌbsɪdi/
–noun, plural -dies.
1.
a direct pecuniary aid furnished by a government to a private industrial undertaking, a charity organization, or the like.
2.
a sum paid, often in accordance with a treaty, by one government to another to secure some service in return.
3.
a grant or contribution of money.
Subsidy does NOT equal tax break. A subsidy is money SENT to someone. A tax break means money not taken AWAY from someone. Unless you are such a left wing nut job that you think that all money belongs to the government then clearly these are not the same thing.
The OP is overstating his case. It is true that many of the things regularly identified as oil subsides are more properly termed fossil fuel subsidies, since they apply to coal and gas. It is also true that some of the key subsidies, involving how foreign work and income is treated, apply generally – though they were crafted largely for the benefit of oil companies, who use close relationships with foreign governments like Saudi Arabia to have their operations classified in such a way as to take maximum advantage of those provisions.
But some tax code and R&D provisions clearly are oil company subsidies, by any reasonable definition. Thisbill contains a good list, though some I agree are not properly termed oil company subsidies.
Oil depletion allowance does not affect big oil companies. They are not eligible for it. It affects mostly individual royalty interest owners.
Intangible Drilling Cost is not a subsidy. It affects the timing only of tax receipts. The simple fact is that if it is a benefit, it simply causes projects to have a higher present value and thus increases the amount a company would pay in taxes by having more projects get done. How does increasing taxes paid by an industry amount to a subsidy?
Enhanced Oil Recovery Credit involves primarily carbon sequestration, which I would think most people would think is a good thing. Further, it is primarily applicable in low price environments. Sure, get rid of it. It is a meaningless item.
No, some tax deductions are tailored for mineral extraction such as depletion though they clearly are synonymous with depreciation of fixed assets that every company in every industry gets. That list is laughable. How is eliminating LIFO accounting for oil and gas companies possibly eliminating a subsidy. Every company in every industry can use LIFO or FIFO accounting and depending upon the price environment, one will be better than the other at a specific point in time.
How does not being double taxed on oversees operations amount to a tax subsidy when every single other industry is treated exactly the same?
You can argue that there are no oil subsidies by always arguing one of three things: (1) it’s not a subsidy because it has an analogue with other companies, because a geological feature is just like a factory for depreciation purposes; (2) it’s not a subsidy because it is too small to matter (i.e., marginal wells, ORC) etc.; or (3) it’s not a subsidy because even though it disproportionately benefits oil companies, other companies can also take advantage of it.
That’s a good exercise in identifying True Scotsmen, but it is not a serious effort to understand what Democrats are saying.
And I was talking about countries with stateowned oil and gas resources (i.e. Saudi) who reclassify royalty payments from U.S. oil and gas companies operating in their countries as income taxes which can then be written off against US taxes – basically a huge accounting fiction that we don’t have to allow if we don’t want.
The law allows royalties paid overseas to be treated as taxes paid to a foreign government. It was put in place specifically to aid oil companies. Not being a tax lawyer or an oil industry pawn, I expect that it allows the royalties to offset US taxes (i.e., a credit) rather than being treated as a deductible expense.
Hey here’s an idea, we lower taxes on oil companies but charge them for the cost of the US military that keeps shipping lanes open. Then we charge them for the externalities related to burning fossil fuels. Oh, and we lift the $75M cap on liability for oil spills. Good old free enterprise in action.
LonghornDave is the same guy that tried to argue that Goldman Sachs didn’t get bailed out because the money went to prop up AIG instead of going directly to Goldman. Apparently, as long as there’s some strictly construed definition he can utilize (“tax break” as opposed to “subsidy”) or loophole he can point to, he thinks it represents a convincing argument, when it’s actually pure sophistry.
Why shouldn’t consumers pay for the gas they use? Why should we pay higher taxes so we can have cheaper gas? Why not have everyone pay higher taxes so we can have cheaper clothes, or cheaper apples, or cheaper TV? What’s wrong with stepping aside and expecting consumers of a product to pay the market price for the product?
If poor people need help paying for gas, it would make a lot more sense just to give them a voucher they can use to buy gas. But why not let them make the choice themselves, and just give them cash they can spend on anything they like, and if they would rather spend it on something other than gas, why shouldn’t they be able to choose?
Maybe if we priced oil based on its market value, people wouldn’t guzzle it like it’s water. And then behaviors would change and other energy sources could move to the forefront.
Sounds like what every good free-market capitalist Republican would want.
IANAR, but IAAFMC, and I could buy into that (pardon the pun). I would want to see how the “market value” was calculated, though. Is there a proposal out there somewhere that doesn’t just slap some arbitrary tax on oil to offset things like ACC and military expenditures?