Oil Companies are 'Subsidized'? Think again.
For some political factions, the Liberal Left and their 'Redistribution of Wealth' mentality, Oil is the cash cow to milk and demonize (one of countless). Interesting that it only drives costs higher for every other aspect of life. Energy, as is Food, is the key to sustainable life. Both are now removed from the COLA (cost of living [inflation] allowance) formula for obvious reasons... Political Party reasons.
Sustainable energy is truly unsustainable without energy, only sustainable by costs and energy projected onto other countries, whose mining and engineering costs are tax deductions. Those 'others' who actually manufacture the products used in creating 'sustainable' energy, profit by the restrictions and regulations present in the current USA.
Political solutions of the Liberal Left, hinge on using and outrageously taxing one energy source... to subsidize their favored other, which 'consumes' vastly larger amounts of energy to sustain ...itself. In other terms, the Corn Ethanol industry, which is now described even by the EPA, as a massive, destructive element to natural habitat, a polluter, can not produce enough 'energy', to even sustain itself (even the tractors and 'cooking' facilities do Not run on Ethanol). Similar for the modern Wind Turbines that consume more energy during their full cycle of production from mining the raw materials, to the energy consumed during the multiple stages of production, to the actual full establishment of the 'system' finally generating power. A twenty year life expectancy does not help the equation. Final figures will increase costs to consumers... exponentially..
already pay an effective income tax rate of 41 percent. For the sake of comparison, the average
tax rate for other industries is 25 percent. To say the oil and gas industry doesn't pay its fair
share, is just wrong.
2. The so-called “subsidies” aren’t really subsidies in the way most people think of subsidies.
They are Not a transfer of money from the U.S. Treasury to fossil fuel companies, which is what
people envision when they hear the term “fossil fuel subsidies.” Anti-oil politicians call them
subsidies, but when you and I do our taxes, we call them “tax deductions.”
3. The “largest single tax break” — amounting to $1.7 billion per year for the oil industry — is the
manufacturer’s tax deduction that is defined in Section 199 of the IRS code, which is designed
to keep manufacturing in the U.S. It is also given to highly profitable companies like Microsoft
and Apple, and even foreign companies that operate factories in our country. Further, the
deduction for oil companies is already limited. Apple is able to take a 9 percent manufacturer’s
tax deduction, but ExxonMobil is only allowed to take a 6 percent deduction.
4. The intended purpose of Section 199 is to keep manufacturing in America. It is irrelevant
how profitable Apple might be; if there is a compelling financial advantage for them to
build a factory overseas, they will do so. This tax credit provides incentive for them to keep
manufacturing in the U.S. Likewise, ExxonMobil has access to oil fields and refineries in many
foreign countries. If they are comparing projects here and abroad, how that tax credit impacts
upon project economics will be a factor in their decision.
Many opponents of subsidies imagine that the impact
will merely be taxpayer savings, as Exxon-Mobil loses out on this tax credit.
But the impact may be loss of domestic jobs, as Exxon-Mobil shifts operations out of the U.S.
(something that tax credit was designed to prevent). The impact may be that we continue to
use just as much oil, but more of it now comes from overseas, because we placed our domestic
producers at a competitive disadvantage.
5. Repeatedly the White House and its allies have targeted the so-called tax subsidies of the oil
and gas companies - these include the manufacturer's tax credit and credits for costs of drilling
and labor, as well as overseas profits to prevent double taxation. These deductions and credits
are presently available to thousands of companies across a wide spectrum of the economy. Yet
some politicians hope to eliminate these deductions for one industry - the energy industry – at a
time when it's one of the few sectors of the economy that is healthy.
6. The reality of increasing taxes on our energy industry, is that it would actually decrease revenue
over time, cost jobs, and lower energy production here in the United States. It would ultimately
hit all consumers... in the form of higher energy prices.
7. According to a Wood Mackenzie consulting study, in the short term, new energy taxes would
generate roughly $16 billion in government revenues during the first five years; but cause
government shortfalls of $144 billion over the next 13 years, because of less capital available
to develop new energy sources. In addition, the study shows how a new tax on the oil and gas
industry, would sacrifice 170,000 direct and indirect energy jobs by 2014 and see a reduction of
domestic oil production by 700,000 barrels per day.
8. Using political trade winds to deny the energy industry the same tax credits to which every
other industry is entitled, represents very poor public policy and is the height of special interest
legislation. A tax code that has the federal government at the helm of picking winners and
losers, is a shipwreck waiting to happen and a serious threat to economic prosperity, as well as a
setback to broader, comprehensive tax reform.
9. Comprehensive reform should focus on simplifying and restructuring, rather than arbitrarily
raising taxes on cherry-picked industries. Targeting individual tax deductions outside of broader
reform is a recipe for more government spending and provides an excuse for delaying the positive
corporate tax reform we desperately need.
10. Imposing an additional tax on one of the few sectors of economy that is prosperous, growing,
and is creating American jobs is a completely wrongheaded approach. Why quash the shale
natural gas boom and the energy manufacturing renaissance that is just now establishing a
foothold in the U.S.? It makes no sense to make our energy industry and all U.S. energy
consumers a political whipping boy, at a time when the government needs to do some
responsible belt-tightening of its own.
Enjoy life in the United States of America. One Nation Under God. Freedom...