Friday, May 27, 2011

Even Though There ARE NO Oil Company Taxpayer Subsidies...

Barry And His Clueless Minions Continue To Make Believe So To Pander For Votes

Obama frequently says Americans “need to end our $4 billion in annual taxpayer subsidies to oil companies.” The latest Democrat bill would have repealed some $2 billion of what Senator Charles Schumer (D-NY) and others call “subsidies” and “special tax breaks” for Big Oil.

That’s baloney – shameless demagoguery that will inflict further damage on our struggling economy.
Subsidies are cash payments from government to the private sector. Money is taken from the 51 percent of Americans who still pay income taxes – and transferred by legislators and bureaucrats to companies and activities that “deserve” or “require” these wealth transfers, because the recipients perform an important service and/or could not remain in business unless subsidized with other people’s money (OPM).

The petroleum industry does not receive “subsidies” to produce oil and natural gas. It doesn’t even get “special tax breaks” or outright tax credits. What are falsely described in these terms are actually tax deductions for costs incurred by companies in the process of exploring, drilling, producing and refining the oil and natural gas that energize this nation’s economy and living standards.

These tax deductions are equivalent or similar to deductions claimed by every US business, large and small, for things like facilities depreciation, equipment, utilities, payroll, and research and development. They are intended to ensure that businesses, like individuals, recover their costs and get taxed only on their net incomes. For oil companies those deductions include:

• Geological and geophysical costs, for exploration to assess prospects prior to drilling;
• Intangible drilling costs – equipment, labor, fuel and supplies associated with drilling expensive wells;
• Expensing “tertiary injectants,” water and chemicals injected into older wells to keep them producing;
• Domestic manufacturer’s deductions of up to 6 percent of income earned from extracting oil and gas (farmers, manufacturers and other producers can deduct up to 9 percent of earned income);
• Percentage depletion allowance, allowing for gradual recovery of up-front investments in a petroleum (or iron, gold, limestone, et cetera) deposit that is gradually extracted and depleted. The allowance is not available to “integrated” companies that produce, refine and market oil.
White House, congressional and eco-activist claims that repealing these deductions will generate “billions in new revenues” reflect an abysmal grasp of basic business, economic and behavioral principles.

Legitimate tax deductions are hardly subsidies, but always remember that the Obama crony-crew has such a difficult time figuring out what taxes are that most of them disremember to pay THEIRS

Using that as a bellwether, I guess we can say that the crooks on Obama's staff who've been found to be tax cheats are simply being subsidized by the American people. Affirmative Action is one thing; even more special rules for special people is another...that's okay but legit deductions are verboten. Now I see.

1 comment:

Anonymous said...

I could argue all those points, but what about earmarks for "technical development" (e.g.Rep. Barton 2005, $50M)