Big oil gets another tax break

[brad34695]

Please read this news story. Big oil has too many friends in D.C.

http://news.yahoo.com/s/ap/20070621/ap_on_...congress_energy

[ystasino]

<div class='quotetop'>QUOTE(brad34695 @ Jun 21 2007, 02:27 PM) [snapback]465879[/snapback]</div>

Please read this news story. Big oil has too many friends in D.C.

http://news.yahoo.com/s/ap/20070621/ap_on_...congress_energy
[/b]

How is 2.9% taxation on $1 trillion profits undue burden?

[boulder_bum]

<div class='quotetop'>QUOTE(ystasino @ Jun 21 2007, 01:29 PM) [snapback]465938[/snapback]</div>

How is 2.9% taxation on $1 trillion profits undue burden?
[/b]

Yeah, what a joke, eh?

Let's see. Bush is from an oil state where he ran failed oil businesses, Condoleza Rice sat on the board at Chevron and used to have an oil tanker named after her, Cheney still receives deferred compensation from Haliburton Energy Services, and now Washington politicians (primarily Republicans) are crying foul when someone proposes ending tax breaks for oil companies who are gouging American consumers.

Ahh, corruption.

[YoDaddyAlex]

the fleecing of america continues

[Bohous]

THIS link from Boston.com actually has a more in depth perspective regarding the tax proposal than the Yahoo! article.


From the article

[snip]...

On taxes, Democrats came three votes shy, 57-36, of the 60 votes needed to overcome a threatened GOP filibuster and add the massive tax package to the energy bill. It called for $32 billion in tax breaks for renewable and clean energy programs and energy conservation, all but about $3 billion paid for by oil taxes.

Republican senators contended that the nearly $29 billion in additional taxes over 10 years on major oil companies would have led to reduced production and higher gasoline prices, an argument Democrats rejected, noting the largest oil companies earned $111 billion last year

Reid said the industry stood to make $1 trillion in profits over the 10 years when the $29 billion in new oil taxes would have been collected. He expressed doubt the measure could be revived and put onto the Senate bill, but left open getting it added later, probably when Senate and House versions will be consolidated.

"It's not over," said Reid, suggesting the measure might be revived in negotiations with the House on final tax legislation.
A $16 billion tax package -- largely mirroring the priorities in the Senate legislation but smaller -- advanced from the House Ways and Means Committee on Wednesday, to be added to a House energy bill later this summer.

The tax measure marked a sharp turn from longtime congressional support of the oil industry to promoting alternative energy development and moving toward energy sources that would help deal with the growing concerns over global warming.

But Republicans said it tilted too far in favor of renewables and conservation at the expense of the oil companies.

"When you put a tax on a business it gets passed on to consumers," argued Sen. Jon Kyl, R-Ariz. "Instead of reducing gasoline prices, this bill is going to add to the cost of gasoline."

Sen. Max Baucus, D-Mont., whose Finance Committee crafted the tax package, said the incentives for renewable and alternative fuels would "help wean ourselves away from OPEC ... from these very high gas prices."

The tax changes would have channeled $11 billion over 10 years into development of renewable fuels such as ethanol, biodiesel and power from wind turbines. It provides an additional $18 billion in other tax breaks -- from tax credits to clean and renewable energy bonds -- to support improvements in energy efficiency, clean coal technology, development of gas-electric hybrid cars that could be plugged into the national power grid and other alternative energy programs.

It would have rescinded a tax break given to oil companies in 2004 that was aimed primarily at helping domestic manufacturing; increased taxes paid under an oil spill liability law; eliminated existing tax credits involving foreign oil production and imposed a new excise tax on oil produced from the Gulf of Mexico to recoup $10.7 billion in royalties the government has been unable to retrieve because of flawed oil leasing contracts issued in 1998-99

[Devil's Advocate]

FIRST - THis wasn't a tax Break! It was a block to all new taxes!! AND SECOND

just so I get your attention MORONS

AN OIL COMPANY (or any other company for that matter) HAS NEVER PAID 1$ in TAX!!!!
YOU THE CONSUMER PAY ALL THE TAXES!!! ALWAYS!!!!

[boulder_bum]

<div class='quotetop'>QUOTE(Devil's Advocate @ Jun 22 2007, 06:47 PM) [snapback]466662[/snapback]</div>

FIRST - THis wasn't a tax Break! It was a block to all new taxes!!
[/b]

Actually, part of what the Demorats disscussed was a repeal of a corportate tax rollback and a re-evaluation of royalty relief. To a large degree, the "new taxes" are only "new" in the sense that oil companies wouldn't enjoy the breaks they received previously.

I'm not even sure what you're getting at with THE REST OF YOUR POST (like the caps?).

[justifyd]

<div class='quotetop'>QUOTE(ystasino @ Jun 21 2007, 02:29 PM) [snapback]465938[/snapback]</div>

How is 2.9% taxation on $1 trillion profits undue burden?
[/b]

It's an undue burden in the same sense that most people (and I suspect you) would complain about their personal income tax going up 2.9%. Do you know anyone who actually wants to pay higher taxes? (I mean you personally, not "raise that other guy's taxes.")

<div class='quotetop'>QUOTE(Boulder Bum @ Jun 23 2007, 01:25 AM) [snapback]466779[/snapback]</div>

Actually, part of what the Demorats disscussed was a repeal of a corportate tax rollback and a re-evaluation of royalty relief. To a large degree, the "new taxes" are only "new" in the sense that oil companies wouldn't enjoy the breaks they received previously.
[/b]

Six of one and half-dozen of the other. It's essentially the same. Regardless of what it's called or how it's spun, the effective tax rate goes up.

I'm not even sure what you're getting at with THE REST OF YOUR POST (like the caps?).
[/b]

What DA was trying to point out is a common misunderstanding of economics. A lot of people fail to realize the direct relationship between the corporation and its consumers. Consequently, they don't realize that a burden levied on the corporation will ultimately be transferred to its customers, and so on all the way to the end consumer.

It's a misconception to think that the oil companies will simply settle for 3% less profit, which I sense is the common belief among those advocating this tax. In fact, the shareholders of the public companies will almost certainly insist on an increase in profit consistent with their previous "schedule".

If the oil companies could offset the tax burden through reductions in other costs, then it's certainly possible that the tax would have little or no appreciable effect on the consumer. However, this scenario might have unintended consequences that would be considered unfavorable here. R&D is one of the most costly "non-essential" expense categories, and it's quite reasonable to assume most or all of the cost savings would come from this department. And guess which department handles research into alternative fuel technologies? If such cost reductions are offset through government grants, where do you suppose the grant money will ultimately come from? (Hint: Taxes.)

More likely, the tax burden will simply be transferred to the consumer in the form of higher prices. Unlike market-driven cost increases, the tax applies "across the board" and is not subject to market forces, making it much more likely to result in price increases. (All means of gaining competitive advantage are already market-driven mechanisms fully independent of the government's "intervention." In fact, one could reasonably argue the government's cash grab actually reduces the probability that such competitive posturing will take place because it reduces the leverage the companies can use to engage in those activities.) Conspiracy theorists will cry foul at the sudden and uniform increase, but it's simply the economics of every company hit with the same cost increase at the same time.

I would also point out there is a second line of questioning worth considering: What is intrinsically wrong with the oil companies' current profit level, and why? Guessing that most tax advocates will respond, "too much" (and an arbitrary reason for why), I follow up by asking what is an acceptable level of profit, who decides it, and why?

Sorry for such a long-winded post! I hope my less-than-exhaustive explanation helps you gain a better understanding of this perspective.

- Justifyd