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MalibuGuru

Joined: 11 Nov 1993
Posts: 9299

Posted: Mon Nov 29, 2010 1:29 pm Post subject:

OK let's simplify this. I don't care what tax rate Mega-corporations pay, as long as net new jobs in America exceed population growth. That is the only formula that matters. Extreme regulation, 0% tax rate = jobs, 50% tax rate, no regulations= jobs. 35% tax rate, current regulations = slow job growth. (too much non banking regulation?) Modified Laffer Curve should include regulatory costs to businesses. (especially small business) under $100 million?

isobars

Joined: 12 Dec 1999
Posts: 20935

Posted: Mon Nov 29, 2010 1:40 pm Post subject:

mrgybe wrote:

Tax planning is totally legal and the right of every American.

It's also the legal obligation of a corporate CEO, whose prime directive is to maximize stock value.

But, of course, we know that corporations don't pay taxes; their CUSTOMERS pay them.

DanWeiss

Joined: 24 Jun 2008
Posts: 2296
Location: Connecticut, USA

Posted: Mon Nov 29, 2010 1:54 pm Post subject:

isobars wrote:

mrgybe wrote:

Tax planning is totally legal and the right of every American.

It's also the legal obligation of a corporate CEO, whose prime directive is to maximize stock value.

But, of course, we know that corporations don't pay taxes; their CUSTOMERS pay them.

The argument that the prime legal directive of a CEO of a publicly traded company is to maximize stock value was rejected the Supreme Court in the 1980s. The primary obligation of such a CEO is to follow the direction of the Board of Directors who set the goals and long term strategy for the company. But even if we accept the notion that the CEO and BoD are in sync, the legal obligations remain much more complex than maximizing stock price.

It's far more accurate to say only that stock price may be one of many factors involved in corporate decision-making and it may not be the sole, driving justification for anything affecting minority shareholder rights.

feuser

Joined: 29 Oct 2002
Posts: 1508

Posted: Mon Nov 29, 2010 5:04 pm Post subject:

mrgybe wrote:

Digging a little deeper than Mother Jones chose to reveals a rather different view. The MJ piece was copied from a Forbes article. This is what the Forbes author subsequently wrote:

"What the financial statement says is that ExxonMobil, in 2009, after a handful of deferrals, recorded a total U.S. income tax benefit (i.e., a refund) of $46 million. Next to this, it shows total non-U.S. income taxes of $15.165 billion.

My mistake was in thinking that these figures somehow reflected actual tax benefits and liabilities. So what we should have written was that ExxonMobil “recorded” no U.S. income taxes for 2009 instead of “paid.” All you re-bloggers out there, please note the clarification. Mea culpa.

And for all you commenters outraged that Exxon isn’t paying taxes in the U.S., don’t worry, it is. Our article only focused on income taxes, but it’s worth noting that the 10-k also records $7.7 billion in other taxes in the U.S. (like sales taxes) and more than $50 billion of other taxes and duties paid (I mean recorded) overseas."

For those of you that don't know, XOM makes about 90% of it's income outside the US.

Exxon, GE, Apple, Google, etc. etc are optimizing their tax position within the bounds of the law, as they should, and we all attempt to do. Justice Learned Hand said it well:

"Tax planning is totally legal and the right of every American. Over and over again courts have said that there is nothing sinister in so arranging one's affairs so as to make taxes as low as possible. Everybody does so, rich or poor, and do right, for nobody owes any public duty to pay more taxes than the law demands. Taxes are enforced exactions, not voluntary contributions."

http://finance.yahoo.com/q/ks?s=xom

This largest of all publicly traded companies nets about one third of a trillion dollars in revenue this year, enjoys a 55% quarterly earnings growth.

Of course I, the tax payer, owe them a tax refund a. because they had overpaid in 2008 and b. in 2009, they've managed to retain more of their cash outside the reach of the IRS.

My point is that they, dollar per dollar get more value while spending less than I do... somehow, your distinction between the legal and the legitimate isn't really satisfactory here.

Thanks for the clarification anyway, MrGybe.
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florian - ny22

http://www.windsurfing.kasail.com/

mac

Joined: 07 Mar 1999
Posts: 17747
Location: Berkeley, California

Posted: Mon Nov 29, 2010 10:36 pm Post subject:

Mrgybe is a bit of the wizard of ooze, eh?

Quote:

How does the protection/ subsidy provided to the petroleum industry compare to that provided to other industries?

He is such a shill for big carbon, and so well symbolizes the excesses of the oil industry. Perhaps I can compost some of his horseshit and provide a more fertile soil for some independent thought. This is at least a partial list of the ways the US taxpayers, and the environment, subsidize the profits of pig oil.
Keep in mind, it’s all about short term profits and market share, init?

Here’s one of a number of critiques of oil company subsidies that can readily be found: http://ctj.org/pdf/energy20100709.pdf
Dallas Kaphan points out the difficulty of calculating the precise amount of subsidy in this piece: http://cleantech.com/news/node/554, but cites Greenpeace in estimating the subsidies at between $15 and $35 billion a year from taxpayers. Relaxing royalties, which is done in a number of ways, is a nearly invisible way to subsidize the oil industry, and is also nearly impossible to calculate. I will give some specific examples that I am familiar with below.

SECURITY

As of 2007, 2/3 of the United States oil supply was imported. Even though only about 10% of American oil comes from the Persian Gulf, keeping that oil flowing has long been a part of our foreign policy. Here is an interesting paper that originally predated our current misadventures in Iraq and Afghanistan. This quote in particular stands out:

Quote:

Foremost among the problems with current U.S. oil policy is that the cost of protecting Gulf oil, with the U.S. insisting on a unilateral defense strategy, is too high. Despite their high dependence on Gulf oil, neither Japan nor Europe plays a major role in strategic defense of the region, and as long as its partners ante up cash for major operations like Desert Storm, the U.S. is prepared to continue to keep strategic command. Even without a crisis of Desert Storm proportions, oil from the Gulf ends up costing more than its per-barrel price because of billions in defense costs.

http://www.fpif.org/reports/us_oil_policy_in_the_middle_east

Well, the military spending is actually much more than that. Total military spending over the last ten years is about $6 trillion, including current but not future costs for the two wars. http://www.globalissues.org/article/75/world-military-spending#InContextUSmilitarybudgetvsotherUSpriorities

Now certainly only a percentage of that cost should be attributed to oil security, and if we bargained harder it would only seem fair that other countries that rely even more on the Gulf for oil should pay their share. Yet the sad fact is that the US spends 46% of the world’s military budget, and one of the main reasons is oil security.

Access to decisionmakers

With 2/3 of our oil supply imported, we are long overdue for a serious discussion in this country about energy. That discussion should be vigorous and transparent. But our current energy policy was set in secret meetings in Dick Cheney’s office. Oil company executives were party to those meetings, and the changes that occurred in the regulatory approach of the Minerals Management System led directly to the BP blow out. Following those meetings, the MMS routinely waived the more extensive reviews for oil development under the National Environmental Policy Act and turned down recommendations for remote controlled shut-off switches due to objections by oil companies. Here from the Post on those meetings:

Quote:

The document, obtained this week by The Washington Post, shows that officials from Exxon Mobil Corp., Conoco (before its merger with Phillips), Shell Oil Co. and BP America Inc. met in the White House complex with the Cheney aides who were developing a national energy policy, parts of which became law and parts of which are still being debated.

Health—

We all know from the BP Spill that crude oil is toxic to marine life. But partially burned oil, and crankcase emissions, are also toxic. Prior to regulations that required gasoline oxygenates, benzene was the second leading carcinogen exposure in the country, after cigarette smoke. Now it is the particulate matter emitted mostly from diesel emissions. The responsibility for, and the costs of control over those emissions has, of course, been shifted to other users. Those emissions not controlled end up in our lungs. A pretty clear transfer of risks, and medical costs, to non oil company share holders.

Reduced lease revenues/Sweetheart deals

California has, of course, been the center over debate over off-shore oil. Not everyone knows that the issues of control over spills, sharing of revenues, and control over emissions have been the issues in that debate. All of the land considered for leasing is, of course, public land, and the mineral resources are owned by the public. In each case, the oil industry has tried to avoid sharing the revenues, and escape any responsibility to control their emissions. Transport of oil has been a particularly contentious issue, with the State of California arguing for transport by pipeline because it nearly eliminates the risk of spills, and because it dramatically decreases emissions. The oil companies, backed by politicians of both parties, have insisted on transport by ship.
Prior to the Santa Barbara oil blow-out in 1969 and the Arab oil-embargo of 1973, development of offshore energy in this country was less controversial.

Here is an interesting article contrasting the US controversies and the Norwegian experience, by a former USGS geochemist. http://www.agiweb.org/geotimes/dec04/feature_Norway.html

http://www.eoearth.org/article/A_Brief_History_of_Offshore_Oil_Drilling?topic=50364

This second article tracks both Watt’s plans to saturate the market for leases, and the battle over royalties. Those who forget the past are doomed to repeat it, and the oil companies would like us to forget. Here is an apt observation by Frank T. Manheim on that history:

Quote:

Soon after appointment Watt sent California Governor, Edmund Brown, a rather brusque letter informing him that compromise leases off California, which had been laboriously negotiated by Cecil Andrus with local and legislative leaders and the Governor, would be restored to their original scope . He proposed massive area-wide lease sales for the Gulf of Mexico, Alaska, and the Atlantic coast, while requesting reduced budgets to manage (including environmental investigations) lease sales up to twenty times the area of his predecessor’s tracts. Area-wide sales were upheld by the courts in a multi-organization suit brought against the Alaska lease sale . Critics called the large tracts “fire sales” and “giveways”, but oil companies defended them and some independent observers who felt the system allowed more efficient planning of the exploration/exploitation process, along the lines utilized by Canada and Norway . A report to the Congress by the Office of Comptroller, General Accounting Office found merit in the area-wide leasing concept but raised eyebrows over Watt’s budget strategy.

Watt clearly understood that saturating the lease market would depress the price of the leases, and was a true believer that such resources were better in the hands of private enterprise than the government. He also made decisions on some of the most promising California reserves that maximized profit for the oil companies and minimized the revenue return to the Treasury. More than anything else, he crafted the MMS in his image, and created a contentious system that persists today.

Offshore oil production peaked at 2,000 barrels a day—10% of the US consumption. Peak royalty revenues occurred in 2008, at $8 billion.

Political efforts to benefit big oil have continued. The Deep Water Royalty Relief Act, written by Johnston and passed in 1995, exempted companies that drilled on certain leases from paying royalties. “It was not like these were a bunch of oilies getting together and deciding, ‘How can we rip off the government?’ ” says Johnston, who left Congress in 1997 and is now an American Petroleum Institute lobbyist. “These were serious policymakers figuring out how to benefit the nation.” Right. That’s why he is now API’s lobbyist.

Quote:

On Jan. 29, 2001, nine days after taking office, Bush signed an executive order creating the National Energy Policy Development Group. Within weeks, Vice President Richard B. Cheney, as chairman of the task force, began holding closed-door meetings with industry officials.
Executives from BP, Exxon-Mobil, Conoco, Shell and other companies met with the vice president and his team. Jim Ford, then director of the American Petroleum Institute, sent the panel an e-mail on March 20 outlining the industry’s legislative and policy wishes. He called for limiting regulations, reducing the backlog of drilling permits, and making it easier for energy companies to access oil and gas leases.
In its report on May 16, the task force said that drilling in the Outer Continental Shelf had an “impressive environmental record” and that state and federal regulations were interfering with exploration and production. The panel urged Bush to direct Interior Secretary Gale A. Norton to “consider economic incentives” for oil and gas firms and reduce the amount of royalties they had to pay.
Soon after, Bush signed two executive orders that tracked many points in Ford’s e-mail and adopted many of the Cheney panel’s recommendations.
Norton, and her deputy, J. Steven Griles, embraced the task force’s endorsement of more drilling. A Griles memo to the White House’s Council on Environmental Quality on Aug. 22, 2001, said Interior was “fully committed to playing a role in this effort” and had a “special interest and expertise” in expanding production
Under Clinton, categorical exclusions granted in the central and western gulf rose from three in 1997 to 795 in 2000. During the Bush administration, MMS granted an average of 650 categorical exclusions a year in the region.
The number of categorical exclusions dipped to 220 during the Obama administration’s first year. One went to BP’s Macondo well.

Of course when that well blew, and because big oil had lobbied MMS successfully to not require some additional blow out protection it had no back up, we discovered that their spill contingency plans were copied from Alaskan plans, and provided for protection of polar bears and walruses. Of course, approved by the MMS.
Transfering risk to the public.
Two weeks after BP’s Macondo well blew out in the Gulf of Mexico, the federal government’s Minerals Management Service finalized a regulation intended to control the undersea pressures that threaten deepwater drilling operations.
MMS did not write the rule. As it had dozens of times before, the agency adopted language provided by the oil industry’s trade group, the American Petroleum Institute, and incorporated it into the Federal Register…. MMS has adopted at least 78 industry-generated standards as federal regulations, American Petroleum Institute records show.

http://www.reefrelieffounders.com/drilling/2010/08/26/washington-post-how-mmss-partnership-with-industry-led-to-failure/

Coastal Erosion:

Between 1901, when drilling began in Louisiana, and the 1980s, the oil and gas industry laid tens of thousands of miles of pipelines and dredged 9,300 miles of canals in an industrial invasion of a wetland that once covered 3.2 million acres. Since the 1930s, more than a third of it has vanished, an area the size of Delaware. Each year, 15,300 acres more disappear, according to Louisiana’s Comprehensive Master Plan for a Sustainable Coast. http://www.bloomberg.com/news/2010-08-18/collapsing-louisiana-marsh-dwarfs-bp-oil-blowout-as-environmental-disaster.html

While disruption to the natural sediment supply and sea level rise are the leading causes of erosion, the massive dredging to provide access for oil development is a substantial contributing factor. http://oceanworld.tamu.edu/resources/oceanography-book/coastalerosion.htm

I could go on, but I think you get the point.

feuser

Joined: 29 Oct 2002
Posts: 1508

Posted: Tue Nov 30, 2010 12:15 pm Post subject:

stevenbard wrote:

OK let's simplify this. I don't care what tax rate Mega-corporations pay, as long as net new jobs in America exceed population growth. That is the only formula that matters.

Extreme regulation, 0% tax rate = jobs, 50% tax rate, no regulations= jobs. 35% tax rate, current regulations = slow job growth. (too much non banking regulation?) Modified Laffer Curve should include regulatory costs to businesses. (especially small business) under $100 million?

Our free-market system is supposed to allow failure and address the need for self-regulation. If it worked properly, all would be well. IMO, a commercial entity should not have to work against its own self-interests. Profit is a perfectly legitimate sole motivator, not for people but for commercial entities (that's why I have a problem with bestowing personhood i.e. free speech rights upon corporations).

Unfortunately, most of what is in the common interest to society comes at a cost to these corporations. This is where regulations come in. The job of government is to provide and enforce a framework that protects the common good without distorting the competitive playing field.

Cap and trade is an interesting solution to the problem. Regulations imposing hard limits on emissions have different effects in different circumstances and can be a real burden on individual producers.

Taxing carbon emissions introduces a real economic motivator; it supplies a metric by which desirable behavior is rewarded in the marketplace. It is a fundamentally market-oriented approach; the least heavy-handed form of regulation and the only one that rewards improvements beyond what was at some point deemed an acceptable burden.

I would really like to hear arguments against it that are non-ideological, or biased through investments in carbon-based energy.
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_________________
florian - ny22

http://www.windsurfing.kasail.com/

coboardhead

Joined: 26 Oct 2009
Posts: 4303

Posted: Tue Nov 30, 2010 6:07 pm Post subject:

Mrgybe said

Quote:

It's clear from the last two posts, and the absence of a response from Coboardhead, that no-one here can answer the question.........but still they believe that sweeping assertions based upon wafer thin knowledge is a satisfactory substitute for informed debate.

Mrgybe also said

Quote:

"There is no response to ignorance like keeping silence"

Couldn't resist that Laughing

Or I could have been out of town!

Your question had nothing to do with the point I was trying to make.

I thought we were discussing how difficult it would be to wean the US from fossil fuels to reduce carbon emissions.

Of course the petroleum industry is deeply embedded, subsidized and protected. Mac points out a number of ways.

As "uninformed" as I am I can also add the following:

The interstate system was developed, among other reasons to provide routes for trucking. Trucks and train routes often parallel. Trucks use more fuel.

City planners promoted large lot suburbs. Longer roads more fuel.

Tax breaks for big SUV's

Tax breaks for big houses

Mideast politics - do I need to elaborate?

Even with my "wafer thin" ability to understand human behavior, I know it is going to be difficult to reduce our dependence on fossil fuels with petroleum products so embedded in our economy (sweeping assertion).
I use way more than my share of cheap oil to feed my windsurf obsession.

mrgybe

Joined: 01 Jul 2008
Posts: 5180

Posted: Wed Dec 01, 2010 11:12 am Post subject:

coboardhead wrote:

Even with my "wafer thin" ability to understand human behavior, I know it is going to be difficult to reduce our dependence on fossil fuels with petroleum products so embedded in our economy (sweeping assertion).

If you had said that in your earlier post I would have completely agreed with you. Hydrocarbon based products are going to dominate our energy use for the foreseeable future. Of course we should pursue alternate sources of energy, but those will not have a significant impact for decades absent some unforessen breakthrough.

However, I took issue with what you actually said:

coboardhead wrote:

Protecting and subsidizing the petroleum industry is so ingrained in our economy that it will be very difficult to change.

That prompted my question.......in essence, does the petroleum industry enjoy greater protection or subsidy than other industries? There is no-one, I repeat, no-one on this forum who knows the answer to that question. I doubt there are more than a handful of people in this country who could answer that question with authority. To do so would require an in-depth knowledge of the tax and treaty affairs of the petroleum industry and other large scale industries.....a rare commodity.

My point is..........relying on common knowledge (i.e., an unproven premise), as the basis of an argument for change is a dangerous strategy, but one on which we increasingly rely. The derivation of "common knowledge" is the knowledge of the uneducated.....the commoner. While that derivation is centuries old, the substitution of internet searches for real knowledge, may make it more relevant than ever.

coboardhead

Joined: 26 Oct 2009
Posts: 4303

Posted: Wed Dec 01, 2010 11:34 am Post subject:

Well, this "commoner" was not arguing for change. I thought I was arguing for a deliberate, measured approach to dealing with carbon emissions rather than jumping into a cap and trade right now. Sorry, I can't find any statistics on that no matter how long I google.

boggsman1

Joined: 24 Jun 2002
Posts: 9120
Location: at a computer

Posted: Wed Dec 01, 2010 11:42 am Post subject:

One could argue that we spend $800Billion of taxpayer funds on defense, which keeps oil prices low. That is a subsidy of massive proportion. If we didnt support the Saudis the way we do, I doubt premium would be 3.50 a gallon. Why are there so few SUV's in Europe? Its a massive allocation of resources to fund our driver happy population, so we can all drive home to our palaces in the Xuburbs. BTW- "unforeseen breakthroughs" are what made this country great, dont tell Steve Jobs to stop dreaming.

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