Do oil companies pay their fair share?

mac · Posted: Wed Apr 04, 2012 11:28 am Post subject:

Techno--the evidence is right before your eyes. The presence of subsidies in the form of the US space program essentially created the transistor and minitiarization industry, which gave us everything from personal computers to Ipads. The subsidization of the solar industry, from those who didn't have their heads in the sand and realized that oil prices will continue to escalate as the third world becomes the second world, has brought about a similar revolution in technology, making solar collectors competitive much sooner than they would have been without such subsidy. The fact that most of that subsidy has come from China, or that Solyndra backed the wrong technology, does not alter the shifting tides of history.

jp5 · Joined: 19 May 1998 Posts: 3394 Location: OnUr6

boggsman1 · Joined: 24 Jun 2002 Posts: 9122 Location: at a computer

How bout the Internet?. D o D technology. Today....Trillions of dollars of market cap.

mrgybe · Joined: 01 Jul 2008 Posts: 5181

Exxon does not receive "subsidies". Current tax law permits it to depreciate it's investments in property, plant and equipment over a prescribed period, normally the useful life of those assets, and thus reduce its tax bill. Every other industry enjoys the same benefit. However, many in the energy sector enjoy a vastly greater benefit than that enjoyed by the industry that actually provides the bulk of our energy needs. Currently, oil and gas receives "subsidies" of about 3 cents per million BTUs. Ethanol/ bio-fuel receives $5.72 per million BTUs..........nearly 200 times that of oil and gas.

I am in favor of tax simplification and a level playing field for all industries. I am not in favor of discriminatory tax policy aimed at those companies that are successful, in favor of those which are not.

mac · Posted: Wed Apr 04, 2012 12:05 pm Post subject:

I would support elimination of subsidies for ethanol, where subsidies have not resulted in technological breakthroughs, nor are they likely to. I would also favor a carbon tax that reflects the cost of assuring energy security, a hidden cost that mrgybe doesn't call a subsidy--but is. These would be modest signals at realizing a more efficient set of market forces that begin the very slow process of turning us away from carbon and absorbing its impacts as public costs. Finally, I would favor sunsetting all subsidies, whether based on energy policy, agricultural policy, water policy, or what have you.

To cull the discussion and limit the idea of subsidy to only depreciation is sophistry of the most blatant sort.

techno900 · Joined: 28 Mar 2001 Posts: 4164

OK, OK, there are lots of government subsidies. My reference and the topic was regarding for profit business enterprises and that's where my comments were directed.

boggsman1 · Joined: 24 Jun 2002 Posts: 9122 Location: at a computer

mac · Posted: Wed Apr 04, 2012 1:19 pm Post subject:

Boggsy--would you agree with the term sophistry? Always spinning, thus the avatar gybe.

boggsman1 · Joined: 24 Jun 2002 Posts: 9122 Location: at a computer

mrgybe · Joined: 01 Jul 2008 Posts: 5181

The Domestic Manufacturing Deduction is not a subsidy. It is a deduction against pre-tax income available to all companies who manufacture a product (except that oil companies get 6%, other manufacturers get 9%). It is designed to encourage domestic manufacturing activities. It is small relative to tax depreciation. It is worth less than $2BN per annum for the entire US oil and gas business. ExxonMobil alone, has book depreciation of close to $5BN a year (tax depreciation will be somewhat different). Removing the DM deduction solely for the 5 largest oil companies, just because they are big and in the oil business, is pure discrimination. If it to be removed, do so for all manufacturers. That would be fine with me.

The elimination of a deduction for taxes already paid to foreign governments is double taxation. The US would be unique in that regard, making our companies uncompetitive in the world market.

Clearly no-one can capture the complexities of oil industry taxation in a couple of sentences.........so you can point out exceptions to your heart's content if it makes you happy. The point is, that the oil industry does not enjoy tax breaks that are disproportionate to other businesses.....and, indeed, they are far less than many. Constantly pounding them, as this administration does relentlessly, is pure political gamesmanship aimed at a poorly informed audience.