Did you happen to catch the big oil bash-fest that occurred yesterday in Washington? It was really quite a day for the progs with all those evil oil executives summoned to the liberal throne room to testify about their “obscene profits” – must be as close to Christmas morning as it gets in Washington. Right now the Democrats are in a push to pass the “Close Big Oil Tax Loopholes Act,” which would raise their taxes by $2 billion a year by eliminating tax subsidies for the five major oil companies. So before we go any further, let me catalogue some of the quotes from our Democrat Senators just slobbering … I mean dripping! … in wealth envy rhetoric.
* Sen. Jay Rockefeller, D-W.Va.: “I think you’re out of touch, deeply profoundly out of touch and deeply and profoundly committed to sharing nothing,” Rockefeller said. “You never lose. You’ve never lost. You always prevail
* Sen. Bob Menendez, D- N.J .: “I find it hard to understand how you can come here before this committee and the American people and say, when you are projected to make $125 billion in profits this year … That somehow the loss of $2 billion a year, which means you only make $123 billion in profits, is somehow so punishing, somehow not part of shared sacrifice, somehow you need to go back at them at the pump to make up for it.”
* Sen. Bob Menendez, D- N.J .: “If the big five oil companies could just live with $123 billion in profits in 2011, they could pay their fair share in taxes, help lower the deficit and not raise the price of gasoline, and all of the savings here go directly to deficit reduction. This is not an argument about there’s other spending we’d like to do; this is about going directly to deficit reduction.
* Sen. Chuck Schumer, D- N.Y.: “Do you think that your subsidy is more important than the financial aid we give to students to go to college?”
* Sen. Claire McCaskill, D- M.O.: “There is more hot air around this building about deficit reduction than any other topic right now, and if we cannot end subsidies to the five biggest most profitable corporations in the history of the planet that come from the federal taxpayer, then I don’t think anyone should take us seriously about deficit reduction. The bottom line is this: If we can’t do this, if we can’t remove subsides from these profitable big oil companies, then I don’t know if we can ever get to the really difficult work that lies ahead.”
Now, I’m trying to noodle this one out. While I am not one for corporate welfare, I also do not believe that our government should be singling out specific industries, and particularly specific companies. By the way, let me take this moment to point out that if we had the FairTax, none of this tax subsides nonsense would even be an issue. But moving right along …. so exactly what subsidies are we talking about? Can you answer that question? What subsidies are the Democrats demanding that we get rid of? This excellent article in the American Thinker has the breakdown:
* Domestic manufacturing tax deduction — $1.7 B. This is a tax deduction given to every manufacturer in the US. Per CNN, it was “designed to keep factories in the United States.” If that deduction were eliminated for oil companies only, it would mean singling out oil companies from all other manufacturers.
* Percentage depletion allowance — $1 B. Any industry can write down a portion of the cost of its capital equipment as part of the cost of doing business. Right now, oil in the ground is treated as capital equipment. Again, this “subsidy” amounts to how the cost of doing business is defined. All companies get it, not just oil companies.
* Foreign tax credit — $850 million. Companies get credit for taxes they pay to other countries. All companies get this “subsidy,” not just oil companies. Should a company pay tax on tax? Should only oil companies pay tax on tax?
* Intangible drilling costs — $780 million. According to CNN, “[a]ll industries get to write off the costs of doing business, but they must take it over the life of an investment. The oil industry gets to take the drilling credit in the first year.” Among these four tax “breaks,” this smallest one was the only one that treated oil companies differently.
As Randall Hoven, the author of the American Thinker article, points out … the only subsidy that is specific for the oil industry is the last one for intangible drilling costs. So $3.55 billion that the Democrats want to claim are tax credits that are offered to all industries and manufacturers in the United States. But what if the Democrats get their way and raise taxes? Hoven has the figures …
* The amount of earnings not collected in taxes is about $4.3 billion per year — about 0.2% of this year’s deficit and enough to fund about 10 hours of current US government spending.
* The only tax in which the oil industry seems to get special treatment compared to other industries is intangible drilling costs. The amount of that subsidy? That would be $0.78 billion per year — enough to fund less than two hours of federal spending in 2011, and not even half the amount we are lending a foreign-owned and state-owned oil company for drilling offshore Brazil.
So what is really going on here? The Democrats know that people are screaming about the cost of gas. Now the fact of the matter here is that while the people are screaming, they’re also doing something about it. They’re consuming less. As they consume less – as the demand decreases – the supply increases. What happens with reduced demand and increased supply? Prices come down, that’s what, and that’s exactly what happened with the wholesale price of gas this week. Give the dealers the chance to replace the more expensive gas in their storage tanks with less expensive fuel and the price comes down at the pump. But before that happens the Democrats want to make sure that this price crisis doesn’t go to waste. So they haul the oil company executives to Capitol Hill and hammer them with their moronic class warfare rhetoric and lies about wanting that money to reduce our deficit.
The problem again is education. The American people are not well enough educated to see through this political rhetoric for a glimpse of the truth. But then that’s the very purpose of government control of the education process.