Free Markets, Free People

ExxonMobile


Here are a few questions for you …

Call it a little thought exercise.

If you are an industry that has gotten tax breaks related to the cost of your production since there’s been an IRS and those tax breaks are the same sort of tax breaks every other producer or manufacturer in the country gets (well, except in some cases they single your industry out for less of a break than the others) and now the Congress wants to selectively punish your industry (for whatever reason – oh, yeah, making too much money) and no other (we’re not talking across the board cuts – just “Big Oil”) by removing all such breaks, what would you do?

Linking two of the politically volatile issues of the moment, Senate Democrats say they will move forward this week with a plan that would eliminate tax breaks for big oil companies and divert the savings to offset the deficit.

Now, I’m on record for removing subsidies for all businesses, and it is argued by some that a tax break is a form of subsidy.  But only if you believe all money belongs to government.  Instead a tax break lets a company (or individual) keep more of the money it (he or she) has earned.  A subsidy, on the other hand, or at least as I define it, is a payment from government to a company (or individual) which has been taken in taxes from other companies (or individuals).  I.e. it isn’t earned.

So, back to the point – if you’re an oil company, like ExxonMobil, for instance, and you’re thinking about building a refinery, would an antagonistic government and their tax policy focused on only stripping your industry of tax breaks other industries get figure into your decision?

Well of course it would.  Why?  Because your job is to give the best possible return to your shareholders’ investment.  So you are obviously going to make a decision to build that refinery somewhere that will help fulfill that goal.  Most likely, all things being equal, tax rates, business climate and a non-hostile governmental atmosphere are going to factor heavily in that decision.

If you had the whole world from which to choose a location  – and for the most part ExxonMobil does – would you build it here given your primary goal and given the above nonsense from Congress?

I bring all this up now just to have you think about it a bit.  More – and more specifics about my point – later in the week.

~McQ

Twitter: @McQandO