The Financial Times [subscription] is reporting that the US is poised to become the world’s largest producer of liquid petroleum (oil and natural gas liquids):
US production of oil and related liquids such as ethane and propane was neck-and-neck with Saudi Arabia in June and again in August at about 11.5m barrels a day, according to the International Energy Agency, the watchdog backed by rich countries.
With US production continuing to boom, its output is set to exceed Saudi Arabia’s this month or next for the first time since 1991. […]
Rising oil and gas production has caused the US trade deficit in energy to shrink, and prompted a wave of investment in petrochemicals and other related industries. […] It is also having an impact on global security. Imports are expected to provide just 21 per cent of US liquid fuel consumption next year, down from 60 per cent in 2005.
The reason? Fracking. As Walter Russell Mead points out:
With productivity continuing to rise, the United States has a chance to become the single biggest producer of crude oil sometime in the near future. If you had said that a decade ago, you would’ve been laughed at and called a fool. What a difference fracking makes.
Indeed. The “peak oil” pundits were sure we were on the precipice of running out of oil. Now, it seems, the sky is indeed the limit. Which is why it makes little sense, given the state of climate science, that our President is busily engaged via the UN and other domestic agencies, in throttling back one of the most economically viable growth engines the American economy has at the moment (and for the foreseeable future).
Instead of working on a policy to limit future use of hydrocarbons, this White House should be pushing a policy that helps us safely and sustainably exploit these assets for all. Additionally, while petroleum is indeed a global commodity, this level of production would go a long way toward the promise of energy independence in time of crisis. It helps remove oil as a weapon of choice by various less than friendly states and allies of convenience.
Two winners for the US: economic growth and national security.
Instead we get an attempt to establish an new tax based on specious science.
Sort of par for the course, no pun intended.
I’ve never really been much of a Burger King fan, but guess what I’m having for lunch today?
Why? Because Burger King has given us an opportunity to point out one reason why our economy is lagging. And, as usual, it has to do with government policy. Politicians would like to play the blame game and point at corporations like Burger King moving to Canada (after a merger with Canadian based Tim Hortons) as the reason. Instead, it is the federal government’s oppressive and unprecedented corporate tax rate that is helping to keep our economy floundering by providing incentive for corporations to leave.
Megan McArdle writes a great column today. To begin with she cites a paragraph from Matt Levine that makes the point that most in the media and almost all politicians opposing the merger fail to make:
The purpose of an inversion has never been, and never could be, and never will be, “ooh, Canada has a 15 percent tax rate, and the U.S. has a 35 percent tax rate, so we can save 20 points of taxes on all our income by moving.” Instead the main purpose is always: “If we’re incorporated in the U.S., we’ll pay 35 percent taxes on our income in the U.S. and Canada and Mexico and Ireland and Bermuda and the Cayman Islands, but if we’re incorporated in Canada, we’ll pay 35 percent on our income in the U.S. but 15 percent in Canada and 30 percent in Mexico and 12.5 percent in Ireland and zero percent in Bermuda and zero percent in the Cayman Islands.”
Got it? The US government does something no other first world government does. McArdle explains:
The U.S., unlike most developed-world governments, insists on taxing the global income of its citizens and corporations that have U.S. headquarters. And because the U.S. has some of the highest tax rates in the world, especially on corporate income, this amounts to demanding that everyone who got their start here owes us taxes, forever, on anything they earn abroad.
This is a great deal for the U.S. government, which gets to collect income tax even though it’s not providing the companies sewers or roads or courts or no-knock raids on their abodes. On the other hand, it’s not a very good deal for said citizens and corporations, especially because our government has made increasingly obnoxious demands on foreign institutions to help them collect that tax. Both private citizens and corporations who have a lot of income abroad are deciding that they’d rather renounce their ties to the U.S. than deal with the expense and hassle of letting it tap into income that they have earned using some other country’s roads and sewers and police protection.
Practically speaking, global taxation is hard to enforce and loaded with bad incentives, which is why our fellow members of the Organization for Economic Cooperation and Development have moved away from global taxation of corporate income, and abandoned global taxation of personal income. If anything, the U.S. has gone in the other direction — by insisting, for instance, that foreign companies report various financial transactions with U.S. citizens to the Internal Revenue Service, and taxing foreign cost of living allowances, which makes it more expensive for companies to employ expats. On the corporate side, the Barack Obama administration has repeatedly suggested tightening up on tax deferral of foreign income and other credits, which would make it even more expensive to be a corporation based in the U.S.
So why base in the US with this being the case? Why wouldn’t any sane US based corporation be trying to find a remedy to this pernicious and oppressive tax code? In reality, this describes it rather well:
[I]t boils down to “the police kept people from sacking your first headquarters, so therefore you owe us 35 percent of everything you make, forever.” Loan sharks and protection rackets offer more reasonable terms than this.
Yes, they likely do. You know you have a problem when more and more of government begins to resemble criminal gangs. And that’s where we are headed. Instead of looking at a solution that will benefit a corporation and give them an incentive to remain and pay taxes, our government and the politicians seem bound and determined to make the corporation the bad guy with absurdly Orwellian insults like “economic patriotism” and “corporate deserters”. This, instead, should be the bottom line:
If we’re worried about inversion, then the U.S. government should follow the lead of other developed countries, and move to territorial taxation. Otherwise, we should stop complaining when people and corporations decide that they’d rather be a citizen of some more sane system somewhere else.
I’m not sure how else you interpret this “inversion” nonsense.
Burger King Worldwide Inc. is in talks to buy Canadian coffee-and-doughnut chain Tim Hortons Inc., a deal that would be structured as a so-called tax inversion and move the hamburger seller’s base to Canada.
The two sides are working on a deal that would create a new company, they said in a statement, confirming a report on the talks by The Wall Street Journal. The takeover would create the third-largest quick-service restaurant provider in the world, they said.
The point of this sort of a merger, beside the business aspect, is to move the headquarters of Burger King to a lower tax nation:
Inversion deals have been on the rise lately, and are facing stiff opposition in Washington given that they threaten to deplete U.S. government coffers. A move by Burger King to seal one is sure to intensify criticism of them, since it is such a well-known and distinctly American brand.
By moving to a lower-tax jurisdiction, inversion deals enable companies to save money on foreign earnings and cash stowed abroad, and in some cases lower their overall corporate rate. Even though many of the headline-grabbing inversion deals of late have involved European companies, Canada has also been the focal point for a number of them, given its proximity and similarity to the U.S. Canada’s federal corporate tax rate was lowered to 15% in 2012.
And surprise – Canada’s economy is picking up steam and corporations are eyeing it as a place to locate. Imagine that.
Canada’s corporate tax rate in Ontario of 26.5% (the federal rate of 15% plus Ontario’s provincial corporate tax rate of 11.5%) is considerably favorable to the American corporate tax rate of 35% thanks in large part to the conservative Canadian government led by Stephen Harper. The Harper government lowered the federal tax rate to 15% in 2012 down originally from 28% since it took office in 2006.
In fact, a recent KPMG Report, Focus on Tax, ranked Canada as the #1 country with the most business-friendly tax structure among developed countries when adding up a wide range of tax costs to businesses from statutory labor costs to harmonized sales tax. When comparing developed countries to what companies pay in the U.S.; Canada came in at 53.6%, the U.K. came in at 66.6%, and the Netherlands at 74.5% of the U.S. corporate tax burden.
Meanwhile, our politicians are trying to find a way to prevent that, because, well because they apparently think corporations work for them and exist to pay whatever tax rate they deem necessary. Of course, in a free country, this wouldn’t even be an issue. Corporations, like people, have the right to move wherever they wish. It is their call, not the government’s.
But, here that’s not the case:
Burger King’s possible merger to obtain the favorable Canadian corporate tax rate is a true reflection of the American corporate tax rate being the highest in the OECD. However, rather than taking the same stance on outright cutting the corporate tax rate as the Harper government did to keep the U.S. a competitive place to do business, President Obama calls tax inverting companies like Burger King “corporate deserters who renounce their citizenship to shield profits”. At the urging of President Obama, Congress is considering a bill to make it harder for companies to change addresses abroad. Treasury Secretary Jacob Lew called for a “new sense of economic patriotism,” asking Congress to pass curbs to inversions. The Treasury Department currently is also preparing options to deter or prevent corporate tax inversions potentially on its own.
“Corporate deserters”. “Economic patriotism”. It’s Orwellian Newspeak at its finest. Imagine anyone trying to “shield profits” from a grasping and out-of-control government. It is also another, in a long line of indicators, that this is no longer a free country in the sense we used to believe it was. It is now a country where every other entity is subservient to the needs or wants of intrusive, controlling government.
While doing a review of Rupert Darwall’s book “The Age of Global Warming”, Charles Moore does an excellent job of succinctly identifying the alarmist movement’s core origins and core identity:
The origins of warmism lie in a cocktail of ideas which includes anti-industrial nature worship, post-colonial guilt, a post-Enlightenment belief in scientists as a new priesthood of the truth, a hatred of population growth, a revulsion against the widespread increase in wealth and a belief in world government. It involves a fondness for predicting that energy supplies won’t last much longer (as early as 1909, the US National Conservation Commission reported to Congress that America’s natural gas would be gone in 25 years and its oil by the middle of the century), protest movements which involve dressing up and disappearing into woods (the Kindred of the Kibbo Kift, the Mosleyite Blackshirts who believed in reafforestation) and a dislike of the human race (The Club of Rome’s work Mankind at the Turning-Point said: “The world has cancer and the cancer is man.”).
These beliefs began to take organised, international, political form in the 1970s. One of the greatest problems, however, was that the ecologists’ attacks on economic growth were unwelcome to the nations they most idolised – the poor ones. The eternal Green paradox is that the concept of the simple, natural life appeals only to countries with tons of money. By a brilliant stroke, the founding fathers developed the concept of “sustainable development”. This meant that poor countries would not have to restrain their own growth, but could force restraint upon the rich ones. This formula was propagated at the first global environmental conference in Stockholm in 1972.
Indeed, the resulting grouping was a natural one. Eco radicals out to ‘save the world’ from evil capitalism (and man) and poor countries looking for a way to extort billions from rich countries without having to do anything of note to help themselves.
The G7 Summit in Toronto in 1988 endorsed the theory of global warming. In the same year, the Intergovernmental Panel on Climate Change was set up. The capture of the world’s elites was under way. Its high point was the Kyoto Summit in 1998, which enabled the entire world to yell at the United States for not signing up, while also exempting developing nations, such as China and India, from its rigours.
The final push, brilliantly described here by Darwall, was the Copenhagen Summit of 2009. Before it, a desperate Gordon Brown warned of “50 days to avoid catastrophe”, but the “catastrophe” came all the same. The warmists’ idea was that the global fight against carbon emissions would work only if the whole world signed up to it. Despite being ordered to by President Obama, who had just collected his Nobel Peace Prize in Oslo, the developing countries refused. The Left-wing dream that what used to be called the Third World would finally be emancipated from Western power had come true. The developing countries were perfectly happy for the West to have “the green crap”, but not to have it themselves. The Western goody-goodies were hoist by their own petard.
The UN was the natural forum for this push and the IPCC, headed by an railway engineer, the natural “scientific” instrument. We know how that story has turned out to this point. No global warming registered for 17 years and 6 months despite all the dire, but apparently scientifically groundless, predictions. The irony, of course, is it is those who have been skeptical of all of this are the one’s called “deniers”. And the alarmists have become so bankrupt and shrill that some of them are calling for the arrest of “deniers.” One supposes since the alarmist cause most closely resembles a religious cult, the call for arrest is on the grounds of heresy … or something.
Meanwhile, “green energy” – the eco radical solution to all – continues to not be ready for prime time, while fossil fuel becomes cheaper and more plentiful.
Yet somehow, the so-called “elites” have decided – based on what, one isn’t sure – that the threat to the globe is real. More irony. On the one hand, the eco radicals don’t care at all if it costs lives since they’ve been convinced for decades that it is man that’s the problem. Less of us is a “good thing” in their world. On the other hand you have the elites, aka, politicians, who see an opportunity to both expand government power and create revenue literally out of thin air. The fight is over who will get the money.
Meanwhile the reputation of science – real science – will suffer because of this very political cause and the actions of some scientists to serve it.
Scientists, Rupert Darwall complains, have been too ready to embrace the “subjectivity” of the future, and too often have a “cultural aversion to learning from the past”.
And that is a complete disservice to science. Given all of that, who are the real deniers here?
Just for an intro:
A Russian expedition ship carrying global warming scientists got stuck in ice earlier this week. Now a Chinese ice breaker sent to rescue the scientists is frozen too just miles away.
Yes friends, “global warming”, “climate change” or whatever the alarmists choose to call it next year, will be with us and with a vengeance.
You see, “if you like your insurance you can keep it” Obama has said it will be one of his highest priorities. There’s gold in that thar air. It is an as yet untapped revenue source that, well, he’s bound and determined to tap – science, or lack thereof, be damned.
Nevermind that 13 new Obama taxes go into effect this next year and will likely stunt economic growth … again. Global warming produces an entire new opportunity to gouge taxpayers “for their own good” — you know, just like ObamaCare. And, of course, the grab will be couched in language much like ObamaCare. They’ll promise the moon. They’ll deliver misery. The only institution which will benefit? Government.
What will be chipped away?
A little more of your freedom. Your liberty.
It is obviously okay now for government to just engage in bald faced lies and get away with it. Obama’s “if you like your insurance …” lie led the parade of Pinocchio awards by that renowned right-wing rag the Washington Post. Result? Nada? Penalty? Nada?
Lesson learned by the perpetrators of the lie?
Hey, it’s okay, there are no penalties and it works.
Global warming (and your wallet).
You’ve been warned.
That’s primarily what politicians seem to want to do despite protestations to the contrary by some. They’re always looking for a new “revenue stream”. And since tax payers are the only folks who actually pay taxes, they’re constantly dreaming up new ways to “access” your wallet.
Rep. Earl Blumenauer (D-Ore.) on Tuesday reintroduced legislation that would require the government to study the most practical ways of taxing drivers based on how far they drive, in order to help fund federal highway programs.
Blumenauer’s bill, H.R. 3638, would set up a Road Usage Fee Pilot Program, which he said would study mileage-based fee systems. He cast his bill as a long-term solution for funding highway programs, and proposed it along with a shorter-term plan to nearly double the gas tax, from 18.4 cents to 33.4 cents per gallon.
“As we extend the gas tax, we must also think about how to replace it with something more sustainable,” Blumenauer said Tuesday. “The best candidate would be the vehicle mile traveled fee being explored by pilot projects in Oregon and implemented there on a voluntary basis next year.”
Because, you know, taxpayers paid for the highways, taxpayers have funded the maintenance of the highways and now they should pay for the privilege of driving on them as well. So, many single moms, who can barely afford gas for the car, will likely be paying by the mile to go to work (as with most of these stupid schemes, the one’s who can afford it the least will get hit the hardest by it).
Brilliant! Aw, what the heck, they can take public transportation, huh?
And what about privacy? What business is it of government how far you drive. One assumes they’ll be able to verify your mileage somehow, no? Do you really think it will be up to you to voluntarily keep records and report to the government? Of course not. So somehow the system has to be able to track you and tally mileage.
In 2011, the Congressional Budget Office (CBO) released a study that explored how a VMT system might work. That report suggested devices could be fitted onto cars that log how far they have traveled, and these devices could be electronically read at gas stations to general tax bills for drivers.
That’s what I want … a government tracking device on my car.
Where’s Orwell when you need him?
And it has all the ear-markings of the usual failure. New York mayoral race:
Since the days of Bill Clinton and the New Democrats, it has been a totem of faith in some liberal-progressive circles that the key to lifting up the lower ranks lies in downplaying social and economic conflicts, cozying up to business interests, and tackling inequality covertly, through largely invisible subsidies such as the Earned Income Tax Credit. De Blasio, in pledging to raise taxes on the rich to finance his education programs, has challenged this formula, and turned himself into the standard-bearer for what some see as a new era of urban populism.
Yes indeed, a “new era of urban populism”, or as those who view the idea just a little differently, a new era of class warfare in which the demonized class gets robbed and the proceeds of the theft are supposedly redistributed for the benefit of the “proletariat”. It’s not like we don’t spend enough on education now. You’d think a smart mayoral candidate would consider the possibility that money isn’t the problem. But that’s too difficult and besides, when you’re supported by teachers unions, well, it’s easier to go after the rich.
And, of course, the author of this article is quite excited about it. It’s like this has never happened recently in, oh, I don’t know, France? You know … where they decided those filthy rich should pay for everything. It certainly wasn’t a matter of “urban” populism per se, but it was a matter of socialist populism – same thing. Result? The rich started moving elsewhere. Imagine that.
Of course De Blasio would have to get this past the state legislature – not likely anytime soon. And, as the author mentions, it’s not a huge tax raise so it’s likely not to get much coverage even if it is passed. But the point of course is the left never learns. Ever. They’re committed to the same failed policies and same failed solutions as they always have been.
Most remarkable is the apparent surprise they register when the predictable happens. It is like they’re geese and they wake up in a new world every day? Unfortunately we have to share the world with them and they’re making it progressively unlivable.
Reprinted from Medium.
Forget your politics for a minute. Lose the whole Democrat vs. Republican, liberal vs. conservative thing. Because this doesn’t really have anything to do with that. We’ve heard a lot this week about some IRS people improperly handling tax applications for some conservative and, oddly, Jewish groups.
If so, this shouldn’t a surprise, because it’s happened before. There were certainly allegations of it as far back as the Kennedy and Johnson Administrations, and it comprised one of the impeachment articles against Richard Nixon. Until the IRS is staffed by benevolent philosopher-kings, rather than, you know, people, IRS power abuses will continue to recur.
Even if they didn’t, ordinary run-of-the-mill IRS incompetence should be bad enough. But put aside the various GAO and inspector generals’ reports showing, for instance, that the IRS accepted 2,137 tax returns from a single address in Lansing, MI, to which they returned $3.3 million in refunds. Forget the Treasury Department investigation where IRS taxpayer question centers incorrectly answered 43% of the taxpayer questions they received. And don’t even think about poor Rachel Porcaro, the Seattle single mom who filed a tax return for $18,000, only to be told by the IRS that it was impossible to live in Seattle on that little money, whereupon the IRS demanded an additional $16,000 in taxes and penalties.
All you have to think about is how many times you or some member of your family or friends have had some sort of hassle with the IRS. Think about how you feel when you receive an envelope with the IRS eagle in the upper left-hand corner. It’s not a good feeling is it? Because you know, really, that you’re not gonna open it up and find out that you’ve won a cuddly little puppy.
The IRS is a government agency with the power to delve into the deepest minutia of your personal financial life. If they don’t like what they find they can garnish your income, confiscate your property, or jail you. If they decide you owe them more money, you can’t escape paying them. You can’t even discharge a tax bill with bankruptcy. It’s like having Ray Liotta’s character in Goodfellas in charge of taxation. “Your kid got sick? F*** you, pay me. You lost your job? F*** you, pay me.”
Ultimately, though, the problem with the IRS isn’t incompetence or malice. The problem is that we have a system of income taxation in the first place. If you tax income, you inherently give the government the power to inquire into every single aspect of your financial life. Once you’ve done that, then you automatically have a government agency with the power to destroy individuals’ lives.
So…why would you do that? There are plenty of options for governments to raise revenue. There are sales taxes,value-added taxes, excise taxes, tariffs on imports and exports, user fees, and several other methods. So, why would you intentionally create a tax system that gives the government such enormous power over individuals?
There are lots of other reasons to wonder about the efficacy of a system of income taxation, of course. The IRS estimates that simply completing a tax return costs the average taxpayer 25.5 hours and $149. If you own a small business or are self-employed, that rises to more than 97 hours and $752. That’s a lot of time and money to fill out a single form.
Also, it’s nearly impossible to prevent politicians from expanding and complicating the tax code, because an income tax allows politicians to subsidize or penalize all sorts of individual behaviors—and they do. The assumption being, apparently, that 535 people in Washington, DC, can make better decisions than you can about how to spend your money. Do you remember that Congressman from Georgia who asked the Chief of Naval Operations if sending more Marines to Guam would cause the island “to tip over and capsize”? He’s one of the guys who gets to decide how the tax code handles your income, and he’s a dolt.
Ask yourself a simple question: “If I was creating a new tax system from scratch, would I create one that allows the government to take my house, and maybe send me to jail if I make a mistake?”
If you wouldn’t, then why in the world would you want to keep one that already does?
If it’s possible for a presidential administration to use the IRS to cow his political opponents, why would you want to keep the tax system that allows it, no matter who the president is? That’s serious banana republic stuff. And if that power exists, it seems self-evident that it isinevitable that it will be exercised. Indeed, by all accounts it already has been, and more than once.
We could completely liberate ourselves from individual attention from the IRS simply by switching to a system of consumption taxation, rather than income taxation. No more individual tax returns. No more income tax withholding from paychecks. No more letters from the IRS demanding extra taxes and penalties for some minor mistake three years ago. No more giving out the details of our private financial lives to some government busybody. The government would know nothing about how much money you make or how much money you have. They’d get their money when you spent yours.
Sure, there might be some quibbling about precisely what form a consumption tax would take. Maybe we’d argue a bit, too, about how to build some progressivity into it and make it revenue neutral. But both of those things are achievable. A 23% VAT that excluded non-prepared foods, clothing, and rental housing would get us in the ballpark. In return, we’d get the government’s nose out of our personal business, get a bigger chunk of our paychecks to spend each week, and turn April 15 into just another spring day.
The benefits of eliminating the income tax and switching to some sort of consumption tax seem so clear to me. I cannot imagine why anyone, of any political persuasion, would be opposed to it.
After considering the check being written by me to the scumbags that run this joint, I’m not in a particularly good mood. They’ll waste it as we all know. There are millions, if not billions of items or programs or, well you name it, that government has no business even being near that they’re up to their rear ends in. And, as we’ve said a million times, government’s have no money … they can only tax it or borrow it. At this very moment, while they’re taking an obscene percentage of what I worked very hard to make last year, they’re planning on borrowing even more to spend on crap like this and tell us it’s “necessary.”
Anyway, this is as good as it gets today.
See you tomorrow.
Orwellian, in that his claim is as follows:
President Obama is marketing his new budget by saying it has “more than $2 in spending cuts for every $1 of new revenue.” Is this true?
In a word, no.
In fact, his spending increases and advertised spending cuts cancel each other out—leaving only a massive tax increase.
Here’s a graphical representation of the point:
Yeah, I know … big surprise.
A politician lied again.