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The first tax increase by the Democrats
Posted by: mcq on Thursday, January 18, 2007

This didn't take long at all:
The House of Representatives is poised Thursday to play Robin Hood with energy policy.

It aims to cut $14 billion in federal oil and gas tax breaks and other benefits over the next 10 years and give them instead to renewable-energy programs.

Such a change would represent a noticeable trim in government support for the oil and gas industry at a time when it is trying to boost domestic production. It would provide a huge boost to renewable energy industries as they try to replace fossil fuels with cleaner energy that's also domestically produced.
Note the term in bold letters - "tax breaks". What that means is the oil and gas industry, presently, is allowed to keep 14 billion dollars more of their revenue than the Democrats think they should be able to keep. So it plans on closing those "loopholes" which allow it.

Then it plans on giving these same sort of breaks to other chosen industries. So it's not about tax breaks, is it? Instead it is a misguided attempt to use the tax system, which should strictly be used to collect revenues for government operations, as a tool to control an industry.

The net result? Well even the most dim among us have come to understand that corporations don't pay taxes. Taxes are a part of the cost of goods sold (CGS) and corporations function as a collection agency. They roll any increase in taxes into the CGS and collect them at the point of sale.

So the 14 billion over 10 years will be coming out of your pocket in the form of higher prices at the gas pump and in the fuel oil and natural gas bills.

That is a given.

Other implications and ramifications include:
"If Congress imposes these additional costs on the companies, it just makes them more likely to look overseas," responds Mark Kibbe, senior tax-policy analyst for the American Petroleum Institute, a lobbying arm of the oil industry in Washington. "If you make these changes, you decrease US production, US jobs, and increase US reliance on imported oil."
Wait a minute, isn't that last point something the boys in blue have been screaming about for nigh on 6 years? So, given no real alternative fuel readily available on the near horizon, is it a smart move to do something which may curtail domestic production and thereby increase the need for foreign oil?

Why not, instead, just give the same sort of tax breaks to the renewable-energy industry? Seems to me the best of both worlds. Or is this really about ostensibly punishing the oil industry which the left has demonized over the years while slipping a 14 billion dollar stealth consumer (i.e. taxpayer) tax into the works?
 
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Comments
"So the 14 billion over 10 years will be coming out of your pocket in the form of higher prices at the gas pump and in the fuel oil and natural gas bills."

No way, it’s comming out of the pockets of fat cats and those who destroy the earth (but not me and and my minivan). YOU FASCIST!
 
Written By: T
URL: http://
Well even the most dim among us have come to understand that corporations don’t pay taxes. Taxes are a part of the cost of goods sold (CGS) and corporations function as a collection agency
While I agree with you, I know quite a few intelligent people who can’t get their head around this. No matter how many times you explain this to them, they still give you the "but they need to pay their fair share" bit.
 
Written By: wilky
URL: http://
Big Pharma is next....
 
Written By: shark
URL: http://
I don’t have the time to do the research, but if big oil is paying less taxes than other industries, I would consider that a subsidy and consider it quite accurate to call it an elimination of tax breaks. I believe this is the case, but am open to being contradicted.

If real estate agents had a special 10% tax rate compared to everyone else at 30% and you removed the special rate for real estate agents, are you raising their taxes or removing a tax subsidy, I think the latter.

Cap
 
Written By: Captin Sarcastic
URL: http://
Ahh, the smell of gridlock in the morning. So when does the part about the Dems teaching the R’s a lesson or some such begin? I feel that we, the taxpayers, are about to get schooled instead....

 
Written By: Come On, Please
URL: http://
Ahh, the smell of gridlock in the morning. So when does the part about the Dems teaching the R’s a lesson or some such begin? I feel that we, the taxpayers, are about to get schooled instead....
So you would prefer that we subsidize the alternate energy without revenue neutrality?

More borrow and spend?

 
Written By: Captin Sarcastic
URL: http://
McQ is this a "subsidy" or is this indeed a tax break? We are in favour of ending "subsidies" EVEN IF they increase prices, in the short-run.
 
Written By: Joe
URL: http://
Personally, as someone who’s livelihood depends on the oil industry, I have no real problem with rolling back the 2005 and 1986 federal subsidies given to the industry. I’m sort of fiscally liberatrian so government subsidies rub me the wrong way.

Also, I don’t feel the mistake by the Department’s Minerals Management in 1998/99 (if indeed it was a mistake) should allow producers to extract Gulf Oil indefinately without paying federal royalties regardless of the current market price.

And I’d imagine the vast majority of Americans would agree given the current market conditions. With the exception of those looking for anything they can find to sling at the new congress of course.
 
Written By: Davebo
URL: http://
"but if big oil is paying less taxes than other industries, I would consider that a subsidy"

You might "consider" it, but it isn’t true. Not paying taxes is NOT the same as getting money from taxpayers. It’s the companies’ money. They made the value and sold it to a customer for money. When they pay taxes, they are transfering this wealth to the State. When a farmer recieves a subsidy, he is taking money from the State. This is not rocket science, though you might "consider" it such.
 
Written By: T
URL: http://
You might "consider" it, but it isn’t true. Not paying taxes is NOT the same as getting money from taxpayers. It’s the companies’ money. They made the value and sold it to a customer for money. When they pay taxes, they are transfering this wealth to the State. When a farmer recieves a subsidy, he is taking money from the State. This is not rocket science, though you might "consider" it such.
Yes, there IS such a thing as a tax subsidy, no matter how much you may wish to deny it. If taxation rates are different between different KINDS of profit, the lower of the two is receiving a tax subsidy, period.

Progressive taxation itself provides tax subsidies for lower income earners and makes it up with higher income earners.

In this case, we are talking about the oil industry tax subsidy, they pay lower tax rates than other industry’s.

It is not rocket science, but as simple as it is, it seems to have gone over your head.

Look again at my example... If real estate agents had a special 10% tax rate compared to everyone else at 30% and you removed the special rate for real estate agents, are you raising their taxes or removing a tax subsidy, I think the latter.

Are you really going to suggest real estate agents in this example are not receiving a tax subsidy?

Now apply it to oil profits.

Cap
 
Written By: Captin Sarcastic
URL: http://
Here’s a concept: How about removing "tax breaks" from all industries and letting the market determine which ones win?
 
Written By: Paul
URL: http://
Look again at my example... If real estate agents had a special 10% tax rate compared to everyone else at 30% and you removed the special rate for real estate agents, are you raising their taxes or removing a tax subsidy, I think the latter.
The effect (higher prices for the consumer) is still the same
 
Written By: shark
URL: http://
shark: You and I are never going to get through to him. We are looking at it from the perspective of private property tax-suppliers (taxes are a cost), he is looking at it from the State and as a tax-consumer (taxes are income).
 
Written By: T
URL: http://
T and Shark, not necessarily... simply put IF Business A pays 45% taxes BUT business B is only paying 35% tax rate, all OTHER conditions being equal, THEN B IS receiving a subsidy. Company A and others are paying it. The removal of the subsidy will raise B’s cost, but COULD lower A’s costs. This is not simply about income to the State but who pays it and how much. Again are these subsidies or not? If they ARE I don’t care about increasing the cost to the consumer, the consumer is paying an artificially low price for a commodity. In this case it MAY be no different than many countries where rice and cooking oil are subsidized by the government. Yes, the removal makes the prices RISE, in the short-run, but we and the IMF say that the long-run gain in societal efficiency is worth the pain. So if it good enough for the Egyptian Fellagha, why not you at the gas pump? Save that we ae not Fellagha, but ARE consumers of gas.

Note I am NOT certain this is a subsidy. But if it is it is also inefficient. Further if it is designed to DECREASE dependence but in the end INCREASES it is a perverse and foolish policy. But that is a somewhat different question. So first things first, is this a subsidy?
 
Written By: Joe
URL: http://
The government doesn’t have to spend what it spends. In one scenario, the government could tax each of its 100 citizens $1 and give Firm A $100. This is a subsidy. In another scenario, Firm A could pay $100 less in taxes, and the government could spend $100 less. In the second scenario, the 100 citizens still have their dollars, and Firm A has $100 more dollars.

But in reality, Captin’s right (although not for the reasons he thinks), because Congress isn’t coupling its tax breaks with an equally large cut in spending. Congress is deficit-spending away and borrowing whatever money it needs to cover the difference, which means they’re taxing future income—not to mention other effects on the interest rate and inflation. It’s a subsidy, but the impact on taxpayers is mostly delayed (and you have to take real interest into account). In a deficit situation, a subsidy is the same as a targeted tax break, assuming they arrive at the same time.

Let’s say for a minute that Congress did enact equal-size spending cuts, however. I suppose that what you call it in this case depends on your assumptions about property. If you believe property is privately owned, then a lower tax rate coupled with a spending cut is not a subsidy; it means the money is never taken from anyone in the first place, and the government is not deciding how the money is spent by any actors in society. They’re leaving it alone.

If, on the other hand, you believe that the government leaving certain people’s property alone is tantamount to making a decision about how that money is to be spent, then it does seem to you like a subsidy. I would challenge that belief, but since this is all counterfactual, I’ll leave it for a later day.
 
Written By: OrneryWP
URL: http://
Here’s a concept: How about removing "tax breaks" from all industries and letting the market determine which ones win?

Written By: Paul
Thats just Crazy talk!
 
Written By: kyle N
URL: http://impudent.blognation.us/blog
Well Captain, maybe they are tax subsidies. However, maybe that is because oil is in fact taxed very heavily in other ways:
CNSNews.com reports House lawmakers will attempt to add language to the U.S. Tax Code that will "roll back some tax loopholes and subsidies for oil companies.”

"While the oil companies experience record profits, the federal government has been giving them a free ride," Jeff Rickert, vice president of the Apollo Alliance, charged during a news conference Tuesday.

In the most recent flap over “excessive” profits, ExxonMobil reported paying over $26 Billion in federal, state, and local taxes in the third quarter alone – roughly two and a half times what they made in net profits.

Income taxes: $7.68 billion
Excise taxes: $7.76 billion
All other taxes: $10.79 billion

Total taxes remitted/paid: $26.24 billion

That has to be the most expensive “free ride” in history.
 
Written By: Lance
URL: http://asecondhandconjecture.com
to further illustrate what Joe and Cap are saying, What if everyone had to pay a $1.00/per 1000BTU energy/fuel tax, but the Congress said, Farmers would not have to pay the tax. In that case, Archer Daniels Midland, ConAgra, Dole Pinapple, and General Mills would be getting a subsidy. Sure, you can say its their money to begin with, but its still amounts to preferential treatment. I would hope that everyone on a Libertarian Blog would be against that.
 
Written By: kyle N
URL: http://impudent.blognation.us/blog
By the way, for those not "in the know," OrneryWP is me. I figure this is better than making my own post about it, even though I haven’t made an actual blog post yet.

So, in answer to McQ’s question, "Why not, instead, just give the same sort of tax breaks to the renewable-energy industry?", my answer is that while it might be sensible policy anyway, it does involve taxing everyone a bit more as long as we’re in a deficit situation (or paying off debt).

A better-targeted policy for what the House is trying to do now would be to tax gasoline itself, not domestic companies that happen to drill for and refine oil.
... Unless, that is, their ulterior goal is simply to punish domestic oil companies and favor foreign ones.
 
Written By: Bryan Pick
URL: http://www.qando.net
Here’s what I’d like to see the Democrats do regarding energy companies and taxation.

Repeal the Percentage Depletion Allowance (this will save up to 1 billion per year)

Repeal the Nonconventional Fuel Production Credit. (again, nearly a billion per year)

Repeal immediate expensing of exploration and development costs (up to a half billion a year)

Eliminate the Enhanced Oil Recovery Credit (100 million per year or so)

Eliminate accelerated depreciation allowances (over a billion per year)

These are all subsidies offered only to energy companies. And perhaps when oil was trading at $15.00 a barrel they made sense. But they are no longer required in the current market to encourage exploration and development.

Finally, correct the problem mentioned above concerning royalties on Gulf production.

 
Written By: Davebo
URL: http://
Davebo,

While we are at it could we eliminate all the taxes they pay that other industries do not? In addition how about all the ones that effect them disproportionately? See above figures.
 
Written By: Lance
URL: http://asecondhandconjecture.com
A better-targeted policy for what the House is trying to do now would be to tax gasoline itself, not domestic companies that happen to drill for and refine oil.

WHAT, ME pay a higher price at the pump via TAXES, Heaven FORFEND! No, NO, Tax Big Oil!!! The Gauging Profiteers! "What they just pass the taxes on....Lal La LA I’m NOT listening....."
... Unless, that is, their ulterior goal is simply to punish domestic oil companies and favor foreign ones.

It’s not but that may be their effect. I believe we’ve been here before in the 1980’s....Congress tried to H’ep then and basically made it MORE expensive to drill for US oil...D’Oh!
 
Written By: Joe
URL: http://
Why are we complaining about the onerous tax burden of the oil companies when we already concede that they don’t pay it, we do?

Face it, the oil industry serves as a collection agency for the government. Politicians tax consumption when they need money, think we’re driving too much or when they need a corporation to slap around. As many different taxes and royalties as that industry pays, it’s nothing more than a line on the income statement. They’ll get theirs, the politicians will pat themselves on the back and we’ll be handed the tab.
 
Written By: spongeworthy
URL: http://
The tax code (at least the income tax part and the regulations/rulings thereunder) is so larded with special provisions and favors for the oil and gas that it was once remarked to me that "they have their own Code."
 
Written By: Ugh
URL: http://
Face it, the oil industry serves as a collection agency for the government. Politicians tax consumption when they need money, think we’re driving too much or when they need a corporation to slap around. As many different taxes and royalties as that industry pays, it’s nothing more than a line on the income statement. They’ll get theirs, the politicians will pat themselves on the back and we’ll be handed the tab.
EXCEPT we pay a mark-up fee... Exxon-Mobil collects the tax AND passes along some overhead costs to the consumer, too. You want to pay Uncle Sam, Pay Uncle Sam, not pay Exxon to pay them because the intermediary will be passing along those costs, too, plus there is the effect on stock-holders and employees.
 
Written By: Joe
URL: http://
OrneryWP:
…depends on your assumptions about property. If you believe property is privately owned, then…
????

Joe:
…are these subsidies or not? If they ARE I don’t care about increasing the cost to the consumer, the consumer is paying an artificially low price for a commodity.
Consumers’ costs across the board are inflated by taxation, not artificially lowered by repeal or lowering of tax on corporations.

Also Joe:
So if it good enough for the Egyptian Fellagha, why not you at the gas pump?

This is the single most staggering question I’ve ever seen.

 
Written By: Linda Morgan
URL: http://
JOE, you are making a separate argument. Yes I would like to see all corporate taxes repealed, but since we have them, what is the reason to favor one group of industrialists over another?
 
Written By: kyle N
URL: http://impudent.blognation.us/blog
While we are at it could we eliminate all the taxes they pay that other industries do not?
Which taxes would those be Lance? Because nothing in that link mentions taxes not paid by other industries.
 
Written By: Davebo
URL: http://
Here’s what I’d like to see the Democrats do regarding energy companies and taxation.
Hey Davebo ... what I’d like to see you do is produce a cite for the quote you’ve attributed to me.

Produce it.

Until then, I’m not really interested in what you’d like to see.

 
Written By: McQ
URL: http://www.qando.net/blog
Ahh, the smell of gridlock in the morning. So when does the part about the Dems teaching the R’s a lesson or some such begin?
You’re mixing concepts here. Gridlock is not dependent upon teaching anyone a lesson. Gridlock also has a very specific meaning.

And finally, this little drama hasn’t played itself out completely so it’s a little early to start crying.
 
Written By: McQ
URL: http://www.qando.net/blog
McQ

Could you make some more obscure references to the quote you are referring to? Just a hint?
 
Written By: Davebo
URL: http://
Ahh, I believe this is the quote you’re avoiding. And oddly enough, you also mentioned cutting corporate subsidies which is what Congress is trying to do now, only now you complain.
Me: Where are we going to make these cuts you speak of? Paying 400,000 police to work in Iraq isn’t going to come cheap. Figure an average of 200k a year per cop in total costs at a minimum. So $80,000,000,000 per year at least.

Where do we get 80 billion a year?
McQ: Where?

Department of Education. Department of Energy. Department of Agriculture. Corporate subsidies.

Think you might find it defunding them and cutting crop and corporate subsidies?

Yeah, me too.
http://www.qando.net/details.aspx?Entry=4821

Hope that clears things up for you.
 
Written By: Davebo
URL: http://
Consumers’ costs across the board are inflated by taxation, not artificially lowered by repeal or lowering of tax on corporations.
Huh, that’s not what the crew here are saying....
So if it good enough for the Egyptian Fellagha, why not you at the gas pump?
This is the single most staggering question I’ve ever seen.
You’ve led a sheltered life then....Why is it staggering? You like YOUR subsidies but the Fellagha needs to give up his/hers? And why would that be? The fact that you live an an almost infinitely richer society doesn’t mean YOUR subsidies, if indeed they are, are any better or more just than the Egyptians, PLUS living closer to the edge of existence means when S/HE gives up their subsidies they pay an even HIGHER cost than you will. So again what is so staggering? It’s like hearing Heidi Fleiss complain about being called a "Madam", after all HER girls were $1,000 night girls, a madam has CHEAP Wh*re$...though there’s no difference between the two.
 
Written By: Joe
URL: http://
Regarding the idea that oil companies simply pass on taxes:
This is not entirely true. I wish that domestic oil companies could just pass on any taxes they run into, in the form of higher prices, less convenience and lower quality. That would be bad enough, but it’s worse than that.

One, they have to compete with foreign oil-producing firms, including those owned by such reputable characters as the governments of Venezuela, Russia and several Middle Eastern states where elites are known to fund terrorism. These firms gain a competitive edge on American firms (or, if American firms have an edge, they lose some of it) and profit by so doing. So, authoritarian states profit, American businesses lose. Fabulous, right?

And two, American oil companies can’t just raise the price as they see fit to make back those lost profits. Even though the demand for gasoline is pretty inelastic, it’s not perfectly inelastic, and oil firms do face price competition (ask OPEC how successful they’ve been at preventing cheating in their wannabe oligopoly). At the increased price American firms face to produce oil, they *will* produce less of it.
That combined with higher prices means less oil bought, and considering that oil is an input to most of the American (and global) economy, that means slowing down economic activity, particularly where people can’t profitably overcome the costs of switching to a different energy source. This is especially true of the poor, but it’s true to some extent for everybody. We’ve made plans based on the cost of oil; we’ve purchased vehicles that we can’t just dump at a moment’s notice in favor of a Prius or a Metro pass. We’ve built and purchased homes big enough to house ourselves and our kids in cold areas that need to be heated at least four months a year, or in hot areas that need AC just as long; if we’re not burning our own heating oil at home, the local power plant may be burning the oil for us. Those homes may be a considerable distance from our workplaces, meaning we need to burn some energy just to get there and back every day. The places we work and shop have budgeted for energy costs, and we’ll face increased costs there as well.

Now, it may be that taxing something like oil, the burning of which comes with some well-known—and some more controversial—negative externalities, is a better policy than taxing something like working, which is what payroll (SocSec, Medicare) and income taxes do. If you have to pay for government somehow—and I’d certainly like to pay for less government, don’t get me wrong—then taxes are going to discourage something. The question is: what to discourage? Labor? Profit? Consumer goods? Something else?
Taxing oil, in and of itself, isn’t such a bad idea; oil is known to pollute more than some alternatives, and keeping a constant demand for oil helps bankroll thugs and terrorists whose income is largely derived from oil, whether or not we buy our oil directly from them.

It’s targeting the problem poorly and doing unnecessary damage to the American economy that’s the bad idea. And that’s what the House of Representatives is preparing to vote to do.
-=-=-=-=-=-=-
Linda Morgan:
…depends on your assumptions about property. If you believe property is privately owned, then…
????
I know, I know... but just a couple weeks ago I debated with someone who believes that private property is only owned when—and to the extent that—society consents. Sometimes you have to cover your bases, y’know?
-=-=-=-=-=-=-
kyle N:
Sure, you can say its their money to begin with, but its still amounts to preferential treatment. I would hope that everyone on a Libertarian Blog would be against that.
That depends on what you’re trying to accomplish by taxation. If you’re trying to tax everything that moves at exactly the same rate because of some idea of fairness, you can do so... but considering that externalities to different activities have different values (whoever’s defining the values), why not try to tax more harmful things before taxing less harmful things?
That’s a serious question, by the way, not a rhetorical one.

Oh, and be careful with that capital L in "libertarian." We don’t fall in line with the Libertarian Party.
-=-=-=-=-=-=-
Joe:
Consumers’ costs across the board are inflated by taxation, not artificially lowered by repeal or lowering of tax on corporations.
Huh, that’s not what the crew here are saying....
Sure it is. Consumer’s costs do indeed rise when goods are taxed during production and at the point of sale. However, when government is deficit spending, cutting taxes on one firm (or group of firms) means that more taxes have to be paid in the future to make up for the expenses not being paid for now. Lowering a tax is lowering the artificial rise in costs caused by the initial taxation, but this doesn’t override the fact that when government spends money, somebody has to pay sometime.
 
Written By: Bryan Pick
URL: http://www.qando.net
Bryan I am still confused... are the things being repealed "Subsidies" or not? If so they are expendable, if they aren’t let me know...
 
Written By: Joe
URL: http://
Ahh, I believe this is the quote you’re avoiding.
Nope ... try again.
 
Written By: McQ
URL: http://www.qando.net/blog
Well, it’s the only quote of yours I can remember posting here.

And since you’re just being obtuse now, I’d guess you’re just looking for an excuse to ignore my original comment on this threat and the suggestions I made.

It’s quite likely that you have no idea what the programs I referenced are all about, so it makes sense not to comment on them I suppose.

As I mentioned, I have a direct interest in the energy industry and would be the last person to rag on big oil generally, but these issues are real and need to be addressed.
 
Written By: Davebo
URL: http://
Oops, did I say obtuse?

I meant disengenuous.

As is demostrated here and here especially.

I really apprecated the "Exactly as it is written" disclaimer.

Nothing like plausible deniability eh?
 
Written By: Davebo
URL: http://
Joe:

Yes, I’m saying that in a deficit spending country, a targeted tax break without a matching cut in spending is the same as a subsidy.
I don’t know what you mean by "expendable," though. There are consequences to suddenly increasing the taxes on a particular set of firms by tens of billions of dollars.
 
Written By: Bryan Pick
URL: http://www.qando.net
Bryan,

I agree, about everything you say there.
Which taxes would those be Lance? Because nothing in that link mentions taxes not paid by other industries.
Well, I shouldn’t have to point out that the average company does not pay 2 and a half times what they earn in taxes.

Which means you were ignoring my information because you have no idea what you are talking about. Which is fine, but then maybe you shouldn’t be acting all high and mighty about the subject or acting as if the oil industry is some particularly favored industry under our system of taxation. In fact, it is probably the least favored industry as my link demonstrates.

As a matter of fact I do know something about this. Because oil was primarily produced domestically in the past, and because taxing oil companies allowed them to pass along costs relatively easily with little competition from abroad governments began to attach special taxes to the oil industry. The big innovator there was Huey Long. This allowed Louisiana to fund massive public works and insulate the citizenry from the immediate consequences of government profligacy and mismanagement. You know, "a chicken in every pot," Huey’s favorite line. Needless to say the Socialist state of Louisiana couldn’t deliver prosperity any better than other resource based taxation schemes in your typical banana Republic. Of course he used flat fees. Later governors (I think Edwin Edwards) noticed you could tax use percentages. Revenue flooded in and we still stayed in a rut.

Of course our innovations were adopted far and wide. That is where the huge excise and other tax categories show up on their bill as opposed to the more normal income tax burden. Once again though, my figures above demonstrate quite clearly their massive tax burden compared to other companies without any need to go into even the small amount of detail I have in this comment.

To put it succinctly you are talking out of your ass, I showed your ass without this extra detail and you didn’t even notice the additional breeze, and you still after all this time haven’t been able to prove McQ said what you claimed he said. Go back, read McQ’s objection carefully and Google away. If you can’t come up with it go ahead and apologize for misrepresenting him, even if inadvertently.
 
Written By: Lance
URL: http://www.asecondhandconjecture.com
The real problem isn’t that oil companies make too much. The real problem is that there isn’t enough competition. We went from about 11 big oil companies to 5 under Clinton. 11 was barely enough.

Clinton basically grandstanded the Microsoft issue while neglecting anti-trust on just about everything else.

Add to that the extremely localized mandates on gasoline formulations and competition almost disappears at the pump as maybe 2 companies (if you’re lucky) step up to produce gas for that locality.

But this is what Democrats really want. A move toward Eurostyle socialism. Basically you get corporate monopolies or oligopolies that are heavily regulated and taxed by the government. In return, those regulations help protect the monopolies/oligopolies. You get the remaining corporate leadership heavily invested in government and vis versa.
 
Written By: jpm100
URL: http://
Well, it’s the only quote of yours I can remember posting here.

And since you’re just being obtuse now, I’d guess you’re just looking for an excuse to ignore my original comment on this threat and the suggestions I made.
Your original comment is irrelevant until you own up to fabricating a quote and trying to attribute it to me.

So here’s the deal, Davebo. Go do the research, find the quote in the proper thread and then find the cite for the quote. Until you do, that’s the last comment of yours which will stay up on this blog.
 
Written By: McQ
URL: http://www.qando.net/blog
There are consequences to suddenly increasing the taxes on a particular set of firms by tens of billions of dollars.
Yes there are... just like there are consequences for Third World consumer who find the cost of staples rising rapidly, yes I say again:
the removal makes the prices RISE, in the short-run, but we and the IMF say that the long-run gain in societal efficiency is worth the pain. So if it good enough for the Egyptian Fellagha, why not you at the gas pump?
So IF this is a subsidy we ought to let it go. Now your concern may be the Deficit, mine is the idea of ending welfare, corporate or otherwise. This may be one effort at this AND it’s good politics.
 
Written By: Joe
URL: http://
Oops, did I say obtuse?

I meant disengenuous.

As is demostrated here and here especially.

I really apprecated the "Exactly as it is written" disclaimer.

Nothing like plausible deniability eh?
Nothing like a fabricated quote, huh?

You’re a lying SOB, Davebo ... and you’re gone.
 
Written By: McQ
URL: http://www.qando.net/blog
You’re a lying SOB, Davebo ... and you’re gone.
And so the hammer comes down. Good

:)
 
Written By: capt joe
URL: http://
Joe said:
So if it good enough for the Egyptian Fellagha, why not you at the gas pump?
I said:
This is the single most staggering question I’ve ever seen.
Joe said:
You’ve led a sheltered life then....Why is it staggering?
Well, “good enough” is a stultifying standard, and the stuff of nightmares when forcibly imposed in the manner implied by the tenor of the question, or the manner by which government presumes to affect my experience at the gas pump.

But what staggers – and I make reference here to the context you’ve requoted just a few comments upthread – is the notion that what the US government forcibly does to Americans should be, in the interest of some sort of fairness, pegged to what an international regulatory body has deemed advisable to long-term Egyptian “societal efficiency” for assuring the subsistence of Fellagha.
You like YOUR subsidies but the Fellagha needs to give up his/hers? And why would that be? The fact that you live an an almost infinitely richer society doesn’t mean YOUR subsidies, if indeed they are, are any better or more just than the Egyptians, PLUS living closer to the edge of existence means when S/HE gives up their subsidies they pay an even HIGHER cost than you will.
You attribute to me here a wild array of things I’ve never said – or thought. For the record, though, I suspect I would be better off all the way around if government bodies did not selectively subsidize or otherwise tinker with the private business of individual Americans. Or Fellagha, for that matter, but that’s for him, her, or them to say.
It’s like hearing Heidi Fleiss complain about being called a "Madam", after all HER girls were $1,000 night girls, a madam has CHEAP Wh*re$...though there’s no difference between the two.
Just wow. Really. I would have guessed a difference of hundreds of dollars and supposed it warranted, but from the confines of my sheltered life, I’ll question neither your experience nor other constraints on your ability to adequately judge.
 
Written By: Linda Morgan
URL: http://
Linda,

I’ll have to agree with your supposition. Though up to this point I have no personal experience with which to attest, I can honestly say that from what I have seen $1000 does seem to hold out the chance for a far more positive experience than the less expensive services. My wife however seems to lean to the theory of Joe’s that they are all cheap wh*re$. My guess is that any suggestion that the two of us empirically test this theory will come to naught.
 
Written By: Lance
URL: http://asecondhandconjecture.com
Sorry I’ve upset you so Linda...let’s try again:
IF these are subsidies to oil companies, AND THEY MAY NOT BE;
THEN there is no difference between you and the Fellagha. You are BOTH receiving market-distorting subsidies.

Now you seem to think I am somehow attacking you, I can’t grasp why? And I still can’t grasp why my question staggered you?

Achmad pays LESS than world price for rice, subsidy, and makes his society POORER...Linda receives benefit of subsidy, makes Her Society POORER.

What is difficult to grasp about that?

What I find difficult, and I freely admit it is, is finding an answer to the question, is this a subsidy to oil companies? Just because Nancy Pelosi SAYS it is, don’t make it so.
 
Written By: Joe
URL: http://
Well Joe, you already got the answer to that from me. Do you need clarification?

There is one complication to your contention that all those who benefit from a subsidy make their society poorer by so doing. It could be that something has positive externalities (which are, by definition, not reflected in the price signal), and that a subsidy could actually correct for this. In that case, a subsidy could make the society richer.

I’m not saying that’s the case with domestically produced oil, but it could be.
 
Written By: Bryan Pick
URL: http://www.qando.net
Subsidy making a society RICHER, unlikely Bryan. And your posting seemed to focus on the issue of a deficit, too.
 
Written By: Joe
URL: http://
Perhaps unlikely, but not impossible. It depends on the costs of the subsidy and the benefits of the externality.

My post about whether or not a targeted tax break counts as a subsidy did indeed focus on the deficit, but not because it’s my only (or even my primary) "concern." I mentioned the deficit because when a government is engaging in deficit spending, a targeted tax break is indeed the same as a subsidy. When a country isn’t deficit spending, it’s not the same as a subsidy.
Whether or not it’s technically a subsidy, however, doesn’t automatically tell us whether it’s inefficient.

I’ve said this several times now, Joe. Are you really reading my posts before responding?
 
Written By: Bryan Pick
URL: http://www.qando.net
Yes I am Bryan...and a subisdy IS INHERENTLY INEFFICIENT. You’re saying, well A is a NET PROBLEM to Exxon, so B is a NET PLUS, so though B IS a subsidy it’;s not inefficient because it covers the effect of A, have I got it so far, Bryan? And B is an INEFFICIENT WAY to compensate for A, the first inefficiency. The answer is BOTH A & B must fall to the wayside.

So let the oil subsidy fall. You’ve revealed the truth to me.
 
Written By: Joe
URL: http://
Joe,

You’ve shown you can’t faithfully represent my argument. I never said "A is a net problem to Exxon" or anything like it. If you continue trying to put words in my mouth, I’m going to start ignoring you instead of giving you a fair response.
And second, you can’t back up your assertion that subsidies are all inherently inefficient. If the price signal could account for everything, you’d be right, but we know that externalities exist, so you’re not.
 
Written By: Bryan Pick
URL: http://www.qando.net
Bryan ignore away...as OrneryWP I found you something of an @rse and as a host I don’t see you doing much better.

By DEFINITION a subsidy is an inefficient way of sending market signals...it is NOT a price signal, it is a signal sent by an agency OUTSIDE the market, designed to guide the market in a certain direction. If it is contrary to the market’s otherwise move it will be wasted effort and money...if it is in a direction that the market would otherwise have chosen, it STILL comes with it’s own consequences and opportunity costs. Now this is not difficult to grasp, even by myself, why not YOURSELF?

If the price signal could account for everything, you’d be right, but we know that externalities exist, so you’re not.

We always here about ’externalities" would you care to bring them out out in this, and wouldn’t these externalities count as the "A" I mentioned? The externalities JUSTIFY the subsidy...something I don’t agree with.

 
Written By: Joe
URL: http://
Joe -

What, now you’re calling me names? For what, disagreeing with you about economics?
Just avoid name-calling, speculation about my motives, and mockery, and I have no problem with you being a guest. If you have a problem with me being a host, no one’s forcing you to stay.

The reason a subsidy may not be inefficient is because some costs and benefits are never paid for. I’m talking about externalities.

Let’s take the example of air pollution. You buy something flammable and you burn it. Let’s say, in fact, that you burn a lot of it. You then put pollutants in the air that other people breathe. Other people may not like breathing that air, and you may impose costs on them without ever having to pay for your contribution to their ill health. This is a negative externality of your behavior.
Now, let’s say for a moment that it were possible that all the people you harmed could be compensated (at a price they would agree is fair in a transaction) for the harm you’re doing them, and furthermore that the bill for those costs was paid by you when you bought and burned that flammable material in the first place. That would be more efficient, no? In that case, a tax might be more efficient than no tax.

By the same token, let’s say something has a positive externality. Say we’re in an oversimplified world in which a subsidy for drilling oil in Alaska cuts down on the profits of those who support terrorism. Perhaps, because of knowledge costs, people aren’t able to discriminate between American-produced oil and oil produced by people in countries that support terrorists, but would pay for the increased security if only they knew that buying one kind of oil contributed to terrorism and the other did not.

A subsidy for that, depending on the costs of collecting and redistributing the money, might just be less costly than the knowledge costs and/or the costs imposed by increased terrorism when people buy foreign oil. It would be very efficient indeed if everyone who enjoyed the increased security benefits paid for it in proportion to the costs that would be imposed on them by terrorists.

In other words, a subsidy that makes people pay the actual price they would pay if not for knowledge and transaction costs could potentially be efficient enough to make up for the costs of collecting and redistributing that money using coercion. The subsidy, then, would not be inefficient.

I’m not saying the U.S. government is always or even usually capable of this, but it’s to illustrate a point: subsidies are not inherently inefficient, even if they usually are. And this is coming from a person who opposes a very wide range of subsidies. You and I agree on cutting so many subsidies; why get uncivil over the details of whether all subsidies are inherently inefficient or if almost all are inefficient?
 
Written By: Bryan Pick
URL: http://www.qando.net
I don’t know WHY the incivility Bryan...I’d argue you started it with:
You’ve shown you can’t faithfully represent my argument. I never said "A is a net problem to Exxon" or anything like it. If you continue trying to put words in my mouth,
Less high horse here, Dude. I haven’t questioned your motives. I simply find this a complex issue that is confusing.

As to the rest a lot of THEORY in the argument, "Theoretically" a tax might achieve ends, but the REALITY is that taxes are not so well imposed. In fact, better to tax for SPECIFIC purposes than for anything else. Better a trading system of pollution credits and better emission standards than a tax. Simply taxes take on a life, apart from any economic issues involved, of their own.

Hence my statement we’d be better to end many taxes AND supports...we tax for reason A, but it hurts in area B, so we subsidy to compensate...The best idea is to tax all businesses equally and leave the subsidies at home.
 
Written By: Joe
URL: http://
There was no high horse, Joe. You didn’t faithfully represent my argument, and moreover, you put words in my mouth (specifically regarding benefits accruing to the oil companies themselves, a claim I didn’t make). Pointing out those facts was not uncivil in any way. Disagreeing with you, and pointing out a logical fallacy like a strawman, is not uncivil.

(Also, I know you haven’t resorted to questioning my motives in this thread; I’m just laying out the three uncivil behaviors that I have a problem with, i.e., speculating on my motives, name-calling and mockery. They’re anathema to an honest and productive debate. If you don’t trip over those, I’m more than happy to continue debating with you.)

And as for theory versus reality, you’re the one who started using words like "inherently," when it’s just not the case. I, too, am talking about reality, not just theory. And in reality, externalities exist and they come with costs and benefits. I’m highly suspicious about government using subsidies for the purposes of efficiency, and just like you I rail against lots of subsidies, but they’re not impossible—merely very difficult. A subsidy could be efficient, and perhaps we already have some that are.
Better a trading system of pollution credits and better emission standards than a tax. Simply taxes take on a life, apart from any economic issues involved, of their own.
Pollution credits and emissions standards usually involve coercion (imposition of costs), just like taxes do. It may be that they’re better than taxes, but it’s not automatic.

You claim it’s best (can I say "most efficient"?) to tax all businesses equally. While that might be the case, it faces a high bar of proof. That would basically be saying that costs of externalities are never larger than the costs of fixing them using force.
 
Written By: Bryan Pick
URL: http://www.qando.net

 
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