Comments on: Bush to Veto Tax Cut Repeal for Big Oil

By: Kelly

Kelly — Sat, 18 Oct 2008 19:53:35 +0000

Most of the cuts that are in question are specific to the industry - accelerated write-offs for exploration, expanded definitions of what qualifies as ‘domestic production’ and so on. I’ll put it on my list to do a further post about this.

By: Roy Wilson

Roy Wilson — Sat, 18 Oct 2008 19:45:32 +0000

What’s not made clear is “What is the nature of these tax breaks”? If the oil companies do not get any special tax breaks and pay the same corporate tax rate as any other company, how is this “special”?

By: Jim Howard

Jim Howard — Fri, 29 Feb 2008 12:13:43 +0000

When you raise taxes on a product, you get less of it.

Don’t cheer a tax increase on oil this week and then complain when gas gets more expensive next week.

By: Another Tax Geek

Another Tax Geek — Fri, 29 Feb 2008 07:19:34 +0000

Kelly, good point. To the extent that the ‘tax increase’ is repealing a narrowly targeted credit applicable only to oil, I’d support that - not to punish oil companies, but to put them on the same level as other companies. I’m generally opposed to any narrrowly targeted cut that’s industry specific.

Jim - yes, oil profits are mostly taxed twice (except for all the oil & gas LP’s out there), but this is the case for all dividend paying C Corps. Economically, it’s the consumer paying all these layers of tax anyway, it’s just collected via the corp.

BTW, microsoft still has a much greater profit margin then big oil.

By: House Votes to Repeal Big Oil Tax Cuts

House Votes to Repeal Big Oil Tax Cuts — Thu, 28 Feb 2008 18:01:57 +0000

[...] House of Representatives has voted to repeal $18 billion of tax breaks for oil and gas producers, as expected. The bill passed by a vote of [...]

By: Kelly

Kelly — Wed, 27 Feb 2008 15:26:03 +0000

Politics aside, how is that different from most consumer goods?

Notwithstanding the taxation of distributions (which is also applicable to many industries), products and services are often subject to layers of taxation.

If I buy a Diet Coke, Coke has paid tax on it and I also pay sales tax. I don’t consider that a punishment on the private sector, so I’m not sure what you’re getting at…

By: Jim Howard

Jim Howard — Wed, 27 Feb 2008 15:18:09 +0000

Kelly, keep in mind that oil company profits are taxed twice, once at the corporate level and then again when they are distributed to individuals (of which you probably are one if you have a 401 with a balanced mutual fund). This is why if the government punishes the private sector it actually costs the government money.

And of course Hillary! wants to “take” all these evil profits and use them for her pet projects. That would shut down the oil industry and throw the country into depression. But it would feel good for a while, if you are a liberal.

By: Kelly

Kelly — Wed, 27 Feb 2008 13:24:51 +0000

ATG - Couldn’t it also be argued that the original cuts were also targeted to one specific industry (oil)? Wouldn’t reducing those cuts undo a prior wrong? Just wondering.

By: Kelly

Kelly — Wed, 27 Feb 2008 13:23:59 +0000

Jim - isn’t it interesting, though, that the reverse is not true (and under pure economic theory, it would be)? When Big Oil made record breaking profits at the pumps last year, they didn’t give it back to consumers in the way of cuts.

By: Jim Howard

Jim Howard — Wed, 27 Feb 2008 11:00:10 +0000

When you tax something, you get less of it.

Prices at the pump will go up and revenue to the goverment will decline if the Bush veto is overridden.