Lars Larson: Dems want to raise taxes, blame oil companies

by Lars Larson

Could we please get some sanity back in the room when it comes to talking about tax breaks for oil companies?

You know the Congress has been talking a lot about tax breaks for oil companies. Let me give you a couple of facts.

Number one, the oil companies don’t get any tax breaks on anything that other industries don’t get. That is, they get to deduct the cost of running their businesses. That’s it, plain and simple, and yet you’ve got folks like Sen. Ron Wyden and who insist all these oil companies are getting strange tax breaks not allowed to anyone else.

Hey, radio stations get to deduct the cost of people like talk show hosts and also the cost of their transmitters and the electricity they use. It’s no different in the oil business, and Congress seems to think, at least the Democrats think, that they can raise taxes on oil companies without those taxes being passed straight on to the consumers.

You know what this really is: the Democrats have their sights set on raising taxes on Americans and handing the blame to the oil companies.

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Posted by at 01:54 | Posted in Taxes | 54 Comments |Email This Post Email This Post |Print This Post Print This Post
  • David Appell

    Oil companies do get special tax breaks: LA Times, 5/25/10: “…there is little disagreement that the industry
    received significant federal support for such deep-water drilling. Since
    the government began aggressively issuing offshore drilling permits
    under President Reagan, the industry has received tens of billions of
    dollars in tax breaks and subsidies, including exemptions from royalty
    payments — the fees due when a company extracts resources from U.S.
    government property.”

    • Founding Fathers

      How can you tell if Lars is lying?  If you see “by Lars Larson”, he’s lying.

      And Oregon Catalyst and KXL don’t care. Actually, I suppose they WANT him to lie. Which is sad.

      • David Appell

        The problem is that talk radio is rarely about telling the truth, but about selling advertising. It garners listeners by fostering outrage in its target audience, and then reassuring them that they’re right and their outrage is justified. Unfortunately it works well, all across the ideological spectrum. 

      • Capitalist Pig

        Do you do anything besides troll conservative blogs?   

  • 3H

    “Let me give you a couple of facts.” Followed closely by, “Number one, the oil companies don’t get any tax breaks on anything that other industries don’t get. ”

    So, that would mean that any tax break the Oil Companies get…  Lar’s radio station should get as well.  Right?  

    Oil companies get a Domestic Manufacturing Deduction – which allows the companies to deduct up to 9% of their domestic profits from their TAXABLE income.  I wonder if KXL gets to deduct up to 9% of their domestic profits from the taxable income?  They must, Lars said that the oil companies don’t get any tax breaks that other industries don’t get.

    There are a few more benefits that oil companies that generally other industries do not: how they can depreciate their wells, recoup the cost of intangibles, and claim royalty to foreign governments (which are not deductible) as paying taxes to foreign governments (which are deductible).

    I kinda have to wonder… when Lars talks about “facts”, does he really mean stuff he made up in his head because he was too lazy to do the research?  Or…  does he know about these and he’s just lying in the hopes no one will check on his assertion?   

  • David Appell

    > the Democrats think, that they can raise taxes on oil companies without those taxes 
    > being passed straight on to the consumers.

    This is simply untrue. There are many things a company can do other than pass increased taxes onto consumers. Foremost would be to reduce their massive cash positions, which many oil companies are currently using to buy back their stock, thus raising their stock price and so benefiting (among others) large stock holders like those in executive and director positions. 

    Likewise they can reduce their dividend payments, which also go primarily to the affluent and wealthy. 

    They can reduce executive compensation, reduce employee salaries and benefits, work harder with less and eliminate waste, fraud and abuse.

    Companies that do all these things will not have to pass increased costs onto consumers, and will be rewarded by having lower prices that in turn attract more customers.

    • Capitalist Pig

      Your level of ignorance is phenomenal.   How are the new meds working out?

  • Edwardio

    The biggest problem with getting rid of the tax breaks for oil companies is that the billions would then be turned over to big goverment politicians who are lunatics like David Appell. Global warming nit wits who are doing all the can to cause the cost of energy to soar.

    Now why would we want people like that redistributing and spending that money?

    With all of goverment incompetence getting worse the last thing we should be doing is enabling it with more revenue.

  • David Appell

    Edwardio wrote:> Global warming nit wits who are doing all the can to cause the cost of energy to soar.

    If your neighbor craps on your lawn, who should pay for its cleanup — you or him? Or would you rather just leave it there?

    Everyone (of course) wants energy to be as cheap as possible, because it is enormously beneficial. But its price should be equal to its true cost, and not just what you take out of your wallet while leaving the crap behind for everyone else to deal with.

    So, yes, the price of energy derived from fossil fuels needs to be raised to better reflect its true cost and to induce people to use other, less polluting sources.

  • David Appell

    Edwardio wrote:> With all of goverment incompetence getting worse the 
    > last thing we should be doing is enabling it with more revenue.

    Or, as corporate tax revenue is about half what it was since the decades when the U.S. had no deficits, we could apply it to deficit reduction.

  • David Appell

    Edwardio wrote:> With all of goverment incompetence getting worse the 
    > last thing we should be doing is enabling it with more revenue.

    Or, as corporate tax revenue is about half what it was since the decades when the U.S. had no deficits, we could apply it to deficit reduction.

  • David Appell

    By the way Edwardio, even without considering climate change, the use of fossil fuels costs US citizens at least $120B/yr in health costs, according to a 2009 report from the National Academy of Sciences, and 20,000 premature deaths per year. Gasoline isn’t responsible for all of that (it’s, more generally, all coal and oil usage), but just for the sake of argument it would require a fee of only $0.88/gal on gasoline, or about the rise in gas prices seen in the last 4 months ago.

     

  • David Appell

    None of you touch my level of genius or level of self education.  You’ve all been brainwashed by the corporate fascists like those from the Bush Cheney cabal.   

    • David Appell

      Can this comment be deleted? I did not write this and this person has appropriated my name.

      • David Appell

        No I didn’t…you appropriated my name!  Delete his comment because I’m the real David Appell! 

      • David Appell

        No I didn’t…you appropriated my name!  Delete his comment because I’m the real David Appell! 

  • David Appell

     No I didn’t…you appropriated my name!  Delete his comment because I’m the real David Appell! 

  • David Appell

     No I am the real David Appell…Who’s the smartest guy in the room?…Me!  Who loves himself more than anyone else on this planet?…Me!  I’m the real David Appell!  Not that phony neocon! 

  • Mark

    Who cares if they get tax breaks? The breaks are in the laws that the Dems have either passed or allowed to stay on the books…they controlled the white house and both houses. Get over it you left wingers. 

    • 3H

      Well, that’s a different question entirely.  Lars was making the claim that the oil industry doesn’t receive any tax breaks that benefit them and not other industries. That is completely false, and that is the discussion that is going on in congress now: should those tax breaks be eliminated.  

      Lars isn’t making the case that the special tax breaks should continue because they still provide a benefit to the country as a whole.  He simply claims that they don’t exist and that there isn’t even an issue to discuss.   It’s puzzling to see someone who was trained to be a journalist to be so careless and lazy in checking his facts. Perhaps that’s why he went into talk radio?  You don’t have to put any effort into double checking your assertions and you can just pretend things are as you believe them to be.

  • Rupert in Springfield

    Every time I get into this discussion with the left I am struck by two things.

    First their illogic – They start from the premise that oil companies are evil, looking out to make every dime they can. Yet when it is pointed out to them if you increase taxes on them they will simply pass it along to consumers all of a sudden they expect oil companies to be altruistic and absorb the loss.

    Second their sources – I am not saying that I know oil companies do not get special tax breaks. I don’t. However whenever I ask someone for exactly what tax breaks they are always talking about I get a nebulous answer. Could those who are all fired up about these special tax breaks actually cite them?

    • 3H

       I did: Domestic Manufacturing Deduction

      • Rupert in Springfield

        No boob, that’s not a citation. A citation means something that is verifiable. In other words a link and what part you are referencing within the article.

        • 3H

          My apologies.  I only answered the first question: “However whenever I ask someone for exactly what tax breaks they are always talking about I get a nebulous answer.”  I answered that question, I did not answer the second one asking for a citation.  Of course, I never claimed it was a citation either.  I will try and be more careful in the future and be sure to include which part of your comment I’m responding to.  Simply asking for a clarification would work wonders.   To forestall any further rage filled outbursts:How the oil industry saves $4.4B a year on taxes(please note I waited more than 13 minutes to respond – I am become less shallow by the hour)

    • 3H

       I did: Domestic Manufacturing Deduction

    • valley person

      I didn’t know everyone on the left thought exactly the same thing. First, “the left” doesn’t think of oil companies as evil, but we do look at them as trying to make every dime they can.  This after all is what capitalism is about, and what Ayn Rand and even Adam Smith celebrated. Its naive to think they have any other social purpose.

      Increasing taxes on oil companies will not affect prices one cent. They are in a commodity business, and the price is determined by the global supply and demand for crude oil, not by how much they get taxed. American oil companies do not produce enough oil in America for a tax to impact the global market one way or the other. OPEC has shown that they alone control enough production to move prices, and they do it by turning the spigot up or down.

      US oil companies could choose to produce less oil here as a consequence of higher taxes, but given the current very high crude price, its doubtful that would happen. What might happen is they would slow down on high priced production or  prospecting if and when prices dip.

      As for what special tax breaks they get, these include:
      A tax credit for preparing oil drilling sites (this is in addition to normal capital costs)
      A tax credit for drilling dry holes
      A special to the oil industry manufacturers tax break passed in 2004
      The well depletion allowance is special for them
      A refiner tax credit
      An enhanced oil recovery tax credit
      Marginal oil and gas production tax credits

      Read all about it.

      http://www.ncseonline.org/NLE/CRSreports/07March/RL33763.pdf

      • Rupert in Springfield

        Pretty close to a citation Dean. However you need to reference the specific portion within the article you are referring as a subsidy you take issue with. Relying on the reader to go through the entire article and divine what you take issue with is not a citation. This is pretty close though so I do give you some credit. Even though a lot of what you list is standard manufacturing deductions.

        • valley person

          I don’t need to do anything. You asked what tax breaks are specific to oil companies. I listed them and provided the citation that describes them. The question was not which particular subsidies I take issue with, but if you want the answer to that it is all of them.  Every single one. They don’t need them and we can no longer afford them. With the price of crude at over $100 a barrel they will produce the same amount with no tax breaks. That is the issue.

          And no, they are not standard manufacturing deductions,though there may be applications in other extractive energy industries as well. Other manufacturers do not get well depletion allowances for starters because wells are not part of their business. They don’t get tax credits for refining crude oil because they don’t refine crude oil. They don’t get enhanced recovery tax credits because they are not recovering anything. They don’t get tax breaks for dry holes.

          You asked for specifics and a citation, you got both.

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