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  • Baucus Not Ending Oil Subsidies but Implementing Tax Hikes

    Senator Max Baucus (D–MT) isn’t shy about picking winners and losers.

    Last December, he led the charge to keep in place a subsidy of $6 billion per year to the ethanol industry. Now he’s picking the oil and gas industry as losers by proposing to eliminate subsidies for big oil and using the increased revenue to subsidize a different set of political winners. Baucus would provide even more incentives for more fuel efficient vehicles and alternative energy fueling stations.

    But what Senator Baucus labels as an oil and gas subsidy is not an oil and gas subsidy. Baucus proposes removing the tax deduction under Internal Revenue Code Section 199 for oil and gas and reducing a tax credit for royalty payments U.S. companies pay to foreign governments. These policies are broadly available and are not specific tax breaks for oil gas producers. Repealing or reducing these tax deductions for the oil and gas industry would be a punitive, targeted tax hike that would likely reduce supplies and increase prices in the years ahead by discouraging investment in domestic production of oil and natural gas.

    The domestic manufacturing tax deduction that oil and gas companies receive is a general tax deduction that goes to all domestic manufacturing. Producers of clothing, roads, electricity, water, and many other goods produced in the United States are all eligible for the manufacturer’s 9 percent tax deduction. EA Sports receives the deduction to make the Madden video games. Even Hollywood and The New York Times receive the 9 percent deduction. In fact, Congress already imposed a tax hike for oil and natural gas companies by freezing the deduction at 6 percent for just that industry. Eliminating the tax deduction entirely for oil and gas would clearly be an even larger, industry-specific tax hike. If anything, Congress should make the deduction available to all domestic production activities.

    The foreign tax credit is a critical feature of the worldwide tax system that prevent the U.S. corporate income tax from double taxing and thereby further crippling the international competitiveness of U.S. companies. Foreign tax credits are not unique to the oil industry, so the Baucus proposal is just another punitive, targeted tax hike.

    Baucus’s proposal would significantly increase taxes paid by U.S. oil and gas companies competing abroad, subjecting more U.S. foreign income to double taxation and severely undermining their ability to compete abroad and grow at home. Instead, Baucus should be advancing the competitiveness of all American companies and workers by proposing to eliminate the U.S. tax on foreign source income.

    Sadly, the Montana Senator wants to use taxpayer money to invest in more fuel efficient vehicles and alternative fuel vehicle infrastructure. The press release on the Senate Finance Committee is headlined, “Baucus Unveils Plan to End Tax Breaks for Largest Oil and Gas Companies, Invest in Cleaner, Cheaper American Energy.”

    This raises the question: If it’s cheaper, why do you need taxpayer money to invest in this energy? With gas prices as high as they are, if these alternate sources of energy need the government’s crutch, there’s a good chance they’re not going to help the American consumer. Economic alternatives to gas-powered vehicles will reach the market when they’re cheaper without government intervention. Such alternatives are not new technologies, nor are they cheaper. Stop trying to force them into the marketplace.

    We need oil, and we can ramp up production quickly in areas like the western Gulf of Mexico, where production has dropped nearly one-third of a million barrels since last April. Increasing the supply of oil can help offset rising demand, and it can be a huge boon for the American economy.

    Posted in Economics [slideshow_deploy]

    13 Responses to Baucus Not Ending Oil Subsidies but Implementing Tax Hikes

    1. Stirling, Pennsylvan says:

      Mr. Baucus has bought into the lie that is the "Green Movement." The tax incentives or dis-insentives are just a tool that is used to nudge us out of the Free market system of our choice. Once the government has pushed the private sector incentive out we will have nothing but Crony Capitalism (global corporations partnered with Government) left. Your voice and vote will not mean a thing because the government will dictate your choices completely.

    2. Sandy, Richfield, UT says:

      Did all the liberals move to Montana to vote for this guy? His anti capitalist policies have been disastrous.

    3. Pingback: President Obama's Energy Policies Bankrupt Seahawk Drilling | The Foundry

    4. Leon Lundquist, Dura says:

      I just love getting 'the weeds!' I am grateful for details like this, how Progressive Socialists are actually into the Kloward Piven game and not the Energy game! It was a Crime Against Humanity to close down the San Juaquin Valley! A Crime because of the coming Food Shortages, a Crime that was exacerbated by this crazy idea of burning food instead of Petroleum! Triple cause, the unnecessary increase in Oil Prices puts a triangulation on Baucus and his Demo-crat friends, they intend to starve the poor! Wrecking the American Economy is evil, call it! It cannot do anything but cause suffering! No explanation is possible! No excuse is possible!

      If we are a Nation of Laws we must Prosecute! We must Impeach! These Demo-crats (DINOs) are a Domestic Enemy! It is proved by their acts! If folks like Baucus are not Impeached the Foreign Interest they Represent will rule very soon! American Communism will not be pleasant! It will be very bloody, and we will all be sorry that we did not act sooner. Please see the crimes! It isn't happening by accident! And it isn't the Republicans' fault! I think the Progressives are Social Engineering for failure. It cannot be lawful!

    5. Bobbie says:

      These people have to be sat down and explained detail by detail, word by word, pictures if necessary on what they (Baucus and the rest of the democrat demolition) are doing. And then, tested. They continue to punish the people for the disastrous governing they're running!? Desperately thieving more money for more control and more out of pocket "hope and change."

    6. Roger S., Mass. says:

      To quote Stirling, Pennsylvania: "Once the government has pushed the private sector incentive out we will have nothing but Crony Capitalism (global corporations partnered with Government) left. Your voice and vote will not mean a thing because the government will dictate your choices completely."

      Time to rename Senator Baucus "(Mad) Max Claw(c)us".

      Follow the money! Bet he's heavily invested in some "greenie" projects. Plus, one look at this guy tells you he loves being in charge, meaning having Power! Leon Lundquist has the right idea: Impeach! Get clowns like Claw(c)us off our backs, their hands out of our pockets!

    7. Heritage says:

      This article is junk. Why don't you say anything about the massive oil subsidies your Republican cohorts are working to protect? You are picking winners, and you have no values.

      Keep up the good work Representative Shultz.

      These oil companies are acting like spoiled brats. At a time when Americans are being asked to sacrifice middle class services the ultra rich and large corporations are getting tax subsidies and bailouts. Then when are treated like normal people and asked to sacrifice for the greater good of the country they whine like spoiled rich brats. This is abhorrent and I am repulsed by the actions of these scoundrels.

      Vote out all Republicans 2012.

    8. Robb says:

      @Heritage

      Republicans are in no way in consensus of the oil subsidizing issues, although for your sake it would be convenient to imply that. But I'll give you the benefit of the doubt and address the real issue…

      Companies like Exxon make large profits, but 42% of that is already taxed. What do they spend the rest of it on? Research and development to find more energy supplies. Do you want to have skyrocketing energy prices in the future, so EVERYONE is poor? In plus, the revenue from eliminating the big oil's tax subsidy would be enough to fund government for what, 10 hours at the current rate of spending? Corporate taxes in America are already some of the highest in the world. Did you know that when you pump gas, more money goes towards taxes than goes to refining costs and profits combined? So why single out just the oil industry? Its unconstitutional. I find it funny how you make no reference to the billions of dollars Obama lent to Petrobras in Brazil. Next time put some critical thinking into the issue and do some research before you leave ignorant comments like that.

    9. Marge Bramschreiber says:

      You have to wonder where in the world he has his money invested, because it surely cannot be in this country.

    10. RobK, MI says:

      I did not find anything in IRS Section 199 that specified that oil company's tax break was limited to 6 percent. It would be useful to have a listing of all the places in the tax code that have specific rules for oil companies, giving specific section and paragraph references. Everyone talks about these tax breaks or subsidies or penalties, but it is difficult to know who is telling the truth. Perhaps also a listing of specific tax breaks/penalties for other industries, such as agriculture, Hollywood, etc.

    11. robert says:

      Bacus is sadly what liberals produce these days. Ethanol is one the worst fuels for ROI that is in the market. It costs 1.5 gallons of fossil fuel to produce 1 gallon of ethanol. Butt I am getting to the point of letting liberals do what they want and then being there to throw them out. Liberals have produced nothing of value ever. They have had control of this country for 96 of the last 118 years and we have gone downhill faster and faster. Yes the moocher class is growing and they love the liberals who steal from workers and give to moochers. Energy controls so much of what we do and need. It is senseless not to use what we already have in this country.,

    12. Bobbie says:

      "Subsidies" has become a distorted term when it comes to "'oil." The oil industry is not the problem. Those unwilling to share truth, are.

    13. Paul Felix Schott says:

      Lord i Pray that we stay One Nation Under GOD, and United that all should be Free. May we always have Patriots like Paul Revere. To tell us the wicked are coming to dig in our pocketbook.

      Our Government needs to Lower all taxes while we still have a United States of America.

      When this Old World starts getting you down. From Pollution the cost of OIL, Heating Fuel,The Fuel you put in your Vehicles, You Electric Bills from
      cooling air conditioners and lights not to speak of the Evil. The TAX that all Governments Federal, State, County and City put on everything they can thing of.

      They are supposed to serve us. Not put a burden on its people. That they are elected to serve all the people you, not their own Pocket Books.

      The Wicked keep putting higher taxes on everything. Making it a Heavy Burden on many that are already struggling just to put food on the table.

      Too many Americans have lost their home to the tax collector or to foreclosures from the unjust bankers greed. More are out of work and lost their homes then in the GREAT DEPRESSION, in the last ten years. All Americans and many Nations need good jobs and more of them. Not more TAXES.

      All Taxes need to be lowered now while there is still time to save America.

      There is a Industry that will employ workers and is growing by more then 50% every year. There is a clear way for all up on the roof the Sun Light is free fuel from GOD. Some wicked in Government have been backing Coal, Oil, Gas and the Nuclear industries for too many years.

      These kickbacks to them were called Subsidizing Industry Technology. Most all Wise Men and smart Economist and Environmentalists call this padding their pockets and subsidizing back to the
      Stone Age.

      The best deal would be to lower Taxes for all this is not the Roman Empire.

      The Chinese Know Renewable Energy is a good thing. Most of the rest of the World is still a slave to Oil, Coal and Nuclear Power. All the Governments of the World now know it is wise to use Renewable Energy it is the Local Governments that are a little slow to learn what is best for all not just there pocket book.

      They fear people going off the grid all that tax money they will no longer be able to take from you. Wind and Solar Farms are growing all over the Earth. This could have happened years ago if the greedy wicked were stopped by the Real Good.

      The Freedom to get your own Power from the Wind and Sun, Solar Energy has been there for years. Are Libraries and Schools should have been the first to have gone Solar and Renewable Energy. And why are they not? Churches are all over the Planet. They are going to Solar Energy.

      Thank GOD for the Pioneers like John Schaeffer that Started Real Goods The first and Best catalog for Renewable Energy and Scientist Bill Young at the FSEC Florida Solar Energy Center and Monica D. Key Lindbergh for many years wrote to our legislators promoting Solar and Renewable Energy and many others.

      These Pioneers helped put Wind, Solar And Renewable Energy in the Spotlight for all the World to see.
      The Great Scientist Albert Einstein Stared it with a Dream that the day would come that all the World would use Solar Energy. His many years of work with the law of the Photoelectric Effect, and showing this to the World won him the Nobel Prize in Physics. We still do not teach this to our young.

      GOD Bless all that help tell this to the World

      All Taxes need to be lowered cut in half or there will be a lot more Poor and needy and not in just other countries. This coming year the World will see hunger like never before. More then 100 million will be sick from malnutrition going with out food. Taxing the poor and taking there Land away from them is Wicked. Very soon the Rich will become the Poor.

      If your Legislature will not lower Taxes vote them out of office and VOTE in someone that will Lower your Taxes. If your Son or Daughter was raised in a christian Home we need them in our Government as Leaders.

      United We Will Always Stand
      In GOD We Trust
      True Patriots
      GOD Bless
      and May HE Guide you all.

      The Lord’s Little Helper
      Paul Felix Schott

      P.S.
      Many a Nation have fallen from taxing their people to Death. You want Prosperity and for thing to Flourish and grow lower all taxes. You want thriving, success, or good fortune for only a few, keep over taxing all.
      Solar, Wind and Renewable Energy Freedom from OIL. The Humanitarian thing to do. Solar Energy.
      Why let the Wicked in office in our Nation if they do not believe in GOD and the Bible vote them out of office.
      United We Will Always Stand in GOD We Trust George Washington and Johann Paul Schott 1776.
      In GOD We Trust
      The United States of America’s Motto July 30, 1956.
      King David's Motto 3,000 years ago.

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