It appears the President studied economics with his textbook upside down.
He proposes to raise taxes on oil companies in order to combat high gasoline prices. Or not. Maybe his textbook was right side up and he thinks gasoline prices are too low. That would be consistent with statements by his Secretary of Energy, Steven Chu.
On Thursday, the President reiterated his call for higher taxes on oil companies. The President pretends increasing taxes is just removing oil industry subsidies. They are tax increases.
For instance, the unfair tax break that makes up nearly half of what Obama calls “subsidies” is the manufacturing tax credit. All manufacturers except the oil and gas industry get to deduct 9 percent of their revenues before calculating their tax bills. (It’s worth noting that “manufacturing” is so broadly defined that it includes newspapers and software companies in addition to producers of wind turbines and solar panels.) Though oil and gas producers get the deduction, they are singled out for a lower 6 percent deduction.
Let’s review that. The oil and gas industry gets a deduction that is only two-thirds as generous as for all other manufacturers (wind turbine and solar panel manufacturers and even The New York Times, for example), yet the deduction is called a subsidy to oil and gas. The President’s proposal does not eliminate the deduction for any other industry. So back to the tax-increase story…
When the tax increases on oil and gas companies were proposed last year, the Congressional Research Service (CRS) was asked to analyze the impact. Here is their conclusion (emphasis added):
On the one hand, the tax changes…would increase tax collections from the oil and natural gas industries and may have the effect of decreasing exploration, development, and production, while increasing prices and increasing the nation’s foreign oil dependence. These same proposals, from an alternate point of view, might be considered to be the elimination of tax preferences that have favored the oil and natural gas industries over other energy sources and made oil and gas products artificially inexpensive, with consumer costs held below the true cost of consumption, when the external costs associated with environmental costs and energy dependence, among other effects, are included.
The CRS says there are two ways of looking at the impact of the tax increases: 1) They will increase gasoline prices and dependence on foreign oil; or 2) They will and should increase gasoline prices, because gasoline is “artificially inexpensive.”
Everybody get that? There is no question about which direction gasoline prices will go if oil industry taxes are raised. They will go up—now and in the future. The real question is whether we want them to go up or not. The Obama Administration has made clear that it wants them to go up. A lot of Americans disagree.
Chu just had a "Biden Moment" where he actually let slip his true feelings… and agenda.. Sorry Mr. President, you can't pull this one back. The truth eventually comes out, since those who have to tell 1/2 truths to hide lies eventually will slip.. .
How much did the oil industry pay you to right this piece? http://www.nytimes.com/2011/02/01/business/01oil….
Since the president has said he wants to destroy almost every energy industry to one group or another, this is just part of the agenda
How much longer are we the American people going to tolerate this excessive abuse of power, fueled with lies, deceit, and a perpetual coverup by the main stream media. It is time to vote this madman out of the White House along with the do nothing Senatorial Democrats, and demand are leaders straighten out this economical mess now, no matter what any of the left wing utopian ideological morons say. We can not and should not stand any longer as a people for this careless disregard for our founding principles by those hell bent on destroying this great society, or this country will be lost forever!
Educate your family and friends on this matter and do all you can in your community to vote people in offices who are productive to American values, not environment "go green". People who are educated need to stand up and tell the truth when dealing with left wing liberals. I agree with you.
All the more reason to vote this administration out of office before they do more damage.
Obama and his Secretary of Energy, Dr. Chu, want to have our gas prices to be as high as those in Europe.
Why?
They believe that higher prices will deter fuel use and thereby reduce foreign dependence. Remember, these people do not live in the same world we do. They have never had a real job or had to struggle to pay their bills, raise a family, and fill their fuel tanks. They have government issued credit cards and the prices are what they are, ces't la vie. They do not see the costs coming out of their own pockets so the cost of goods means nothing to them.
Obama wants to take the petroleum subsidies away which will be passed to the consumer with higher prices. That means that the cost of goods being moved to market will rise as well.
I have always said the the oil industry does not get subsidies, but gets the same tax treatment as every manufacturer in America. When the President misinforms the public by calling the treatment of the oil companies under the current tax code a subsidy, the oil companies need to mount an active defense immediately, as many voters already think big oil gets special treatment. The true beneficiaries of subsidies are the green industries which cannot compete in the marketplace without said subsidies. The market always works when government stays out of the game.
Obama has to be the stupidest person to ever hold office.. so what does that make all the idiots that voted for him..
"The problems we face today exist because the people who work for a living
are outnumbered by those who vote for a living."
Can I quote nyou on that?
The Obummer administration should want gas prices to drop, that would help revive the economy more by people spending FAR, FAR less on gas and more on food, entertainment, etcetera.
Lets vote that clown out of office in November!!!!!!!!!!!!
The fraudulent traitor is adhering to his stated plan–to "fundemently transform" (destroy) our nation.
The fraudulent traitor if fulfilling his pledge to "fundamently transform" (destroy) our nation. It looks as if that he's right on target.
Let's remove the usurper and most of the Senate in November.
Let me see if I understand what the President and Mr. Chu are saying: "if you think the gas prices are too high, just wait and see what happens when we take away subsidies for those specific company and THEN slap them with a tax!!! I think I understand now . . . . we will be paying somewhere north of $6 a gallon by end of summer, our heating bills will go through the roof next fall, and all the while the Presidents says he is doing it for "our own good!"
How's this, Mr. President!!! How about you get the H*LL out of my personal business, let ME decide how to spend my hard-earned money, and you just go take yourself another vacation. At least while you are on vacation, you are not doing yet something else to the American people!!!! I think I would rather help finance four more big vacations than to see you screwing up our government to the point where it will never recover!
Can't wait for November, 2012!!! The "Silent Majority" will rise and take back control . . . . . you can count on it!!!!
All the left wing liberals environmentalists should go to a deserted island where there are not cars and manufacturing plants to pollute and take Obama with them and make him their king.
Everyday Obama proves he true intent is to destroy this nation by collapsing our economy. Oil, and energy companies, touches every part of our daily lives, not just the gas we put in our tanks. When fuel prices go up, the cost of everything goes up which means it cost us more to live our lives. The higher by cost, the less we can afford, the less the economy will prosper. The final result, the people will plead for Obama to implement total socialism where the government supplies all of our needs. Make no mistake, this is Obama final agenda. He was invented for this end to America.
David, thanks for clarifying the difference between a ‘subsidy’ and a ‘deduction.’ The rhetoric can be confusing and few people take the time to understand the tax code. As you point out, the oil and natural gas industry is already unfairly treated under the Section 199 manufacturing tax deduction. We are limited to a 6 percent deduction while all other manufacturing industries are able to claim a 9 percent deduction. Removing this and other deductions — thus increasing taxes on the oil and natural gas industry — would negatively affect the economy and lead to fewer jobs, less government revenue and less energy. Moreover, higher taxes would hurt the millions of middle-class Americans whose retirement and investment security is tied to the success of the oil and natural gas industry through mutual funds, pension funds and IRAs. If you’d like to learn more about oil industry ownership, Energy Tomorrow sister site WhoOwnsBigOil.org is worth a read.
Mark, EnergyTomorrow.org
It's plainly evident Obama does not see te bill for filling up the fleet of cars that escort him, or for the planes, incl, AF1, that he uses about every day. Nor does he see the increases in the store every week, while those of us ,on fixed incomes adjust out budgets, and forgo a trip to the store along with wondering if we can make it until the next month
If the manufacturing tax credits are only half of the "subsidies," of what does the other half consist?
Good question. The vast majority of what the president calls subsidies are not subsidies. See Nick Loris' and Curtis Dubay's piece that sorts it all out: http://www.heritage.org/research/reports/2011/05/…