A Further Perspective
Architects of Economic Ruin
They can take our jobs, but they’ll never take… our… diet soda.
Like a delusional fast food customer who orders a triple bacon cheeseburger and smugly asks for a “diet” soda, Obama administration policies that aim to promote economic health actually threaten economic ruin for the country.
Consider the president’s insistence on cutting so-called “subsidies” for the oil and natural gas industry. The president pledges to eliminate Section 199 of the Tax Code — but for oil companies only. The section 199 manufacturer’s deduction has been a central focus in trips to Iowa, Wisconsin, and other states where he touts it as a jobs creating measure. So, is the deduction not creating oil and natural gas industry jobs? Is the president right in wanting to eliminate it for the U.S. oil and natural gas industry? According to new research, the answer is a resounding no.
A recent analysis by the World Economic Forum indicated that oil and natural gas companies, though targeted for punitive elimination of the manufacturer’s deduction, created 9 percent of all new U.S. jobs in 2011. Those included 37,000 new, direct jobs, and 111,000 indirect jobs in related service fields and contracting positions. This total of nearly 150,000 employment opportunities does not include, as most such studies do, another set of jobs for store clerks and others who are hired because of the influx of new oil industry jobs. In a year when the president is scrambling to defend his policies (to get re-elected in an “Economy Election”) his rancor against an industry creating so many jobs seems reckless, or worse.
Further, another study, by economist and University of Pennsylvania Wharton Senior Fellow Dr. Joseph Mason, uses government modeling to find the economic impact if the selected tax deductions for oil and natural gas companies are eliminated. The results aren’t pretty: 155,000 lost jobs and over $340 billion in unrealized economic output. The tax barrage on these U.S. companies highlights this administration’s fundamental misunderstanding of the way the economy grows.
As former Congressman Harold Ford Jr. (D-TN) recently pointed out on MSNBC’s “Morning Joe” program, Americans get excited about cutting edge companies like Apple, but “ExxonMobil’s a great U.S. company, as well, and we seem very shy to talk about.”
In fact, the country’s big corporations — including oil and natural gas companies — are a major driver of the economy; fueling every home and industry, creating jobs, innovating profusely and providing a large proportion of U.S. tax revenues. Moreover the federal Energy Information Administration (EIA) reports that the oil industry paid $35.7 billion in corporate income taxes in 2009, the last year for which the government has released that data. Large corporations like ExxonMobil, GE, Ford, or any other company that employs 5,000 or more typically account for 70 percent of U.S. exports. Ironically, one of the president’s major goals for economic revival has been to increase exports, something targeted tax increases would stymie. These same companies are responsible for 69 percent of private sector research and development spending, the investment which makes U.S. products and services a must-have for people around the globe. And they employ 32 percent of the workforce. But Washington “experts” don’t appreciate the impact of these major economic players.
From the disastrous passage and implementation of “Obamacare” to the refusal to reduce the corporate tax rate to a reasonable 25 percent, Washington has let down the unemployed and underemployed across the nation. Imposing higher financial demands on businesses leaves them less competitive against their international rivals, with less revenue to invest in growth opportunities, to expand operations, and, ultimately, to hire new employees. When these companies are succeeding, Americans find employment, earn money, and spend it to reinvigorate our economy.
On the other hand, obtuse policy decisions that hamper large businesses with higher federal costs push jobs overseas or eliminate them altogether. Such “leadership” is as self-delusional (but more dangerous for the country) as buying a diet soda to go with your triple bacon cheeseburger.
Letter to the Editor View all comments (53) | Leave a comment
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Vox populi| 3.20.12 @ 7:29AM
The great quesrion of the day: Is Obama just an exceptionally ignorant and stupid man or a deliberate wrecker and agent of the enemies of the US? I don't see that any other explanation for his behavior is possible.
albert constantine jr.| 3.20.12 @ 8:46AM
Is there some reason that he can't be both, or more?
Aces and Eights| 3.20.12 @ 8:56AM
President Bozo is just too stupid make these decisions himself. While he is no doubt a true believer in what he is doing, he really doesn't KNOW what he is doing. He is a puppet for global socialists, doing what he is told, mouthing words he is told to say. The real power is Ayers, Soros, et.al., his puppetmasters. Barack Obama truly is the dumbest stump in any room he enters.
SUBVET| 3.20.12 @ 10:41AM
Check this out it was posted by WND yesterday.
Bill Ayers' postman said he was introduced to a young obama a "foreign-born student" who said he'd eventually become president of the United States.
SUBVET| 3.20.12 @ 10:44AM
Sorry....http://www.wnd.com/2012/03/postman-ayers-family-put-foreigner-obama-through-school/
Aces and Eights| 3.20.12 @ 11:13AM
I read that. The fix is in. Chilling.
Aquanomics| 3.20.12 @ 10:21AM
How can you be surprised at anything the Affirmative Action Administration does?
numbatdog| 3.20.12 @ 7:56AM
It is now perfectly clear Obama has no intention of pulling the USA from it's death slide onto the failed empire trash heap.
Each time his destructive policies cause a bleat of protest from citizens, he appears somewhere and makes a soothing speech chock full of promises about being laser focused on the issue - And then does nothing.
How many times must we be fooled before we see the light? His policies, methods and priorities are so perfectly in line with marxist stratagy it can't be an accident. Worse, current revelations seem to reveal a far left plan decades in the making to put this charismatic man in high office.
The left attacks cheap oil because it means freedom for the individual and self dependency, the last thing central control Marxists want.
If America doesn't wake up and fight for it's survival as a free country, citizens will wake up to a 4 am knock on their door.
Alan| 3.20.12 @ 8:51AM
There is a solid 40% plus that will believe anything this clown says no matter how fantastic the lie is. The trick for them is to get that 40% plus into the 50% plus range and they are intentionally destroying the country to get there.
THKrupp| 3.20.12 @ 9:55AM
I have to disagree with you. People were free before oil was even a fuel. The price of oil has nothing to do with freedom or lack thereof. With these tax breaks the American citizen is subidizing an industry sector that does not need to be subsidized. It actually more marxist to subsidize oil and gas than it is to allow the free market to work. We are not in an era of $8 a barrel oil.
markenoff| 3.20.12 @ 10:27AM
So you must be all for (as I am) eliminating subsidies for ethanol and other farm products as well as subsidized loans for Solyndra etc. Not to mention the blatant disregard for bankruptcy law in the Chrysler and GM bailouts.
THKrupp| 3.20.12 @ 11:27AM
Yes
numbatdog| 3.20.12 @ 12:22PM
Fuel now means freedom as modern man cannot live without it. Control access to energy and you control the population.
However I agree with one point- stop all subsidies. Just let oil and the economy loose to do it's thing.
THKrupp| 3.20.12 @ 12:35PM
Thats a slippery slope. You could make the same arguement for health care, insurance of many different kinds, welfare benefits etc etc. Let the market decide what we will pay for fuel and the consumer will adjust as needed. We will most likely never see sub $40 dollar oil again or at least only for short periods of time when economies take a nose dive and demand dries up.
jan| 3.20.12 @ 6:46PM
You must be ignorant, oil Co's get the same tax brakes as other Co's, they pay lots of taxes, as stated in this article, guess where the tax money comes from??
THKrupp| 3.20.12 @ 9:45AM
Im not quite sure why an industry sector that has made immense profits in the last few years needs to be underwritten by the American citizen. I have nothing against the oil and gas companies. I have no qualms with their profits at all. I question why they need tax breaks. They got rid of all the tax breaks for the ethanol industry. They should do the same for the oil and gas industry. They should also do away with government supports to agriculture as well. We really need to question government support to any business entity.
Stammon| 3.20.12 @ 10:00AM
I believe it's in the unique nature of Mining as a business. In Mining, the unmined material underground has value, and if taxed as inventory will cause an undue burden on the owner. Because of this our Government allows this unmined inventory to be depreciated over time. This and other incentives encourage our energy producing companies to continue to provide our country with energy and value.
THKrupp| 3.20.12 @ 10:26AM
Ahh perhaps I dont understand. I looked up this secton of the tax code and it appears to be a 9% deduction. It doesnt seem to mention anything about taxing inventory or depreciating inventory over time. To be honest I didnt read the entire portion and merely skimmed it, so I could be missing something. Also I am not a tax expert. If I am not understanding something please educate me.
Stammon| 3.20.12 @ 11:05AM
I have not studied the tax code that Obama is referring to. The significant tax load on mined energy has always been underground inventory. If Obama needs to make the tax code more "fair" to oil and coal producers, that will be the tax load he should criticize.
markenoff| 3.20.12 @ 10:27AM
Actually they have not gotten rid of all the tax breaks for ethanol.
THKrupp| 3.20.12 @ 11:31AM
Which ones are still in place?
Jack Rafuse | 3.21.12 @ 12:27PM
For years ethanol was unique; it didn't reduce auto emissions, but did reduce auto mileage; its diversion from feedstock use raised every price for every family; it received federal and state tax subsidies as an "environmental fuel;" it was shielded by import tariffs against competition, and federal and state laws REQUIRED its use in gasoline. That was overkill by any definition. They've finally lost some subsidies and the tariff.
On your point about taking all the tax "breaks" from the oil companies, they are part of the tax code -- it's the discrimination that's bad. If those tax treatments were eliminated for every industry and company, that could be seen as just. Obama doesn't want that; in fact he wants to double some of those tax breaks for "high-tech" companies, though the oil industry is one of the highest-tech. He just hates the oil industry and wants to target unjust treatment. Even a President should not be able to do that; it's not the way the system is supposed to work here in the USA.
PolishKnight| 3.20.12 @ 10:17AM
I like bacon cheeseburgers and diet coke simply for the taste of both. If I preferred real coke, I'd order it.
Stammon| 3.20.12 @ 11:18AM
How about Mongolian Beef and Bourbon? Nice and hot with "Bird Peppers" and Jim Beam.
kwan| 3.20.12 @ 10:19AM
Obama's resume indicated that he wasn't fit to run a hot dog stand but the morons in the electorate went ahead and voted for him. His so-called qualification to be President consisted of handing out bottles of Ripple to street bums to get them to protest for this or that leftist cause. Without a doubt the entire Obama presidency is being choreographed by a cabal of Leninists, Maoists, and Stalinists whose ultimate goal is the fundamental transformation of the United States into a Totalitarian Socialist State. This shuck-n-jive community organizer is nothing more than a Judas goat whose every policy nails one more nail in our county's coffin.
jan| 3.20.12 @ 6:48PM
How right you are.
Bill Hussein O'Stalin| 3.20.12 @ 10:26AM
Kwan do!
Petronius| 3.20.12 @ 10:28AM
The Oil industry facilitates Freedom for the ordinary Americans Obama and his henchmen despise. His animus against it is not about the price at the pump or anywhere in between. Cheap gasoline allows Joe Sixpack to load his pickup and go places where Obama's control freaks cannot tell him what to do 24/7. That's His issue with oil.
Stammon| 3.20.12 @ 11:28AM
If you want a precedent on how the Left looks at "Joe Sixpack's" needs, look at the controversy over allowing snowmobiles in national parks. The Left Treehuggers wanted to ban snowmobiles, the Right "Joe Sixpacks" did not want to trudge in their snowshoes after a hard physical week at the mill. Just so you know, I have snowshoed, but never snowmobiled.
DRed| 3.20.12 @ 11:38AM
How about getting rid of special tax breaks for everyone?
Stammon| 3.20.12 @ 12:07PM
That sounds good, but how will it work? For example; In the Mining industry, when they find a valuable resource within their ownership, how do they handle the sudden increase of value in that ownership. The Government will tax it. And the mining company will be rewarded for their entrepreneurship with a big tax bill. No how is that supposed to help our economy?
Stammon| 3.20.12 @ 12:08PM
Sorry, last sentence should read: Now how is that supposed to help our economy?
THKrupp| 3.20.12 @ 12:15PM
As I said before Im not an expert, but it seems to me that this is only an issue if you are doing your books and paying taxes based on accruel method of accounting. Im most familiar with agriculture and there we look at accrual but we pay taxes based on cash basis. I would think the mining industry is similar. I own ground that has doubled in value over the last 5 years. I dont pay any increased taxes because of that. Its only when I sell the ground that I could pay capital gains.
Stammon| 3.20.12 @ 1:22PM
The Government taxes corporations on the value of their holdings. If a mining corporation thinks there is value in a piece of otherwise worthless desert, then leases it for mining and finds a billion dollars in copper there, they can be taxed on the increase in value of their stock and holdings. This depresses the urge of corporations to search for new value. So the Government has allowed a graduated tax on mining assets. They allow mining companies to depreciate their holdings over time, to encourage research and development of their assets. Because a billion dollars of undiscovered copper brings nothing to anybody. But a billion dollars of discovered copper can eventually be taxed.
Stammon| 3.20.12 @ 1:24PM
Oh, and I am a farmer. No longer doing tobacco, but just corn and beans and hay.
THKrupp| 3.20.12 @ 4:18PM
I used to be a farmer up until 2007. Corn, beans, wheat, cash hay, hogs and cattle.
Stammon| 3.20.12 @ 4:42PM
Please let me offer you my hand. We farmers understand hard work and profit. The present administration does not.
Stammon| 3.20.12 @ 1:29PM
Oh, and when oil goes from $30 a barrel to $100 a barrel the Government wants that $70 in increased value taxed. Even if it is still underground.
Why are the Eastern US Refineries shutting down? Because they have no oil to refine. No pipelines, no oil. We in the Midwest will have to pay for that.
THKrupp| 3.20.12 @ 2:41PM
Thanks for explaining that. I didnt realize.
John Woolley| 3.20.12 @ 12:10PM
I'm one of those who order "fat food" with a Diet Coke, not because I'm delusional, but because I like the taste of Diet Coke.
Gary| 3.20.12 @ 1:18PM
The left's and O's obsession with oil companies as Dr. Evil borders is stupid, a lie, and infuriating. My late wife, her Dad, his Dad, all worked in good jobs for Shell Oil in south Louisiana, as did, and do thousands of people who work in the petro chemical industry. To single that industry out,which provides good jobs for thousands, pays all sorts of state, local, and federal taxes, as bad guys is wrong and the worst kind of cheap political ploy. O wants to remove tax breaks that all companies get, but just for oil companies. Why are their profits obscene but Apple, GE ( which pays no taxes) are OK? O talks of "subsidies" for oil companies, but tax deductions are not subsidies, but seed money for green pets ARE subsidies down the toilet. Tax deductions are not subsidies as taxes are paid on money earned by companies and people, it's THEIR money, not the government's, but liberals see it as the government's money first. My blood boils.
dominusveritas| 3.20.12 @ 1:40PM
Hey now! I always order diet soda with my fat explosion triple death burger. I can take the grease but not the syrupy sweetness of regular soda; makes my stomache ache! Don't be a hater ;)
Tired Taxpayer PRM| 3.20.12 @ 3:05PM
Why give this or that company a tax break? Why should the oil companies get or lose a tax break? Why is your way fair and his way unfair?
I have a SIMPLE solution, eliminate all taxes on corporations. Corporations do not pay taxes. Their customers pay the taxes. If I sell you a snow cone and I know the government is going to tax me $1 per snow cone then I will charge YOU $1 extra for the snow cone. This is true whether I am selling snow cones or oil. The customer always pays the tax.
Why is this such a difficult concept to grasp? Is it because “that’s the way we have always done it”? Can anyone imagine the explosion in economic activity we would have in this country if we eliminated all corporate income taxes?
Stop fighting over the scraps and tackle the real issues.
Tired Taxpayer, Peoples Republic of Michigan
Stammon| 3.20.12 @ 3:53PM
I did this once, I'll do it again:
The Government taxes corporations on the value of their holdings. If a mining corporation thinks there is value in a piece of otherwise worthless desert, then leases it for mining and finds a billion dollars in copper there, they can be taxed on the increase in value of their stock and holdings. This depresses the urge of corporations to search for new value. So the Government has allowed a graduated tax on mining assets. They allow mining companies to depreciate their holdings over time, to encourage research and development of their assets. Because a billion dollars of undiscovered copper brings nothing to anybody. But a billion dollars of discovered copper can eventually be taxed.
The Government will tax you on what they perceive as your increase in value. Sometimes they will modify this concept for their own benefit.
Why is this so hard?
PolishKnight| 3.20.12 @ 3:56PM
In all fairness to the Dems (devil's advocate here), if the corporations are to enjoy the rights as a legal person, then they should be subject to taxes. Your argument about passing on the taxes is disingenuous since the income taxes paid by corporations only apply to profits, not net income. So the "snow cones" aren't taxed. Assuming the company is non-profit (such as Solyndra :-), then the company won't pay any income taxes anyway just like individuals.
Stammon| 3.20.12 @ 4:00PM
All corporate taxes are passed on. All.
I want you to make a case when that has not happened. It's the same thing with Obama telling the Catholic Church that the insurance companies will pay for birth control. Where does the money come from? The only entity that can make money is the US Government, and their presses are running as fast as they can.
PolishKnight| 3.21.12 @ 12:10PM
I already did make a case for when it doesn't happen: When the taxes are based upon net profits rather than gross income. A profitable company that's paying taxes on that income will lose money, rather than earn more, if they raise prices in a free market and lower their gross and ultimately net income. Unlike normal "persons" who have to pay for food, clothing, and other non-deductable expenses many corporations can declare nearly all of their expenses deductable and if they didn't make a net profit, not pay anything in income taxes. This is how GE got the government to pay them rather than vice-versa.
This is not rocket-science economics.
Mark in LA| 3.21.12 @ 6:34PM
Polish knight, you also forgot the BS that goes on with those deductions. Remember when Microsoft was donating "software"? They probably valued for tax purposes each disk at its true retail value even though none of it could ever be sold.
Companies play games all the time with in-company accounts. As an engineer we had to fight all the time to get test samples. Most of them are not salable as there is something wrong with all of them and you work around the failures. However, the engineering departments are billed for the actual cost of the unit as though it would be sold. My guess is that this phony deduction artificially lowers the "profit" of the company by increasing its costs.
Stammon| 3.20.12 @ 3:56PM
Tired;
I agree with you, but the Government is always looking for money to buy votes. That is the way it is. Sometimes (rarely) the Government can understand an obvious concept enough to modify it's behavior.
Mark in LA| 3.20.12 @ 8:56PM
This nonsense was barked out by Reagan and the people bought it and corporate taxes have been going down ever since and the deficits have been going up and up. While it sounds reasonable it is just more political drivel.
Lets use a thought experiment about who pays taxes and when. When I work for a company, I get taxed based on my pay. When the company sees fit to fire me and hire my replacement, I no longer pay those taxes but my replacement does. Does this mean the company or the person "pays" the taxes. There is no income without the company and therefore nothing to tax the people with. Therefore, it is really businesses that are being taxed and not people.
Lets also look at it from a libertarian point of view. If I use a product from a company, doesn't it make more sense to make me pay the full amount of the product instead of the it subsidized by the rest of society? If so, then we should eliminate all taxes on people and only tax businesses. That way only the customers of businesses pay the taxes and the people who don't use them don't, what could be more "fair".
This isn't to show what is right or wrong - only to show how simple minded arguments sound good but have no more "logic" than anything else.
Fairbanks99| 3.20.12 @ 7:22PM
While Obama often display ignorance, it is not part of his assault on domestic energy. It is, instead, deliberate. The socialist utopia can't be achieved with a strong middle class and cheap, abundent energy.
POST American| 3.20.12 @ 11:56PM
FURTHER
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that's made from the feces of E-Coli
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enhancers derived from dead fetuses
largely manufactured in RED China.
CHECK IT OUT!
"We MUST take humanity OFF its
pedestal and train them that they're
but another animal. This is ESSENTIAL."
-Julian Huxley
Capstone EUGENIST
Globalist
PSYCHOPATH
UNESCO founder
-----------------------------SO!-----------------------------
---1945? ----------OR ---------------1934?
Everything OLD ---IS 'NEW---Remberg' again.
-------------------------------------EVERYTHING!
Dmitry Aleksandrovich| 3.22.12 @ 1:26AM
Obama choosing not to subsidize the oil and natural gas industry is the equivalent to an added tax on every American worker in the form of higher gas prices. Let me make it clear that I am not convinced that we are not also being gouged at the pumps by the oil companies themselves after all we have all heard those stories of oil tankers anchored in the bay just to drive up prices (I'm not sure if that's true but as a mariner in the San Francisco bay I know they are very prevalent stories). However the blame for the high gas prices ultimately belongs to the Federal Reserve. Oil is traded and dollars and the more the Fed floods the system with cash the higher the price of oil goes up. Yes the environmentalists, the EPA and our elected officials are to blame but the Fed is the main reason for the high prices. We can artificially keep bread and milk low for the moment, but we can't keep gasoline artificially low. It is true we do need to learn from the Russians and institute a vigorous campaign of domestic drilling and we must also start to utilize and build the infrastructure for our vast natural gas reserves. In my wife's country in a former Soviet Republic in Central Asia every car is equipped with a natural gas tank in the trunk because natural gas is cheaper than petroleum. We must also build new refineries across the country. Like the progressives I hope to find some source of renewable energy that can be placed on the roof of every house and connected to every car battery, but until that paradigm shift is made it is essential that we as Americans utilize our oil and natural gas resources and maximize our petroleum production for the domestic market.