Dems Call for the ending of tax breaks to the "Big Five"

[gimpy117]

http://blogs.abcnews.com/thenote/2011/05/senate-dems-call-for-end-of-tax-breaks-for-big-oil-pledge-savings-to-reduce-deficit.html

I appluad this decision. Why are we habding money to these companies who clearly don't need any more help, and who have not shown any progress to keeping prices down for the american consumer?

Link Fixed. Sorry guys

[magic452]

NO Corporation pays any tax at all, the consumer of the products pays ALL the tax. When you buy a Big Mac you are paying the corporate taxes.
When you buy anything YOU are paying the tax. It's really very simple.

I had my own small business for 18 years and my costumers payed all my taxes. The more I was taxed the higher was the cost to my costumers.
All my competitors also payed the higher taxes so we were even.

With international corps the competitors may not have to pay the same taxes, so they lose business to foreign competition. Lost business equals lost jobs.

The very same thing applies to minimum wages talked about in another thread. The higher the wage the greater the cost of your product, till you price yourself out of the international market.

Believe me I did not make any decisions on hiring, wages or equipment that I didn't consider the tax consequences.
If I could not justify the expense I didn't hire anyone and you don't have a job at any wage. The higher the taxes the harder it is to put someone on.
Every time I turned around I had a new tax bill from somebody on my desk.
You have no idea at all about what it takes to run a business big or small.
There were many a time when I could have expanded my business but I didn't because of all the hassles government puts in your way.
Somebody lost a job pure and simple.

The bigger the company the tighter they look at these things. Nobody runs a business to give you a job, Unless they make money off your labor you will not be working for them.

Repeating my self here but it is very simple. You pay the taxes period.

By the way your link turned a blank page for me so I couldn't respond to that subject directly.

Magic

[Sailor Steve]

For some reason the link keeps coming up as a blank page, so I can't comment directly. I will comment on a statement of yours though:
Why are we habding money to these companies who clearly don't need any more help, and who have not shown any progress to keeping prices down for the american consumer?
While with all the information I might actually agree that perhaps certain corporations need to be watched, you're falling into your old fallacy. A tax break is not handing money to anyone. It's taking less of their money, which is not the same thing. The purpose of taxation is not to punish anyone, or to help anyone. The sole purpose of taxation is that governments by their nature cannot generate revenues. Taxes are necessary for the government to run, and using them for anything else is political and moral engineering.

[AVGWarhawk]

More politcal grandstanding. :hmmm:

[nikimcbee]

More politcal grandstanding. :hmmm:

How could you come to that conclusion?:haha: So they just need to pay a little more tribute to the bamster (like GE) then you pay no taxes.

[gimpy117]

While with all the information I might actually agree that perhaps certain corporations need to be watched, you're falling into your old fallacy. A tax break is not handing money to anyone. It's taking less of their money, which is not the same thing.

Yes, but its taking less of their money than other companies. Why do they get to skate by in these hard times? why are they given tax breaks when other big companies are not? especially when their businesses are booming?

ps. Link fixed

[Sailor Steve]

My thought is that the government shouldn't be taking any money from anyone, period. Of course I've mentioned before that the government doesn't exist if it can't get money from somewhere, so taxes become a necessary evil.

But these guys are talking (at least on the surface) about subsidies, not tax breaks, and I agree. The government shouldn't be spending our money to subsidize major corporations. Nor should they be subsidizing farmers at the same time food crops are dying due to lack of distribution, and farmers are being paid to not grow certain crops.

Political grandstanding? I think so too, but we'll see.

[magic452]

You missed the point gimpy.

CORPORATIONS DO NOT PAY ANY TAXES AT ALL.

You pay the taxes every time you fill up your tank.
If they pay more taxes you will pay more at the pump. It's that simple.
If you think that they will generosity pay the tax out of their profits you have a rude awaking coming.

The bill would "eliminating the domestic manufacturing tax deduction"
Sounds like that is not the right thing to do, we need more domestic oil production. One of the objectives of tax policy is to encourage certain behavior. Encouraging domestic oil production seems like a very good thing indeed.

Sounds like a Nancy Pelosi smoke screen to me.

Magic

[kraznyi_oktjabr]

U.S. government needs two things:
1. more tax or other revenues
2. lower operating costs

Ms. McCaskill said that unless U.S. government can do this particular thing nobody will take your deficit reduction efforts seriously. Well who at the moment really takes your government seriously in deficit reduction?

There have been a lot talk in this issue but zero progress. I would really like to see something happening before this is in situation where investors are no longer willing to loan more money.

[Aramike]

Mark this one in the calender, gimpy, as I agree with you and the Team D on this. At one point these tax subsidies were necessary, but with record prices comes record profits, and oil companies should pay their fair share.

Indeed, as someone said, corporations do NOT pay taxes - consumers do. On the other hand, in this particular situation if the oil companies attempted to recoup the reduction in record profits through passing the cost on to the consumer, they would be guilty of gouging. Capitalism is a balance.

However, that all being said I do believe that the Dems are shooting themselves in the foot with energy policy. This would be an excellent bill if it also aimed to increase domestic energy production. It just blows my mind how the party that supposedly sides with the poor won't allow for us to drill and refine our own energy supply when the poor are the people MOST affected.

In any case though, just because you can't get 100% of the policy you think is good on the books, the 50% you CAN get is not necessarily bad.

[gimpy117]

but the thing is, how will domestic energy production help unless wall street reduces it's prices on the commodities market? We can make all the crude we want here, and unless the price per barrel of oil goes down on th market we'll just have a lot more gas priced over $4.00 a gallon. Team R keeps saying drill baby drill, saying it will lower prices, and while thats a ice thought it's not that simple, especially was oil prices ignore supply and demand.

but yes Armike, the subsidies are totally unnecessary in todays market.

[magic452]

Mark this one in the calender, gimpy, as I agree with you and the Team D on this. At one point these tax subsidies were necessary, but with record prices comes record profits, and oil companies should pay their fair share.

Indeed, as someone said, corporations do NOT pay taxes - consumers do. On the other hand, in this particular situation if the oil companies attempted to recoup the reduction in record profits through passing the cost on to the consumer, they would be guilty of gouging. Capitalism is a balance.

Big oil companies are the biggest crooks on the planet, they have very high dollar accountants to see that they can pass this tax increase on to the consumer. It may take a year or two but rest assured you will be paying the tax.

Magic

[August]

Domestic drilling doesn't have to lower prices to still be a good idea. Reducing or eliminating our dependency on foreign oil used to be an objective in itself.

[magic452]

but the thing is, how will domestic energy production help unless wall street reduces it's prices on the commodities market? We can make all the crude we want here, and unless the price per barrel of oil goes down on th market we'll just have a lot more gas priced over $4.00 a gallon. Team R keeps saying drill baby drill, saying it will lower prices, and while thats a ice thought it's not that simple, especially was oil prices ignore supply and demand.

but yes Armike, the subsidies are totally unnecessary in todays market.


A lot more gas will help keep prices down a little but at least some of the money will stay here instead of going to foreign interest. Some of them don't like us very much.

Oil does follow supply and demand as the recent big drop in price during the recession proves. 2007 or 08 oil was well above $130.00 a barrel. During the recession it went to well below $100.00
Gas was above $4.50 and dropped to about $3.00

Two Billion dollars/year deduction divided by five oil co. will not amount to a hill of beans. They only pay a small percentage of that in taxes.
It's a deduction not a credit.
This whole thing is a feel good sham.

Magic

[gimpy117]

A
Oil does follow supply and demand as the recent big drop in price during the recession proves. 2007 or 08 oil was well above $130.00 a barrel. During the recession it went to well below $100.00
Gas was above $4.50 and dropped to about $3.00

I thought that was due to people getting out of the market :hmmm:

[mookiemookie]

Two Billion dollars/year deduction divided by five oil co. will not amount to a hill of beans. They only pay a small percentage of that in taxes.
It's a deduction not a credit.
This whole thing is a feel good sham.

Magic

Two billion dollars is enough to fund NPR or Planned Parenthood for quite a long time. :woot:

[magic452]

Two billion dollars is enough to fund NPR or Planned Parenthood for quite a long time. :woot:

I meant a hill of beans to the oil companies.

But 35% or what ever the corporate tax rate is won't fund them for all that long. But what you say is true. The point of the discussion was who pays the tax and I say you will. Are NPR and Planed Parenthood worth the higher gas prices? Some will say yes, others no and I will ask why are we funding these kind of things in the first place? Planed Parenthood at least is a social service that many people need.

gimp "I thought that was due to people getting out of the market :hmmm:"

That's what supply and demand is, getting in and out of a market.
You buy, your in the market, don't buy your out.
If I buy a Big Mac I'm in the market, if I don't than I am not contributing to the demand. Gas was too expensive so people drove less and reduced the demand. Prices went down dramatically. The world economy is recovering and the demand has grown thus prices are going up.
When the US economy starts to really grow watch out, you ain't seen nothin yet. Making the oil companies pay more tax is just pouring more fuel on the fire.

Magic

[gimpy117]

magic, I'm not talking about trading as in supply and demand, I'm talking about futures trading for oil.

[magic452]

The very same rules apply.

I see what you mean and there is no doubt that traders do pump up the price but what are the alternatives, price fixing?

Don't get me wrong, I'm no big fan of the massive oil company profits and there is no doubt that they are sticking it to us, but again what are the alternatives. I would far prefer to see their personal incomes taxed that's all.

The very or super rich can certainly pay more tax but the Dems always put the limit at $200,000 to $250,00 and that is too low. Hurts too many small business owners. Put higher tax rates on one million per year and you don't raise near enough money to really help.

Change the tax laws and people will change their behavior and you don't get the revenue you expect. If it becomes more profitable to put money into something safe they will go see MookieMookie and buy bonds and not invest in business. (I think I remember MookieMookie saying he was in the bond biz.)

Do you have any idea how much it cost to open a simple thing like a McDonald's franchise. Easily a million and probably more.
And that is a business that is all set up for you and a massive marketing campaign as well. Who do you know that is willing to risk a million + on something that may fail. Not to mention the enormous amount of time and headaches that go with a small business. You deserve to make a pretty good profit and not have 30+% go to the feds and another 10 or 15% to local taxes.

Magic

[Aramike]

but the thing is, how will domestic energy production help unless wall street reduces it's prices on the commodities market? We can make all the crude we want here, and unless the price per barrel of oil goes down on th market we'll just have a lot more gas priced over $4.00 a gallon. Team R keeps saying drill baby drill, saying it will lower prices, and while thats a ice thought it's not that simple, especially was oil prices ignore supply and demand.

but yes Armike, the subsidies are totally unnecessary in todays market.Gimpy, I'm not sure what you're trying to say. Wall Street doesn't set prices on commodities - demand and availability does. Even more specifically, demand from nations with strong buying power sets international commodity prices.

If we began to reduce our dependance on foreign oil, international sellers would have far less access to easy US dollars which, at least for now, they still covet. Ergo, prices drop in order to encourage consumerism. OPEC is notorious for this. Also, I believe this is why inflation will remain in check despite our insane money printing - the world wants access to its top consumers.

Honestly, please step out from the Blue Team talking points for a moment and attempt to understand this. An independant mind is a terrible thing to relegate. Increasing oil production WILL lower prices - I'm not sure how you don't get this. Even OPEC knows this - everytime prices skyrocket and demand falters, what do they do?

Increase production.

[Aramike]

Two billion dollars is enough to fund NPR or Planned Parenthood for quite a long time. :woot:Or fund a few mandatory job education programs for perennial welfare recipients.

[Aramike]

Domestic drilling doesn't have to lower prices to still be a good idea. Reducing or eliminating our dependency on foreign oil used to be an objective in itself.Indeed. That's another side that gimpy is missing - we're sending US money out of country for a product which we could just as easily get here using said dollars.

Which means ... jobs, higher tax revenues, etc.

[mookiemookie]

Gimpy, I'm not sure what you're trying to say. Wall Street doesn't set prices on commodities - demand and availability does. Even more specifically, demand from nations with strong buying power sets international commodity prices. False. The price of oil is driven overwhelmingly by speculators. Institutional investors increased their investments in commodities from $15 billion in 2003 to between $250 and $300 billion in 2008. (http://online.wsj.com/article/SB40001424052748703960804576120151435053120.html) If 16 to 20 times more money is chasing the same relative supply (I doubt supply had increased 16 to 20 fold in those 5 years), then the price necessarily has to become inflated. And that has absolutely NOTHING to do with how much oil is being pumped out of the ground. It's supply and demand alright - the supply of investors all demanding futures contracts! In January 2006, ICE Futures in London introduced a futures contract for West Texas Intermediate crude. U.S. based investors could route their trades through London so as to avoid coming under the Commodities Futures Trading Commission's rules against speculation. Fun activity - chart the price performance of oil in 2006 (around $60/bbl) to today (around $100/bbl). To ignore the role of speculation as the driving force behind oil prices is to ignore reality.

Oil was trading at around $112/bbl two weeks ago. Now it's around $97. Did worldwide supply increase 15% in two weeks? Did worldwide demand decrease 15% in two weeks? That'd be one amazing feat if it had.


Even OPEC knows this - everytime prices skyrocket and demand falters, what do they do?

Increase production.They do the only thing they CAN do. The only way they can influence oil prices, even if its to less of a degree than speculation, is to curtail supply. That is not a piece of supporting evidence for your case.

Honestly, please step out from the Blue Team talking points for a moment and attempt to understand this. This isn't a Blue Team or Red Team issue. Quit looking at it through the lens of politics and look at the facts.

[Aramike]

That's funny, mookie - you DO know what commodity speculation IS, right? More specifically, futures trading?

You DID know that prices in futures trading rise based upon FUTURE delivery dates and expected ability to meet that demand, right?

There's no doubt that speculation is a driving market force, but even THAT is based upon the principle of S&D. How again would increasing domestic production not impact the commodity?

[mookiemookie]

That's funny, mookie - you DO know what commodity speculation IS, right? More specifically, futures trading?I am a financial analyst at a securities firm. There would be a problem if I didn't.


You DID know that prices in futures trading rise based upon FUTURE delivery dates and expected ability to meet that demand, right?

You DID know you misunderstand how commodities futures contracts operate, right?

Futures contracts in the vast majority of cases don't end with physical delivery. They are settled by cash. (http://en.wikipedia.org/wiki/Futures_contract#Settlement_-_physical_versus_cash-settled_futures) So no, futures contracts are not limited by the amount of physical oil available for delivery on the contract's expiry date. Do you think Goldman is having barrels of crude dropped off at 200 West in NYC?

This is much the same as how credit default swaps (the unregulated derivatives that were a major cause of the financial crisis) worked. People traded the CDS contracts whose total value exceeded the underlying value of the bonds they were supposed to be insuring.

And you still didn't answer the question. Oil was trading at around $112/bbl two weeks ago. Now it's around $97. Did worldwide supply increase 15% in two weeks? Did worldwide demand decrease 15% in two weeks?

[Armistead]

Sure corps see taxes as part of overhead, unlike most small businesses in american that don't, because of much stronger competition to survive.

But when will people get it, you could raise or cut corporate tax rates to zero and nothing would change, it's all about regulation. Thanks to our government, mostly the GOP corporate america doesn't work for america in a global economy.

The problem is as always, the GOP would under regulate, the Dems over, no one seems to have enough sense for proper regulation.

In the end the total maddness is all about government wanting as much power over the people, both parties are equally guilty.

[Platapus]

What Congress needs to do is look at all subsidies.

At the time the subsidy was approved, there had to be a justification. Subsidies are usually granted to encourage research/development/production. In rare cases it is to discourage production.

All subsidies should be subject to a zero level review. If the original subsidy justification is no longer valid, then the subsidy needs to be stopped.

This is the problem with government programs like subsidies. They are easy to start, but hard to stop. The reverse needs to be true.

[magic452]

The trick is that what they are talking about is a tax deduction not a subside.

It's like the home mortgage deduction, they want to encourage a certain behavior. Home ownership, no home loan than no deduction.
If you were really serous about raising money you'd eliminate this deduction.
Course you'd have a small revolution on your hands but you would have more money.

What this deduction is doing is to get more domestic oil production, not a bad thing. If they don't spend any money on domestic oil production than they get no deduction.

The fact that the state and federal governments won't let them drill is a minor glitch in the plan.

No matter who you cut it this is all a big smoke screen.

Platapus, as far as subsidies go you are correct. There are many of that should be reviewed. "Easy to start, but hard to stop" holds true or almost all government programs. Tax deductions and subsidies and very much the same thing, deductions the government doesn't get taxes. Subsidies the government gives away tax money. Same horse different color.

Magic

[Platapus]

I am not sure I would want to eliminate ALL of the deductions. I am, however quite firm that the subsidies need to be reevaluated and hopefully removed.

Here is a pretty good article that explains the deductions under consideration. Some of them seem legitimate

http://www.accountingtoday.com/news/Senators-Propose-Bill-Close-Oil-Tax-Loopholes-58330-1.html

[gimpy117]

Well I also think it's sad they're using the subsidies as a gun held to the head of america. They're making HUGE profits, but they pretend that if their tax beaks go away that they'll have to raise the price. essentially holding us american Taxpayers hostage for their cushy tax breaks. Personally, I say take away the breaks and let them try to raise prices, and then we haul them in on price gouging and profiteering, because honestly thats what it would be.

[Sailor Steve]

They're making HUGE profits
Exactly how huge? I ask because I honestly don't know. How much of what they make goes into production costs, paying employees, funding research, and other operational odds and ends? How much goes into shareholders pockets? People buy shares of the company expecting to make a profit themselves. Are we talking about the CEOs again? How much of the money they charge actually stays with them?

For every gallon you buy, 18.4 cents goes to the Federal Government. Where I am, the state takes another 24.5 cents. That means that a motorist here in Utah is paying 42.9 cents to the two governments. I don't hear you yelling about the obscene profits the government is making, mainly because they spend far more than they take in, which truly is obscene. But the businesses are the bad guys and the government is the good guy, so it's okay for them to do whatever they want, as long as the bad guys don't get away with something.

I'd still like to know how much profit is too much, and how much they actually make.

[Aramike]

am a financial analyst at a securities firm. There would be a problem if I didn't.Well, let's just say I hope your clients know that you believe a supply infusion won't lower prices.Futures contracts in the vast majority of cases don't end with physical delivery. They are settled by cash. (http://en.wikipedia.org/wiki/Futures_contract#Settlement_-_physical_versus_cash-settled_futures)Yes, I did indeed know that. Believe it or not, my profession requires a fairly rounded knowledge base regarding economics as well. And you still didn't answer the question. Oil was trading at around $112/bbl two weeks ago. Now it's around $97. Did worldwide supply increase 15% in two weeks? Did worldwide demand decrease 15% in two weeks? No, of course not. Nor did I ever imply that. Or, at least, I figured that the people engaging in the discussion could make the OBVIOUS distinction between week-to-week commodity trading and the more long-term impact of an increase in that commodity's availabilty. My bad.

The difference is the PERCEPTION of availabilty (which is largely subject to reality).

Your argument: because oil is set by Wall Street increasing production and availability doesn't mean anything.

My argument: increasing production and availability DOES have an impact, and that impact influences Wall Street.

And, ironically, while you accused me of seeing the discussion through political lenses (although I sided with a bit of BOTH sides here), you are the one taking up the cause of the particular party you unwaveringly align yourself with. So wait - the political one is the guy who thinks BOTH sides have a point, or rather that simply their predeterimined one is always right in all scenarios. Cute.

[mookiemookie]

I set up a little chart here (http://ycharts.com/companies/XOM/profit_margin#compCos=MSFT,BA,CAT,JPM,AEP) that shows profit margins across a few representative companies in different sectors. You can see XOM (ExxonMobil, which was the first one I thought of) has a profit margin of 9.34% for the first quarter of this year. That's not too out of line with some of the other companies...Boeing, JP Morgan Chase, American Electric Power, etc. Look at Microsoft's profit margin...wowee!

Even though their net margin is about where other companies' is, I'm in favor of taking their most egregious tax breaks away, just simply because I don't think we should be giving tax breaks, bailouts, handouts or subsidies to any company.

[Sailor Steve]

Even though their net margin is about where other companies' is, I'm in favor of taking their most egregious tax breaks away, just simply because I don't think we should be giving tax breaks, bailouts, handouts or subsidies to any company.
And I consider that a fair and honest answer, one I can support wherever discussions may take us.

[mookiemookie]

Well, let's just say I hope your clients know that you believe a supply infusion won't lower prices. Not what I'm saying at all. My argument is that speculation comprises a larger percentage of the market price of oil than supply and demand factors do. ]Or, at least, I figured that the people engaging in the discussion could make the OBVIOUS distinction between week-to-week commodity trading and the more long-term impact of an increase in that commodity's availabilty. My bad. You miss the point. The main driver of oil prices is speculative activity. Don't you think a 15% price swing is noteworthy? Since we've ruled out any major supply or demand shocks in that two week period, that necessarily means that speculative activity has the ability to move a market 15% in two weeks. That's HUGE.

Your argument: because oil is set by Wall Street increasing production and availability doesn't mean anything. No, that's not my argument at all. My argument is that prices are more influenced by speculators than supply. Don't paint this as an all or none argument.

My argument: increasing production and availability DOES have an impact, and that impact influences Wall Street.
And my argument is that the people that believe the panacea to high oil prices is to increase supply will be disappointed when they see that a flood of supply would not translate to a major drop in prices. Curtailing speculation by re-instituting rules that worked since the 1930s through the early 2000s would be a much more effective, not to mention CHEAPER and FASTER way of bringing down oil prices.

[gimpy117]

For every gallon you buy, 18.4 cents goes to the Federal Government. Where I am, the state takes another 24.5 cents. That means that a motorist here in Utah is paying 42.9 cents to the two governments. I don't hear you yelling about the obscene profits the government is making...

yes, because that money goes to the roads we drive on and other infrastructure that we use, not some CEO trust fund. You guys act like when the government takes money in taxes it just vanishes, but in reality it goes to programs we use, or could use every day.
I might also add, My state, Michigan, Pays more into the Federal Pot for roads than we get out. You can thank me later for fixing your streets in some state i've never been to.

[Aramike]

Wow, mookie, we are so far off its almost unbelievable.Not what I'm saying at all. My argument is that speculation comprises a larger percentage of the market price of oil than supply and demand factors do. Yeah ... except that - wait for it - speculation is DRIVEN by the very factors that would influence supply and demand.

Geez.You miss the point. The main driver of oil prices is speculative activity. Don't you think a 15% price swing is noteworthy? Since we've ruled out any major supply or demand shocks in that two week period, that necessarily means that speculative activity has the ability to move a market 15% in two weeks. That's HUGE. Yeah, it's huge if you're playing in the ballpark of two weeks. But you're a financial guy - you should be aware that trends are not set in weeks, and one of the primary influences of trends is the perceived stability of the market.

Furthermore, I would think you'd be acutely aware that a 15% MAJOR two week blip is hardly even noteworthy when one is looking at a commodity's performance over an annual or even semi-annual trend.

So no, I didn't miss your point - I just failed to see it as relevant when we are discussing the long-term infusion of a commodity into the market.No, that's not my argument at all. My argument is that prices are more influenced by speculators than supply. Don't paint this as an all or none argument.I agree that it's not an all or nothing thing. In fact, I'm pretty sure I specifically said that I agree that speculation is a driving force in the market.

HOWEVER, my point is that speculation ITSELF is driven by supply and demand. I hope that's more clear now.And my argument is that the people that believe the panacea to high oil prices is to increase supply will be disappointed when they see that a flood of supply would not translate to a major drop in prices. Here's why I disagree. A flood of supply WOULD translate to a major (20% or more) drop in prices. For one, foreign companies will still have access to our markets, but they would have to incentivize the sale of the commodity. For another, the dollar remains the world's reserve currency, and despite its weakening state, access to it is still coveted. Curtailing speculation by re-instituting rules that worked since the 1930s through the early 2000s would be a much more effective, not to mention CHEAPER and FASTER way of bringing down oil prices. Suprise. I actually do agree that speculation is a problem, because it is ultimately a fiat representation of an already fiat currency. I believe that long-term speculation is fairly harmless, but the ability to get in and get out artificially inflates prices.

That being said, the driving forces behind the motivation to get in and out must be noted. When you see the prospect of a sudden reduction in supply, money is dumped in to the commodity artificially increasing value. That value is then sold off causing an artificial return to normalcy, or lower.

Furthermore, the drop in the price of crude has been met with a drop in the price of gasoline, although it is certainly not to scale. Yet, that only serves to prove my other point, that a two week drastic change is merely a blip long term.

[magic452]

Looking at that graph big oil doesn't seem to be quite so profitable.

Better we should tax Bill Gates.
The thing is that these profits go someplace and there are millions of Americans who hold stock in pensions 401K IRAs etc. Cut corp profits and cut all these American's investments.

Nothing happens in a vacuum. Pull one leg of the octopus and the other 7 legs react.

Here are some thoughts on the bill in question.

";The bill would modify the foreign tax credit rules applicable to major integrated oil companies. U.S. taxpayers are taxed on their income worldwide, but are entitled to a dollar-for-dollar tax credit for any income taxes paid to a foreign government."
This is a good thing, what we have now leaves the door to abuse wide open.

The two sections on Section 199 deductions sucks big time.
The first part will inhibit exploratory and production drilling. Section 199 is a very big incentive for investment.

The second part about limiting IDC Section 199 might be ok but if it propagates to other industries would be a disaster. Once you set a precedent it sticks around forever.
The problem is IDC are not capital investments. These are recurring business cost.

Section 199 is important to development as that is when you need something to offset the high cash outlay it requires. The long term tax won---8217;t be much different verses capital investment but short term it makes a big difference.

With out Section 199 my business would have been much smaller. I could not have afforded to expand. I would assume that this also applies to big companies as well. Yes big oil has the capital on hand for these things but with the energy situation as it is why put road bolcks on new development?????

Percentage depletion is a mixed bag but would hit me in the pocket book very hard.
I collect gas royalty income and the depletion allowance is, give or take, $850.00 a year.
So this isn't just a tax on big oil at all. If all royalty owners are exempt now it won---8217;t be too long before they aren't Having said that I do think that the percentage depletion needs to be revisited.

tertiary injectants are a cost of doing business not a capital investment.
Talk about inhibiting oil production, come on give me a break. This has the same effect as the Section 199 thing.

I have a little insight into all this as I have land with 3 natural gas wells on it and they are talking about a fourth.

---8220;All of the savings realized as the result of the bill---8217;s elimination of the tax breaks and other subsidies would be devoted to deficit reduction.---8221;

This is the biggest pile of BS I have ever seen(well maybe not) Put money into the government coffers and they will spend it one way or the other, look at Social Security.

They took our cold hard cash and spent it and gave us IOUs. Now they can't pay the IOUs without getting more cold hard cash with no guarantee it will pay the IOUs.

This whole bill is a crock.

Magic

Edit Don't know what happened to the formatting on this. Did it on a word processor and now cant correct it?

[mookiemookie]

Wow, mookie, we are so far off its almost unbelievable.Yeah ... except that - wait for it - speculation is DRIVEN by the very factors that would influence supply and demand. How? If speculators don't take delivery or use oil in any fashion, then the amount of supply is immaterial to them. They are simply in it for the price changes. Supply and demand factors move the markets, sure, but those moves are magnified by the speculation aspect. Volatility is intensified.

Geez.Yeah, it's huge if you're playing in the ballpark of two weeks. But you're a financial guy - you should be aware that trends are not set in weeks, and one of the primary influences of trends is the perceived stability of the market. Furthermore, I would think you'd be acutely aware that a 15% MAJOR two week blip is hardly even noteworthy when one is looking at a commodity's performance over an annual or even semi-annual trend. Again, you miss the point. A price movement of that much in two weeks means that the market is extremely volatile. Volatility is bad for gas prices. Volatility is great for traders.

You say look long term. I say now we're going in circles, which means it's my last post in this thread. Look at a chart of oil prices. Look at the performance since 2003. Since 2006. Since I've already pointed out why those times are significant, I'll not repeat myself.

If we indulge ourself in the fallacy of false choice and say our only options are to A) increase domestic supply or B) re-institute appropriate curbs on speculation that worked for decades, I'm going to take the option that doesn't require companies to invest billions of dollars for something that in 5 to 7 years will lower prices a little bit, but does nothing to address the volatility in the market. I'm going to take the option that can be done in a year or two and has an immediate and greater effect on the market.

Thank you and good day.

[gimpy117]

If we indulge ourself in the fallacy of false choice and say our only options are to A) increase domestic supply or B) re-institute appropriate curbs on speculation that worked for decades, I'm going to take the option that doesn't require companies to invest billions of dollars for something that in 5 to 7 years will lower prices a little bit, but does nothing to address the volatility in the market. I'm going to take the option that can be done in a year or two and has an immediate and greater effect on the market.

I don't think Option A was ever intended to be a viable choice to lower gas prices. It was simply political Grand Standing By the Republicans when they wanted a presidential bid, and also an excuse to take to heat off their buddies in wall street and oil friends who are making a buck off of these artificially inflated prices.

[Skybird]

It was said that the customer/consmer pays all the corporation'S taxes.

Okay then, so have all business companiesd alltogether pay no taxes at all anymore. I'm sure share holders and profiteers and the top staff in the leadership of said companies will immediately stop to fetch up the cream they take, and prices will drop immediately.

Things are seriously off balance in our economic system. Loans, profits, taxes, subsidies, legal tax write offs. It is about balancing things in a fairer, more reasonable and understandable way. What we have now, is casino madness and Wild West gun-ho, bureaucratic overregulation and lack of vision for the whole, exploitation in multiple different meanings of the term, and "catch what you can and then try to get away with it".

Our excesses destroy our civilisation. First culture-wise, then biological survival-wise. Has happened before in history, with many regional civilisations - but we refuse to learn from their mistakes, instead reviving them to new extremes.

[August]

I don't think Option A was ever intended to be a viable choice to lower gas prices. It was simply political Grand Standing By the Republicans when they wanted a presidential bid, and also an excuse to take to heat off their buddies in wall street and oil friends who are making a buck off of these artificially inflated prices.


Yeah right, that's it gimpy. The evil Republicans. The source of all your troubles. :roll:

[gimpy117]

Yeah right, that's it gimpy. The evil Republicans. The source of all your troubles. :roll:

Ironic. Because just a page ago some of the other republicans were saying that killing the oil subsidies was "political grandstanding". Things do go both ways you know.

but i'd pretty much say, when a desperate party runs on "drill baby Drill" for a presidential bid, and even goes to the trouble to make up a catch phrase, it's political grandstanding

[Tchocky]

Regardless of what political party promises it, increasing domestic drilling in the United States will have at best a microscopic effect on gas prices.

[Platapus]

Regardless of what political party promises it, increasing domestic drilling in the United States will have at best a microscopic effect on gas prices.

And people are not understanding the strategy.

If you have a resource as valuable/critical as oil and you have two ways of getting it

1. Buy someone elses supply
2. Use your own supply

Which do you choose? Smart money is on using the other guy's supply first and keep our supply until later. Imagine what will happen when the ME's supply of oil dwindles and our (US) supply is still there. Is that not a whole lot better than using up our supply first and then having to buy oil when it is in shorter supply?

I say we cap all domestic oil wells and buy the other guy's oil first. Then when his oil supply gets low, we will not only have our own supply, but we will be in a position to set the prices.

[magic452]

Not a bad plan if you don't go bankrupt trying to wait them out.
5 to 6 dollar a gallon for gas is in the not too distant future.

Magic

[August]

"political grandstanding"

Gimpy all you ever post here is political grandstanding. When are you going to start seeing yourself as an American first and party attack dog second?

[August]

Not a bad plan if you don't go bankrupt trying to wait them out.
5 to 6 dollar a gallon for gas is in the not too distant future.

Magic

Yeah. Not only wait them out but still have the scratch to build the pipelines and other infrastructure to exploit it once the waiting is over. Not to mention the ability to defend it from the now hungry and desperate world.

[Sailor Steve]

yes, because that money goes to the roads we drive on and other infrastructure that we use, not some CEO trust fund.
That's the theory, of course, but the reality? It also needs fixing.
http://financecommission.dot.gov/Documents/Tax%20Foundation%20paper%20on%20Gas%20Tax.pdf

As far as CEO trust funds go, if they haven't broken any laws then it's their choice. If they have broken laws then they need to be punished. It is the government's job to regulate and prevent wrongdoing, and I agree that many on the right are in the pockets of the people they're supposed to be controlling. But so are many on the left, a fact you seem to forget. I'm open to honest discussion, but not one-sided arguments of the "I'm right" variety.

You guys act like when the government takes money in taxes it just vanishes, but in reality it goes to programs we use, or could use every day.
"You guys"? You are about as one-sided as anyone you claim to stand against. I specifically praised Mookie's comments as being fair and reasonable because yours rarely are. I have to agree with August on his last "grandstanding" comment. A lot of the guys on the Right here do the same, but the ones on the Left seem to think they're immune to this.

[gimpy117]

yes, I know, you don't agree with me so obviously I'm unreasonable. Im not going to pretend to be some kind of middle ground lets all be friends democrat just so i can get a pat on the back from time to time. I have my beliefs and thats how i see it.

[magic452]

Gimpy you are unreasonable, in a manner of speaking, in the fact you started this thread to get a discussion on a proposed bill. Many here have pointed out the pros and cons of the bill and related topics, namely oil production and prices. Things that the bill would affect

You have not once given any facts or sound reasoning to rebut what has been discussed. All we see from you is the stuff we see everyday from politicians on TV. Not a very good source of information.

I pointed out why I think the bill sucks and is political grandstanding.
What say you? Why is this bill a good thing? Did you research the bill or even read the article that was linked? Have you any experience or real knowledge in business or petroleum production. Well I do and that wall of text is my option of the bill. It's a smoke screen.

The oil companies will not pay much in the way of the extra tax, we will. The bill hurts domestic oil exploration and production and gas price will rise and our balance of trade will suffer.

Oil speculation will remain rampant unless we do something like Mookie suggest and reinstate some regulations on traders.

Why don't those idiots in Washington do something about this? No tax "Big Oil" and say "we did something" A pile of horse manure.

You state that oil profits are HUGE. Mookie also pointed out a graph that shows that they are in line with many other big business. Why should they be singled out for extra taxes? and what would be the effect?

If you have some sound reason for your position I would like to hear it but not just TV sound bites the same old platitudes.

This is your thread and you invited debate, yet you don't debate.
How will passing this bill be a benefit? Will the government get more money? I say very little. Will it improve our energy position? I say no and in fact it will hurt it.

Give us some reasons and than you position will not be considered unreasonable.

Nothing personal here I just would like to here a reasonable position.

Magic

[gimpy117]

I've given a reasons, I just didn't write a book about it so it got written off. heres the even shorter version

-Oil companies are making a lot of money
-prices still aren't low even with subsidies
-we have a large deficit

so, why are we letting them off with these tax breaks and subsidies when they aren't necessary? I really don't think I need to over-complicate things and reinvent the wheel here. It's pretty obvious Oil companies aren't struggling so I don't believe all these subsidies are necessary anymore.

oh and government getting money? I think it's more principle of the matter. It could also open more discussion to eliminating other handouts to the corporate world. Besides...every little bit helps...right?

[Armistead]

The very same rules apply.

I see what you mean and there is no doubt that traders do pump up the price but what are the alternatives, price fixing?

Don't get me wrong, I'm no big fan of the massive oil company profits and there is no doubt that they are sticking it to us, but again what are the alternatives. I would far prefer to see their personal incomes taxed that's all.

The very or super rich can certainly pay more tax but the Dems always put the limit at $200,000 to $250,00 and that is too low. Hurts too many small business owners. Put higher tax rates on one million per year and you don't raise near enough money to really help.

Change the tax laws and people will change their behavior and you don't get the revenue you expect. If it becomes more profitable to put money into something safe they will go see MookieMookie and buy bonds and not invest in business. (I think I remember MookieMookie saying he was in the bond biz.)

Do you have any idea how much it cost to open a simple thing like a McDonald's franchise. Easily a million and probably more.
And that is a business that is all set up for you and a massive marketing campaign as well. Who do you know that is willing to risk a million + on something that may fail. Not to mention the enormous amount of time and headaches that go with a small business. You deserve to make a pretty good profit and not have 30+% go to the feds and another 10 or 15% to local taxes.

Magic

I agree the tax rate is set too low, it should effect 1 million and over. Why it take a lot of money to set up a franchise, much of that you can deduct from your taxes...although many do set high franchise buy in fees.

When I ran my business in a big way, I made good money, 2-300K a year, We lived maybe a lil upper middle class, but not rich. I paid a lot of damn taxes.

Again, it's not so much about taxes as it is regulation, the more money you make the more shelters and loopholes apply.

We know something it terribly wrong, that 1% hold over 40% of all wealth, 10% hold somewhere between 50-80% of all wealth depending how how the numbers are worked...in the 60-about 80, 60% of us held 80% of all wealth...This is not because people are lazy...government has created a two class system and every study, every big business brain says it's coming like it or not.

If trickle down worked we would be a thriving nation. It could be fixed over time, but we have this two party system that can't work together, they would rather seek political power fully.

Get rid of all loopholes and shelters.
Cut the corporate rate down to 10% of less
Pass massive laws for US small busiensses that create jobs, incentives, less regulation, etc.
Change the tax code to a flat tax.
Americans won't save for retirement, it has to be law, change from a 401 system to a system of retirement that works and force all workers into it, slowly kill SS.
Strong regulation against big pharma and insurance, medical....sorry, I think a system of mass profit over health is one area of business that has to be regulated and non profit.
Use all our natural resources
Stop being the world police, we have several hundred bases leftover from WW2 that need to be shut down...place them on our border.
Get out of useless trillion dollar wars..Let the Seals do the killing, reverse terror, whatever..

[Aramike]

How? If speculators don't take delivery or use oil in any fashion, then the amount of supply is immaterial to them. They are simply in it for the price changes. Supply and demand factors move the markets, sure, but those moves are magnified by the speculation aspect. Volatility is intensified.

Again, you miss the point. A price movement of that much in two weeks means that the market is extremely volatile. Volatility is bad for gas prices. Volatility is great for traders.

You say look long term. I say now we're going in circles, which means it's my last post in this thread. Look at a chart of oil prices. Look at the performance since 2003. Since 2006. Since I've already pointed out why those times are significant, I'll not repeat myself.

If we indulge ourself in the fallacy of false choice and say our only options are to A) increase domestic supply or B) re-institute appropriate curbs on speculation that worked for decades, I'm going to take the option that doesn't require companies to invest billions of dollars for something that in 5 to 7 years will lower prices a little bit, but does nothing to address the volatility in the market. I'm going to take the option that can be done in a year or two and has an immediate and greater effect on the market.

Thank you and good day.All that must be said here (and that proves my point) is this: when you see an increase in futures demand (speculation), what causes it?

Answer: perceived threats to the stability of availability of the commodity itself. In other words, when the middle east is blowing up, so goes oil prices.

Now, concentrate more supply from less volatile regions and voila! Mopre stability in pricing.

Furthermore, concentrate more supply from the UNITED STATES who owns the world's reserve currency and - wait for it - dollar value INCREASES and prices decrease.

[Platapus]

Pass massive laws for US small busiensses that create jobs, incentives, less regulation, etc.

Can you give an example?

I am not sure I understand how passing laws (massive or not) can create jobs. Demand for products/services creates jobs.

I would also be interested in reading your opinions on how passing more laws can result in less regulation. I can understand laws resulting in a different type of regulation, but I stub my brain on how more laws can result in less regulation.

[Sailor Steve]

yes, I know, you don't agree with me so obviously I'm unreasonable. Im not going to pretend to be some kind of middle ground lets all be friends democrat just so i can get a pat on the back from time to time. I have my beliefs and thats how i see it.
Sorry for my rant, but it was triggered by you lumping me with "you guys". I agree with you in part, but the opposite of what you say is also true. You only see one side, and there is no room for any chance that you might be wrong. This is true of most arguers, and it's what I oppose more than anything else.

[gimpy117]

Sorry for my rant, but it was triggered by you lumping me with "you guys". I agree with you in part, but the opposite of what you say is also true. You only see one side, and there is no room for any chance that you might be wrong. This is true of most arguers, and it's what I oppose more than anything else.

no i understand, we are all human, but sadly there is a lot of polarization on here. I'm one of the many im sure.

[Aramike]

no i understand, we are all human, but sadly there is a lot of polarization on here. I'm one of the many im sure.Well then try not to be so one-sided! :know:

At the end of the day, it is my strictest belief that ANYONE who agrees across the board with one of the TWO political parties in the US has completely relegated their thought-process to someone else. As far as sins go, I cannot think of one greater.

[magic452]

Well paying off the debt didn't last long, they are already proposing to use the "extra" money to fund "green energy" technologies.

Great idea take money away form companies that are already developing green technologies and give a percentage to who knows who to do the same thing. Big oil sees a profit in this area and are using some of that HUGE profit to get their share. Capitalism at work.

Obama announced today that HE is going to develop more domestic oil production, don't see how he personalty is going to do this but that isn't important. The bill they are purposing will remove the vary tax incentives to do just that. It's all a political smoke screen.

Gimpy says that;
-Oil companies are making a lot of money

Oil companies are making a lot of money is very true.
That's why they are in business. HUGE profits for the company but just who is the company. Shareholders. Hundreds of thousands of them, every day Americans that have a pension plan, 401K IRA, etc. If you have any of these you ARE the big oil company. If you aren't put out your 80.00 or so dollars and get your 47 cents per quarter profit. Buy some EOM stock. Look at how many pensions etc that were hard hit by the Enron collapse if yo don't think this is true.

Some of those profits go to new energy development and technologies.
Why is it the government needs to put money into new technologies? The oil companies are already doing this. Make it profitable for them and it will happen. Capitalism at work.

"-prices still aren't low even with subsidies"
Prices are not low because of supply and demand and to a big part comedies traders. This bill and the policies in Washington do nothing to address this and in fact discourage this.

"-we have a large deficit"
Nothing here will do anything at all about the deficit. May even make it worse. The more they mess with the market the worse it gets.

It's all smoke and mirrors. They can all stand up and say that they are doing something about the problem but in fact nothing will be better and in fact may get worse. Both parties have had 20+ years to work on this and they have done nothing and it looks like that policy will continue.

I certainly don't have any love for big oil, in fact just the opposite but I have more faith in a free market than I do the government. A free market with good intelligent regulations. Neither party seems to be able to come up with any sort of intelligent regulations. Either too little or too much.

Magic

[Platapus]

-Oil companies are making a lot of money

Oil companies are making a lot of money is very true.
That's why they are in business. HUGE profits for the company but just who is the company. Shareholders. Hundreds of thousands of them, every day Americans that have a pension plan, 401K IRA, etc. If you have any of these you ARE the big oil company. If you aren't put out your 80.00 or so dollars and get your 47 cents per quarter profit. Buy some EOM stock. Look at how many pensions etc that were hard hit by the Enron collapse if yo don't think this is true.


I think the point is that a company that is making that much profit does not need to be subsidized by the taxpayers.

On the matter of deductions, I feel that all of the deductions across all the industries needs to be looked at. I also believe that not all of the deductions needs to be removed.

But on the matter of subsidy, I would like to read a justification that a company that is making billions in profit needs to be subsidized by the government/taxpayers.

If there is a good justification so be it, but I would sure like to read that one.

[magic452]

What we are talking about are not subsidies but every day tax deductions for operating cost that every business large or small are entitled to.

What this bill does is change the way these deductions are expenced.
They are taking everyday operating expenses and expencing them as a capital investment. In the long run the tax revenue will be very much the same. There will be a increase in tax revenue in the beginning but 15 years down the road there will be less.

Section 199 also allows you to recoup some of the capital outlay that you incurred by expanding or improving your business. To treat this as capital investment will spread the cost over 20, 30 or even 40 years.

An example. Obama announced that they are going to expand domestic oil production. The only place you can really do that at this time is off shore. This requires hundreds of millions of dollars invested in oil platforms.
This is a capitol investment depreciated over 30 or more years. Section 199 allows you to wirte off a percentage of that cost in the first year allowing you to recoup some of the cost at a time when you most need it.
This is an incentive to produce more domestic oil which is what Obama and just about everybody else wants. This bill strips section 199 form the equation. It is counter productive to their stated claims.

You inhibit domestic oil production.
You decrease shareholder dividends, that's you and me.
You increase taxes to pay off the deficit but they are already spending that money someplace else.

This bill is a lose, lose, lose situation pure and simple.

Again corporations DO NOT PAY TAXES, the consumers do, not the taxpayers but everybody that uses gas weather or not they pay taxes.

Many of these so called loop holes are there for a reason. Some of the reasons are very dubious at best. It certainly wouldn't hurt to take a good a look at all of them, but this one really serves it's purpose.

Magic

[yubba]

Tax tax tax, that's all I hear, how about cutting the insane spending or the growth of government, I got a sure fire solution too all of this, you raise taxes say 5 percent on every one, you cut spending and slash the size of government by 15 percent for a start, and every year you cut the size of government by 5 percent.

[gimpy117]

I think the point is that a company that is making that much profit does not need to be subsidized by the taxpayers.

On the matter of deductions, I feel that all of the deductions across all the industries needs to be looked at. I also believe that not all of the deductions needs to be removed.

But on the matter of subsidy, I would like to read a justification that a company that is making billions in profit needs to be subsidized by the government/taxpayers.

If there is a good justification so be it, but I would sure like to read that one.

Exactly, Subsidies are a good then when used properly and responsibly, they can prop up industries that are in a bad cycle. This however is not a time for subsides for oil companies...theres just not a good reason for taxpayer money to go to them, wither or not they have stockholders or not. Other companies have people holding stock...but do they get this treatment?




You inhibit domestic oil production.
You decrease shareholder dividends, that's you and me.
You increase taxes to pay off the deficit but they are already spending that money someplace else.


So you're saying that we should all have to pay for these oil companies expansions because it will cost them a pretty penny and your dividends will shrink? hrm...so its bad to pay for your healthcare...but i have to grow your 401K?

also, these aren't "Mom And Pops Oil Shop" These are the big boys in the industry, the ones who can already afford to expand and do more drilling. They Want new places to drill, it's not like we coax them into that. Also, lets think of what happens when we let them write off their expansion plans...they get to double Dip. Not only do they get to "recoup some of the capital outlay" at the people's expense, they get to keep all the profits they get from the increased production of oil.

[magic452]

"Exactly, Subsidies are a good then when used properly and responsibly, they can prop up industries that are in a bad cycle. This however is not a time for subsides for oil companies...theres just not a good reason for taxpayer money to go to them, wither or not they have stockholders or not. Other companies have people holding stock...but do they get this treatment?"

Yes they most certainly do get this exact treatment.
What this bill addresses are not subsidies but deductions for everyday business expenses. Every company gets these exact deductions in exactly the same way. With the exception of the Depletion Allowance and I do think that needs to be looked at again even though it may cost me personalty some money. The Depletion Allowance has gone far beyond being a incentive for domestic production and looks very much like a subsidy. The percentage needs to be reduced or eliminated and just use actual cost basis.

There is no taxpayer money going to them.
If they don't spend any money on new domestic development than they get exactly nothing. If they spend the money they are entitled to deduct it and they will, every penny, only thing this bill does is change the time over which it will be deducted. Section 199 lets them deduct more expense in the first one to five years. That's when you need the deduction most as you just put out one he** of a lot of cash.

Capital investment means the same amount will be deducted evenly over 30 or 40 years. The government will not really get any more taxes in the long run, but it will cost the oil companies quite a bit more to produce more domestic oil. I'm sure that you understand this concept. Capital outlay, loan amortization, negative cash flow, compound interest, etc.



"So you're saying that we should all have to pay for these oil companies expansions because it will cost them a pretty penny and your dividends will shrink? hrm...so its bad to pay for your healthcare...but i have to grow your 401K?"

Absolutely not!
First when you say "we are all paying..." I assure you that with or without this bill you will be paying for expansion and everything these companies do including the taxes they pay. But the "WE" are not the taxpayers as you infer. Everybody that buys gas or oil or anything else they make will pay for everything. Higher taxes = higher gas prices.

Taxes are a cost of doing business and are figured in when you set the price of your produce no matter what that product is. Every company does this on all products and they all get the same deductions.
Taxes are figured on net profit not gross income. This goes for all companies large or small. This bill singles out the oil companies and changes the way they may deduct their business expenses and nobody else. Why not change everybody taxes, Ford, Microsoft, Subsim, assuming that Neal makes a profit. (hope he does)

What the heck does healthcare have to do with the price of bananas.
I can guarantee you pardner that YOU are not paying one penny for my healthcare at least not now but once Obama care kicks in that may change.

It's not my 401K, i don't have one, but everyone's pension, IRA 401K etc.
Many, many millions of Americans have at least one of these items.
50% or so of working people in the US do not pay any federal income taxes
I would venture to guess that there are a larger number of people that have a pension, 401K or an IRA than people that pay fed taxes and all 311,000,000 people are affected by high oil prices.


"also, these aren't "Mom And Pops Oil Shop" These are the big boys in the industry, the ones who can already afford to expand and do more drilling. They Want new places to drill, it's not like we coax them into that. Also, lets think of what happens when we let them write off their expansion plans...they get to double Dip. Not only do they get to "recoup some of the capital outlay" at the people's expense, they get to keep all the profits they get from the increased production of oil."

This is with out a doubt the silliest thing I have ever read on this board.
EVERY COMPANY IN THE UNITED STATES gets these same deductions and they all, hopefully, make a profit off the expansion.
I had a very small business and I took these very same deductions and made a profit off them and of course I payed taxes on that profit.
You really do not seem to understand how a business works, any business.

By the way we are trying to coax them into expanding domestic production at least according to what Obama was just saying.

Big oil or any company doesn't give a rats behind about you or me they only want to make money and if they make more money using foreign oil than that's what they will do. Before they go for US oil they need to be sure it is more profitable that any other source. This bill takes some of the profitability out of US oil.

There is no doubt that they are putting the screws to us but what are the alternatives. If it wasn't these guys it would be some other guys.
Big oil is big business and it takes a big company to operate it.
Big companies make big profits and theirs aren't any bigger than the several companies that Mookie listed in his post.

I really hate to be here defending big oil but this law really stinks, it's going to cost all of us more at the pump.

Magic

[Platapus]

Every company gets these exact deductions in exactly the same way.

Actually, they don't. That is the reason for the bill. The purpose is to bring the oil companies in line with other industries. In the past, oil companies have been treated differently than other companies. This proposed bill's intention is to change that so that the oil companies are no longer treated differently but are treated similar to other companies.

[magic452]

Actually, they don't. That is the reason for the bill. The purpose is to bring the oil companies in line with other industries. In the past, oil companies have been treated differently than other companies. This proposed bill's intention is to change that so that the oil companies are no longer treated differently but are treated similar to other companies.

What are the differences other than the depletion allowance?
The depletion allowance is only for those industries that have natural resources.
Oil and gas, timber, coal, gravel and almost all minerals. So no real difference here.

The allowance is given to recoup the capital cost of your asset, namely the natural resource that you own.
The secondary reason is to enhance the exploration and development of these resources.
The laws were first enacted in the 1920s and the current oil and gas deduction is as far as i can find out 15% of your yearly output.
The depletion allowance goes to the owner of the resource not necessary the oil company itself.
I am the owner of land which has natural gas, I receive the depletion allowance not the oil company that is pumping the gas.
I get to deduct the 15% from the income I receive from selling my gas to the oil company, I pay my current tax rate on all the rest of that income. This land is very good farm land and the well, access road and pipeline reduce the amount of available land to farm.
But having said that I do think we need to look at this deduction again.

Do you have a link or something to the other deductions, such as Section 199, as I would really like to know?
If I'm all wet I'll be the first to admit it.

Magic

[Platapus]

I am afraid I don't, I just have the same bill that you read.

[magic452]

Never say never and never say exactly.
Section 199 is different than Section 179. 199 only deals with domestic production of anything not just oil. No domestic production than no Sec. 199 and Sec. 179 will apply and there is some difference between the two.
As far as I could find the IRS makes no distinction between oil and any other Sec. 199 company.

Don't get me wrong I don't like high fuel and energy prices any more than the next guy and that is why I oppose this bill. It will raise energy prices.
It will not reduce big oil profits. Consumers will be paying any extra taxes.
Higher energy cost drive up cost of just about everything else. Higher prices at the pump, grocery store, K mart, etc.

It's all a big smoke screen so the politicians can say "we are doing some and going after Big Oil." It's all about good TV sound bits.

Magic