Government Subsidies

Subsidy? This is one of my pet peeves. The left in our country calls everything that is a benefit to anyone a "subsidy". But that isn't true. You actually have the definition of a subsidy right there, and you notice it says: "A subsidy is an assistance paid to a business or economic sector." Notice the key word... PAID... Many of what Obama and the left call a "subsidy" is actually a tax break, and the two are not the same. See in leftist world, every dollar you rightfully earn, is actually *their* money that they are benevolently *allowing* you to keep. Thus, if they allow you to keep more of *their* money, then to them it is a subsidy. But that's not a subsidy. The best way to think of a subsidy is taking money from person A, to give to person B. Person B is being subsidized by person A. Taking less money from person B, is NOT a subsidy. If you go to the store and find Cheerios are 1/2 off, you would never think "I'm being subsidized by the store!" If a thief came to your home every month and stole $200 from you, and then one month stole only $100, you would never think "I got a $100 subsidy!". Similarly, when the government simply doesn't take as much money from a company, that doesn't mean it's a subsidy. No one is taxed, so that their money can be given to the oil company. The oil company simply doesn't pay as much in taxes. So nearly everything they claim as oil companies being subsidized, really isn't. Is claiming a dependent on your taxes, mean you are subsidized by tax payers? Nope, then neither is a tax break to a company. 2 Cents This is very true. People talk about "Big Oil" companies, and fail to realize just how little control "Big Oil" has over the industry, and equally how high the competition is. Exxon Mobile, the biggest name there is in the Oil industry only has a whooping 3% of the worlds oil production. And only 9% of all Gasoline production. Not exactly a market controlling share. People often point to high oil production revenue, which is true. But that high production revenue is not in the US. 75% of Exxon's earnings came outside the US. Which that in itself is pathetic in my estimation. We use more energy products than any other country on the planet, and yet because we have hamstrung the companies, they can earn more in other countries than here in the US. It also points out what a MASSIVE benefit the oil companies are to the US. Exxon recently reported $9.4 Billion in profit. If 75% was earned outside the US, that means Exxon brought $7 Billion dollars into the US economy from outside the US. Is there any way you can see that as anything other than positive? My personal conclusion I am against all subsidies. All subsidies. Any time the government confiscates wealth from one individual, to give to another individual, that's bad in my book. I'm ticked off when a city steals money from tax payers, to fund a new football stadium, that a company is going to charge me to get into. It's like paying twice for the same service. But allowing people to keep their own money, is not a subsidy. However... I am against a tax break for specific companies. If we are all 'equal under the law' as we claim to believe, then everyone should pay the same. You shouldn't get a tax break for buying a hybrid car, or drilling an oil well. There are two specific reasons I hate these specialized breaks. [b]First, it gives government congressman ways to bribe companies. [/b] People like to claim the companies influence government, and that works well for politicians who deflect blame, but that's not how it works. Government loves high taxes, so they can get companies to lobby them for a specific deduction. We actually have tax breaks in the IRS code, that is specific down to the exact product by a single manufacture. The people in congress love this. They can get millions of dollars donated to them, or on their behalf, in exchange for these special deductions. Congress loves this system, and it's inherently bad. The second reason is that it encourages bad incentives. For example, some people remember a few years back the complaints about un-used oil leases. They tried to implement the "use it or lose it" rule. Why are companies doing this? Quite simply, there's a large tax deduction for holding an oil lease. The value of the tax deduction is larger than the cost of buying the lease. Result, many companies buy oil leases, and never use them. See, most of the leases require the company to pay royalties on oil produced. Thus if they produce no oil, they pay almost nothing for the oil lease. So the company buys the lease, and if there is a huge deposit of profitable oil, they win. If there is not, or if they never get around to really looking, then they still win because of the tax deduction. A side benefit is, if they hold the lease, no other company can drill for oil there. Thus they hold the competition in check. This is a bad system, created by bad tax incentives. Instead, lets eliminate all deductions, all exemptions, all abatement, and just have a lower (possibly much lower) tax rate. Now of course it's going to be hard to convince congress who greatly benefit from selling relief from insane taxes, to give up this system. Especially the left who have managed to convince their followers that higher taxes are good. (amazingly ignorant people on the left). FYI... I am against the "use it or lose it" rule on oil leases. Why? Because sometimes a company will buy an oil lease, knowing there is oil, and fully intending to drill there. However, drilling for oil is horribly expensive. It takes time to build up the capital reserves to drill on that land. Not to mention the INSANE litigation and government permits, that all must be done to finally drill. There is no way to know which reason is why the company is not using the lease. We could be stripping companies of oil leases, when they are doing everything they can to develop the oil reserves. No, instead just remove the bad incentives. Without the massive tax deduction for holding a lease, no company would continue to hold a lease that they didn't intend to use.

I think in theory they are good but in practise they have been horribly abused. Yes there are some industries I do feel should be subsidized to help all around. Our Farmers and and other food creating industries that becasue of our economy are having a hard time if surviving if doing so at all and lets face it without them what will our nation do, we need food and it cannot all be imported who could afford that. I do not beleive companies who make billions in profit a year should get any breaks from anyone at this point. In fact if a company comes in any where over a million dollars profit they should not be entitled to any breaks as they are making a good living.

i would be for tax subsidies to help oil and gas companies develop domestic oil and gas reserves. i wouldn't support tax subsidies for oil and gas development in other countries.

Which countries don't have subsidies? The richest country like USA still need subsidies on certain sectors, let alone developing countries. Am i right?

While I do not agree with government subsidizing businesses, this is just one way that Obama will be busy picking winners and loosers instead of allowning the market to decide. Why do I think that? He's always believed in subsidizing alternative energy companies. Why suddenly, in sn election year, is he changing his tune? I'm sure he thought, here's a way to be able to say he is decreasing spending, AND take subsidies from industries he deems unworthy.