Subsidies for the Oil Companies
By bobmnu
@bobmnu (8157)
United States
May 12, 2011 12:52pm CST
Congress is holding hearings on Subsidies for Big Oil. First the politicians do not understand the difference between subsidy and tax deductions. A subsidy is a direct payment from the government or other group. A tax deduction is money that you subtract from the gross receipts of a company to determine the adjusted gross income which is what your tax is based on. What Oil companies are allowed to do is deduct the cost of drilling, wages paid, and other costs of doing business. This is the same as other businesses. In addition to the taxes paid to Federal Government, Oil Companies also pay state, local taxes and foreign taxes. Before they can drill for Oil they must bid on the rights to drill (paid to the government), then they pay for the lease and they pay a royalty fee for each barrel of oil they produce. Car companies do not pay a royalty on each car produced nor do any other company pay the government a royalty for the right to produce a product.
Compare that to the Alternative energy companies. The government pays them to do research and development, they pay them to keep the price competitive, the government also pays consumers to buy the product.
Which is the government better having an oil company or an Alternative Energy Company??
The other thing to consider is the attitude of the congress that some how the oil companies have money that the government is entitled to. Just like some beleive that because you are not paying taxes on what you earn in your IRA the government is losing money they are entitled to.
1 person likes this
3 responses
@ParaTed2k (22940)
• Sheboygan, Wisconsin
12 May 11
So the whole "Oil Company Subsidy" thing is just another lie from the left?
@dark_joev (3034)
• United States
15 May 11
To comment I kinda had to laugh hearing Obama's speech or well news conference thing with CNN on it. The Oil Companies make on average 2 -5 Billion a Quarter from that $4 Billion he quoted a day that they make in gross profit which is about right they only make a profit of 2-5 Billion though at the end of a Quarter so are they really making all that much.
these are stock values of companies in the United States Only one Oil Company.
1. Exxon Mobil $329.44 billion
2. Apple $272.73 billion
3. Microsoft (MSFT) $214.87 billion
4. Wal-Mart (WMT) $196.08 billion
Exxon Mobil is the biggest Oil Company and well Oil Companies do pay a ton of money to the Government and the states they operate in just to get to the oil.
Now personally I don't believe in Subsidies period I do think tax incentives work if their is something that may no be profitable to venture into and would otherwise not be something that the market would look at which is Alternate energy sources. As oil is limited in use and really isn't the most efficient energy source to be using. The most efficient Energy sources would be things like.
Geothermal
Electricity
Solar
Wind
Hydo
Magnets
The spending is the issue not how much money the government is going after and well these subsidies could go away and I don't think much would be lost as far as Exxon wouldn't make as much money but they would remain profitable. But if we are cutting subsidies then we need to cut all of them and preferably slowly so that the market can make an easy adjustment to this change nothing causes a panic that all of a sudden changes in the market that things like the government stepping back causes. We saw it in the 1930s when FDR pulled the Government back and a mini recession started all over again which congress quickly gave FDR his power back so that he could fix the economy. It was just the market needing to adjust to the losers that caused the mess to begin with and FDR may of even extended the time it took for the economy to bounce back.
This is just another side step from the real issue which is the big spending things like the two wars, the Defense budget and Social Security and Medicare which is the things that need some triming as well as some of these Departments that aren't needed or where never needed in the first place (DHS,TSA (being in airports) just to name a few)
@anniepa (27955)
• United States
13 May 11
To be honest, I couldn't care less whether they're called subsidies or deductions, the oil companies pay lower tax rates than other companies and make more in profits than just about any other companies. I have no problem whatsoever with companies making profits but they should also pay their fair share of taxes. Billions in profits and zero in taxes is hardly fair.
Annie
