Parties Seeking to Blame Each Other’s Policies for Gas Prices

[Hauldren Collider]

They are both very distortionary--by design. Neither are particularly good ideas, generally.

[MikeH]

Exactly. They do the same job.

[DinoDoc]

Some conservatives oppose energy subsidies of all sorts — including those for ethanol, wind, nuclear and solar power — and would be willing to see them all repealed as part of a reform of the business tax code.

What's the point of killing one subsidy when you leave subsidies for the rest on the table? Kill em all I say.

[Ogie Oglethorpe]

They are both very distortionary--by design. Neither are particularly good ideas, generally.

With respect to distortions the point is that if all extractionary industries recieve the same deductions how is one industry favored over another. The underlying point of the article is that the US is unfairly 'subsidizing' teh BIG OIL when in fact the same deductions appliy to coal, aluminum, gold, iron, etc. Further the renewables such as ethanol etc. find themselves with far greater subsidies on a unit of energy basis than BIG OIL.

I agree with the proposition that less dedcutions and lower tax rates as a consequence favor a more level playing field where the government isn't in the business of picking winners and losers. But for the purpose of this article the intention was to show that BIG OIL is unfairly favored, while if anything a case could be made for the opposite or equally favored at the very least.

[Dinner]

So all extractive industries are subsidised then?

But some more then others depending on how much "persuasive" their lobbyists are to congressmen (larger donations from lobbyists are usually found to be more persuasive). It works great for defense contractors too because they can insure none of their defense systems ever get cut (even if all the military leaders say they don't want it and can't use it) simply by bribing enough Congressmen to block the cut. For the company it's a great return on investment because a few tens of millions upfront means you get billions and billions from the government decade after decade even if you never build anything that works or anything which your customer wants. It's the ideal business.

[giblets]

Exactly. They do the same job.

Yeah, I had no idea the government needed to physically send a check in the mail before you could call it a 'subsidy'.

[Hauldren Collider]

Tax deductions are subtly different in their effects than direct subsidies. The difference is relevant.

[Felch]

By this dictionary definition subsidies seem to be cash payments, and I think that's what Ogie is talking about. Tax breaks are more like indirect subsidies. Tax breaks bother me less than cash payments, and there's a legitimate argument that we're best served strategically by having a competitive domestic oil industry. America is almost always in some sort of foreign conflict and it makes a lot of sense for us to distort the market in order to retain expertise in strategic trades. Tax breaks combined with restrictions on drilling mean that the government is sustaining an oil industry while keeping a strategic reserve of oil under American soil and waters. Besides, it's fair in my view to describe royalty payments to a foreign government a tax, and that seems to be the big issue here.

[MikeH]

But for the purposes of this discussion, the term is good enough.

I would term tax breaks like this to be "indirect subsidies" if we really need to get pedantic.

Typical Poly, ultra-anal discussion of semantics over discussing the actual issue.

[Dinner]

Tax deductions don't do anything for a company if it already doesn't owe any Federal taxes which is pretty common these days even for large companies. If they do owe some taxes then yes the deductions can help but direct cash payments would be seen as beneficial even to a company like GE which doesn't pay any taxes to the Feds. Free money is always desirable while lower tax rates might or might not encourage you to do something depending on you tax situation.

[Ogie Oglethorpe]

Yeah, I had no idea the government needed to physically send a check in the mail before you could call it a 'subsidy'.

It doesn't have to, however in a number of cases it does. Particularly when a company or individual has no tax liability because they have no income or profit to claim.

More critical thinking less retarded snark.

[Ogie Oglethorpe]

But for the purposes of this discussion, the term is good enough.

I would term tax breaks like this to be "indirect subsidies" if we really need to get pedantic.

Typical Poly, ultra-anal discussion of semantics over discussing the actual issue.

The actual issue being that Big Oil is given breaks in an unfair favored fashion a point that is questionable at best considering it apparentlt is the norm for non oil US industry.

[giblets]

More critical thinking less retarded snark.

Maybe you should present an example of critical thinking?

[giblets]

With respect to distortions the point is that if all extractionary industries recieve the same deductions how is one industry favored over another. The underlying point of the article is that the US is unfairly 'subsidizing' teh BIG OIL when in fact the same deductions appliy to coal, aluminum, gold, iron, etc.

The actual issue being that Big Oil is given breaks in an unfair favored fashion a point that is questionable at best considering it apparentlt is the norm for non oil US industry.

Is it a special exemption for extractionary industries or is it applied to all industries in the US? Make up your mind please. Why should the US federal government subsidize extractionary industries?

[Ogie Oglethorpe]

Is it a special exemption for extractionary industries or is it applied to all industries in the US? Make up your mind please. Why should the US federal government subsidize extractionary industries?

This would be an example of noncritical thinking.

Think a second. What is the commonality between an extractionary industry and other industries.

If a resource is finite and is undergoing depletion it is in fact similar to depreciating the useful life of an asset which is similarly finite and undergoing depletion.