Sorry, but I just had to reply. The govt doesn't "give" any money to "oil" companies. Energy firms are allowed certain tax credits for taking risks in exploration.
Tax subsidy. That's very much a subsidy -- if I get a tax break for buying an electric car, that's also a subsidy.
If they find oil or gas they get to deduct a small portion of their expenses in this regard, AND the taxpayer wins, since they then in turn must pay royalties (assuming they are exploring on federal or state land) to the govt.
The royalties are FAR below market rates. That's also a subsidy!
[quoute]Subsidy-again show me in the tax code(which I understand) where anybody gets a subsidy. Let me help the uneducated understand a subsidy. As a young Navy E4, I could not afford a house. There was a FHA program called FHA-235 started in the 60s and their were various versions of it. I qualified for this no down payment program. The mortgage was $335/month. I paid $225/month. The FHA SUBSIDIZED the remaining amount by paying the other $100. Every April I had to send FHA a copy of my tax return. AS I got promoted and made more money, my mortgage share increased to $335/month as I got promotions/longevity raises and the SUBSIDY decreased form $100 to zero in (3) years. This subsidy had NOTHING to do with the tax code. It had to do with a Congressional LAW being passed. So saying we give the oil companies money/subsidies is an UNTRUTH (politically correct)
Or, more accurately, it's the truth. If you choose to pretend that a tax deduction for oil companies only (percentage depletion, domestic activities production credit) is not a subsidy, this is simply not the modern (post-1900) meaning of the word subsidy. If you choose to pretend that a below-market royalty rate is not a subsidy, this is simply a misuse of the word subsidy. If you want to say that it's not a *government expenditure*, that's fine and accurate, but these are *all* subsidies, just as any below-market deal or special tax break for an industry is in fact a subsidy.
Next you'll be saying that providing rent-free housing isn't "providing a subsidy". Consider this definition from the Concise Encylopedia: "Financial assistance, either through direct payments
or through indirect means such as price cuts and favourable contracts, to a person or group in order to promote a public objective."
This doesn't make the subsidies inherently bad, but pretending that they're not subsidies is economically unjustifiable. As you know, having studied economics.
You can have your own opinion, BUT you can not have your own facts. DO NOT use definitions from Concise Encyclopedia/Wiki when they have "legal" consequences. As a former business manager, I deal in the LAW, not touchy feely anti capitalism dissertations from dictionaries, Yahoo finance, Wiki, Huffington Post, PMSNBC etc.
http://definitions.u....com/s/subsidy/ Subsidy Law and Legal Definition
"A subsidy is generally a special money payment by a government to one or more firms in a favored industry, usually for the purpose of enabling them to sell one or more of their products at a price below their costs of production, or at least at a price below the free market price. "
"An example of a subsidy is a farm subsidy paid annually to farmers by the U.S. Department of Agriculture (USDA). The most expensive USDA programs are the field crop programs such as the wheat and corn programs. Annually the USDA gives farmers more than $9 billion a year in direct payments. The USDA offers to pay farmers per bushel of commodity at a guaranteed price, invariably set above the market price."
Oil companies sell their products ABOVE the their costs of production WITHOUT subsidies..
http://www.nypost.co...U9QIO0BKHs1Be7M
"Oil companies can deduct their expenses for things like equipment purchases and rig-technicians' salaries. Oil companies can also deduct expenses related to exploration or development. The point of these deductions as for any other industry or individual — is to ensure taxes are only levied on income
after expenses."
"But even these deductions aren't unique to energy companies. Many provisions in the tax code seek to encourage certain kinds of behavior. Mortgage deductions reward home ownership. Special tax benefits promote savings in individual retirement accounts or 401(k)s."
"Now, some energy-sector players
do get federal subsidies. The wind and solar sectors alone take in $12.5 billion annually in direct subsidies. (Actually they are GRANTS)"
I've tried to make it as simple as I could. The IRS is the law, not anti capitalism rhetoric. The IRS spends millions of dollars a year on accountants to make sure you report expenses and income correctly. I think I'll trust them first.
You can call LEGAL tax deductions subsidies all day, That doesn't make it true. I know it is "cool" in certain circles and political groups to demonize the oil and gas business (which I have NEVER worked for) and it makes them feel angry like they are getting screwed somehow and they "feel" they "need" to right a wrong and vote for someone who will stop them from taking LEGAL deductions. I'm sorry. I can't help people like that.
Also, I'm sorry I took so long to reply to you. I have been on my other favorite sites for a couple of days. I was explaining on one site (at length) the Social Security Retirement and Disability system (which I taught for 20+ years in Navy benefits classes). Can you believe it. Some of the people were so stupid, oops, UNEDUCATED, that actually thought there is real cash in the
Social Security trust fund in Parkersburg WV.
NAVYBLUE
