Lying about “subsidies”

I am sick of the left lying about the supposed “subsidies” being offered to the oil and gas industry. See the screed by F. Mary Lee Ortega in today’s Albuquerque Journal. The author calls these tax breaks — which are available to other businesses — a subsidy — which is factually inaccurate under the definition of a subsidy: a form of financial assistance paid to a business or economic sector. Notice the active verb “paid to.” This is very different from not collecting taxes from a business or industry which is nothing more than a tax break or tax expenditure.

She also states that “We are paying the oil companies twice – once at the pump with high gas prices and then again on tax day.” Again, “we” are not “paying.” There is no transfer of money here and New Mexico families are not “under financial attack.”

We can/should have a debate about energy and tax policies — including fundamental tax reform and whether “green energy” should be subsidized — but no progress will be made until honest language is used. Ortega is either lying or attempting to create a smokescreen to cloak her real goals which is to simply attack an industry she doesn’t like. Regardless of her goals, it is important to understand that “subsidy” involves a direct payment.

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7 Replies to “Lying about “subsidies””

  1. Amen! I’d be a lot more convinced of Ms. Ortega was addressing Solyndra, Fisker or many of the other “green energy” boondoggles that the taxpayers really are subsidizing with real dollars extracted from the pockets of real taxpayers. Of course I’m sure Ms. Ortega would argue that large amounts are flowing back to the taxpayers through the mechanism of contributions to the Obama campaign, and besides much of it is borrowed money, which we owe to ourselves so it’s really free.

  2. The oil companies, unfortunately, have become the whipping boys for high oil prices including the misuse of the word subsidy. Like individuals, oil companies are simply taking advantage of all available credits and deductions thus the blame (if there is any) lies with Congress who writes tax laws.

    While Paul attacks the “left” for lying he acts as if only they do it. The “right” does the same. Many on the right call for drill, drill, drill, as if that alone will solve our high energy prices. America produces half of its daily oil supply thus must import the remainder. We could drill everywhere in America, onshore and off and still couldn’t make up the 9 billion barrel per day shortfall needed to make us oil independent. Furthermore, complete self-sufficiency doesn’t mean lower prices. Oil is priced in dollars and sold on global commodity exchanges thus is subject to world pricing based on global supply, demand and other factors. And it takes 10 years to bring new fields online anyway. The only way to guarantee lower prices (like Bachmann claims) is for the US government to step in and mandate pricing. Lying is the normal modus operandi of the left “and” right.

    1. Mark, Do you not know that we have enough natural gas in this country to power everything we do for the next 200 to 300 years, clean energy, here now? In terms of natural gas we are the Arabia of the World. The only reason we are not using LNG, cutting oil consumption form our enemies is simple. It doesn’t fit the liberal agenda… The other possibility… liberals are incapable of understanding supply and demand principles.

  3. In the never ending propaganda from the left we hear about subsidies and tax breaks being given to the big oil companies. As usual that bit of rhetoric linking these two words is fatally flawed.
    A subsidy is money awarded for a project or to a company for some action. Two examples come to mind, the Rail Runner and Green Energy. New Mexico will pay for the Richardson rail way boondoggle a hundred times over. Rail Runner makes me think of the highways in South East New Mexico… specifically the road way between Artesia and Hobbs. Specifically the cut off just the other side of Red Lake… a major portion of it has remained virtually unchanged since 1954, no shoulder, two lanes and dangerous! But, that is what happens with subsidies. The dollars in tax revenue generated in one place are taken and redistributed as bureaucrats see fit.
    In subsidies, tax payer money, actually changes hands from politicians to pet projects. When liberals speak of “subsidies” to oil companies… there is no money given to the oil companies, no money changes hands. By now we should expect such loose language from the left. Liberals are good a twisting words to promote their agenda of vilifying the oil companies. Liberals continue to use the tactic because they believe you and I are too ignorant to know the difference.
    On the national level – Obama subsidies were paid to one green energy company to the tune of millions, and low and behold the company once touted by Mr. Obama as leading the way to way to a green future and green jobs is now defunct… after all those millions in subsidy tax payer dollars, (42 cents of every dollar was borrowed). The giveaway was in the name of economic stimulus or so we were told. What do we have to show for it? …not even a single job. Wind power technology subsidies… about 2/3 of the money went to China for manufacture of the windmill generators, while 1/3 went for construction and American jobs.
    Tax Breaks
    When companies expand, or move into a new area, city or state tax breaks are often given to encourage the move and in some cases are the only incentives toward economic feasibility. The tax breaks are given with the knowledge that property values will rise, new employees will move in and more support businesses will also… and the tax roll grows. Businesses and most importantly people, workers, families and whole communities flourish!
    Liberals know this but are driven by their agenda of fomenting class warfare and hatred for corporations and capitalism in general. These people are Marxists to the bone, the product of our liberal colleges and universities… attributes that describe Obama’ Tsars, cabinet and many of his supporters perfectly.
    Tax breaks promote business in the best way and everyone wins economically. That is what they were designed to accomplish. Subsidies on the other hand remove the activity from free market influence. Inefficiency becomes the rule… and as the project collapses economic ruin follows. It is no wonder we hear that sucking sound from Rail Runner, eating our tax dollars. If we shut it down today the bonds issued to build it will still have to be repaid by you and me along with every other working citizen of New Mexico.
    Subsidies eventually bring about that terrible sound of tax dollars squandered and bond payments (debt dollars) going down the drain.
    Tax incentives, in stark contrast… promote economic growth and strong economic activity.

  4. I am not a tax expert but my understanding of what is called a “subsidy” to oil companies is not a subsidy at all.

    There are two tax breaks that apparently are involved in this reference. Only one applies to larger oil companies and that is the intangible drilling cost expense (IDC). IDCs are deductible in the year made and are mostly the cost of drilling a hole but not equipping a well. Costs of pipe, pumps and other completion costs are depreciated over a term of years. IDCs are just given a faster tax deduction than otherwise. This IDC cost is incurred if a well is dry and ought to be a straight deduction in that case anyway. No money is transferred to the oil company from anyone as in a true subsidy.

    Percentage depletion is another deduction but few oil companies qualify for it. Some small producers and royalty owners can often deduct 15% of the gross amount received as an additional deduction to take into account that there is an asset being depleted by production. Again there is no subsidy but a reduction in taxes occurs.

    Contrast these deductions from income with a real subsidy where money is taken from one taxpayer and given to another due to some policy set by the legislature.

    The left has been beating up on oil companies as long as I can remember. Make no mistake, their real motivation is to attack capitalism. Don’t fall for it.

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