Oil Company "Subsidies?"

OK, President Obama is not happy with the deal struck to bring down our debt, he now wants to get rid of subsidies for Oil companies, and raise the taxes on the most wealth Americans and corporations.

I did a search on oil subsidies, and it may surprise you (or maybe not).

Here are the tax expenditures the President has targeted: taken from http://www.americanprogress.org/issues/2010/05/oil_company_subsidies.html

1. Intangible drilling costs. Firms engaged in the exploration and development of oil or gas properties may expense (deduct in the year paid or incurred) certain types of drilling expenditures from their taxes. These costs include wages, fuel, repairs, hauling, and supplies related to and necessary for drilling and preparing wells for the production of oil and gas. Other companies incurring similar types of costs must recover this cost over the life of the investment. The administration expects that eliminating this subsidy will produce budget savings of about $7.839 billion over 10 years.

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If he is going to do this, is he also going to eliminate the deduction for small businesses for their expenditures, like mileage to and from work, if your business is in your home, the office computer, etc.? And it includes wages? How about when they give Congressmen $500,000 to hire up to 18 aides? How many congressmen are there? At $500,000 each! That would save a lot. Make them pay their employees just like the oil companies have to. And Senators get even more money for staff.

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2. Deduction for tertiary injectants. Tertiary, or enhanced oil recovery, methods increase the amount of oil that a company can extract from a well by an additional 5 percent to 15 percent according to some research. This tax expenditure subsidizes the costs of tertiary injectants—the fluids, gases, and other chemicals that are pumped into oil and gas reservoirs as part of this process. The subsidy essentially gives companies government money for acting in ways that will enhance their profits. It allows companies to expense the costs of tertiary injectants, even though such costs should be recovered over time. Companies can alternatively choose to deduct these costs as an intangible drilling cost.The administration expects that eliminating this subsidy will produce budget savings of about $67 million over 10 years.

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How about eliminating the subsidy to farmers to grow corn for ethanol? It's been proven that ethanol only makes an engine deteriorate faster.

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3. Percentage depletion allowance. Percentage depletion allows an independent oil company to deduct from its taxes about 15 percent from the revenue generated from a well, even if that amount exceeds the well’s total value. This means that oil companies take a deduction as long as a well is producing oil, without regard to how much, or whether, the well is still declining in value. Companies in other industries are only allowed to deduct an amount that represents the decline in their investment’s value that year. The administration expects that eliminating this subsidy to produce budget savings of about $10 billion over 10 years.

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Is this a way of driving the oil companies out of the US? Remember, under his plan, energy costs will naturally sky rocket.

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4. Passive investments. The government generally only allows investors to deduct a limited amount of losses from “passive activities” such as renting land in order to prevent tax shelters. Yet oil and gas properties are exempt from this rule. This gives oil and gas companies a competitive edge over other types of energy companies. The administration expects that eliminating this subsidy will produce budget savings of about $180 million over 10 years.

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And why is it when I bought my house in 2008, I had to sign something that said if they found precious minerals or oil on my property, it didn't belong to me? Do you think the government would pay me for it? Not.

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5. Domestic manufacturing tax deduction. Companies that manufacture, produce, or extract oil and gas or any primary derivative receive a manufacturing subsidy provided that the product was made in the United States. But since removing this subsidy does not affect the production of oil, the subsidy does not significantly affect business decisions and eliminating the subsidy would not affect consumer prices. The subsidy is essentially a throwaway for oil companies. The tax expenditure is provided through a deduction for 9 percent of income, subject to a limit of 50 percent of the wages paid that are allocable to domestic production during the taxable year. The administration expects that eliminating this subsidy will produce budget savings of about $17.3 billion over 10 years.

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Yea, won't affect the price of oil in the United States. Let's make it as unfriendly as possible so all the oil companies move to another country. Then we'll still be buying our oil from Saudi Arabia.

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6. Geological and geophysical expenditures. The Energy Policy Act of 2005 created this tax subsidy, which allows companies to deduct the costs associated with searching for oil, recovering the costs over a two-year period. The administration expects that scaling back the amortization period to seven years would produce budget savings of about $1.1 billion over 10 years.

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I suppose this is so they won't choose to drill in Alaska, or Idaho or where ever they could find new oil. Another one of Obama's anti-oil policies.

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7. Foreign tax credit. This credit is intended to prevent the double taxation of income that is taxed abroad but also subject to tax in the United States. Yet companies, particularly oil companies, have managed to exploit this subsidy even when they don’t pay income taxes abroad. In total, adjusting the rule would prevent companies from avoiding about $8.5 billion in taxes over a 10-year period.

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How about checking the books occasionally? They could then add their government employees and give them something to do. Instead they want to possibly double tax companies because some have exploited it?

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8. Enhanced oil recovery credit. Companies receive a 15 percent income tax credit for the costs of recovering domestic oil when they use “enhanced oil recovery” methods to extract oil that is too viscous to be extracted by conventional primary and secondary water-flooding techniques. The EOR credit is nonrefundable and is allowed if the average wellhead price of crude oil (using West Texas Intermediate as the reference) in the year before the credit is claimed is below the statutorily established threshold price of $28 (as adjusted for inflation since 1990) in the year the credit is claimed. Oil prices in fiscal year 2006 were too high for companies to receive this subsidy, but the subsidy remains in existence. Its elimination is not expected to produce budget savings.

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This is being eliminated because if we start producing oil again, the price WILL fall, because we won't be buying it from Saudi Arabia. He wants to make sure the money goes there.

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9. Marginal well production. This provision provides a subsidy for oil and gas produced from certain types of oil and gas wells. These wells include those that produce heavy oil and those with an average production within a statutorily specified range. Oil prices were too high for companies to receive this subsidy in fiscal year 2006, but the subsidy remains in existence. Its elimination is not expected to produce budget savings.

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Again, eliminating this one will only effect us if oil prices go down. That's something President Obama doesn't want....low fuel prices. Once again, under his plan, energy costs will necessarily sky rocket.

Do you really think that people hire on to work on oil rigs because it's fun? They do it for the money. It pays well. It only pays well and is profitable to drill for oil in the US because of these tax breaks. If these companies leave the US because it's no longer profitable, how many people will be out of work? Do you really think they'll keep the same people on if they move to a different country? This is nothing but a bid to make oil companies leave the United States. That way he can say the prices are high because we have to buy from the Arab countries. I have to wonder, where are his loyalties? They certainly don't appear to be with the American people.

What we need is changes to the tax code

I've been thinking a lot lately about our tax code. I tried to research how many Americans don't pay taxes, or in other words either get back all they paid in or more, but it's very varied. You can see the political slant in everything I researched, except one. http://www.taxfoundation.org/publications/show/25962.html

These are cold hard facts, which is what I wanted, and not some fairy tale that included illegal aliens. We can't really count that, as I would assume they don't file.

In a nut shell, this chart tells how many returns there were, and how many got all of their money (or more) back come tax time. It starts with 1950, when 53,060,098
claims were filed. There were 14,873,416 that got back their taxes or more. That's 28%. The number has ranged from 16.0% (in 1969)to 36.3% (in 2008). This table doesn't break it down into pay ranges.

This page: http://www.taxfoundation.org/research/show/1410.html breaks it down by state.

I had thought that far more didn't pay taxes, so I was mildly surprised. I don't mind people under a certain wage getting their taxes back. Here's my suggestion: don't let the refund EVER be more than what they actually paid in taxes. In other words, these stories you hear about people making $12,000 in wages for the year and getting back $8,000 in a refund is absolutely ridiculous. If they didn't pay it in, they shouldn't get it back. By them getting more than they paid in, they're taking it from the ones who don't get any back. Taxes are supposed to go to run the government, not pay low income people. That's redistribution of wealth, pure plain and simple.

Here's how our tax brackets look:

Single 2010 Tax Brackets

Taxable Income: Income Tax:
$0-$8,375 10% of the amount over $0
$8,375-$34,000 $837.50 plus 15% of the amount over $8,375
$34,000-$82,400 $4,681.25 plus 25% of the amount over $34,000
$82,400-$171,850 $16,781.25 plus 28% of the amount over $82,400
$171,850-$373,650 $41,827.25 plus 33% of the amount over $171,850
$373,650+ $108,421.25 plus 35% of the amount over $373,650

I think they make it complicated on purpose. But, basically the argument that the rich aren't paying their fair share is bunk. As you can see from the table, those making over $373,650 pay back 35%. So they start out paying $108,421.25 and then anything over the %373,650 is taxed at the 35% rate. That's not enough for the socialists? A majority of them don't get a lot back, either. Not so for those under the 25% mark. They usually qualify for Earned Income Tax Credit. So, they not only get back all they put in (which is the $4,681.25 plus 25% of the amount over #34,000), but they could get back much more than that.

It used to be if you got back a large refund, they wanted to know why. Now they hand out EITC's like candy. We made just a bit too much to get the EITC, but lets suppose we didn't. My Brother-in-law is in the 33% bracket. It would have been like taking his money and putting it in my bank account. I didn't earn it, but the government is going to give it to me anyway. We usually end up breaking even (meaning we paid the right amount of taxes) give or take under $100. This past year we paid $39 over what had already been collected. Two years ago we got back about $1,000, but last year we owed over a $100.

So, if we all agreed to the tax bracket, as complicated as it is, why do we feel the poor need even more than just what they paid into the system? I realize this has been going on for longer than the current Democratic President. From the best I can find out, the EITC started in 1975, under President Nixon. I wonder why the democrats would support something that a Republican president started? Because the more the government puts out, the more they can claim they're broke.

My solution? Use the current tax brackets that we have, but come time to file, you don't get back more than you put in. If the poor think this isn't enough, we should reconsider what is taken out. They can always claim all their dependents on withholding, so the government doesn't withhold as much. If you claim no dependents, the government will take out more, and you'll get more back. That's sort of like loaning it to the government until tax time.

Here's a good table for how many returns were filed...http://www.irs.gov/taxstats/article/0,,id=102886,00.html

If you look at individual tax returns, the income to the government based on the number of returns was .8% (based on they had so many files, and $x in income). The "evil" corporations had a much higher percentage: 9.1%

I don't see why we couldn't save billions of dollars by just getting rid of the Earned Income Credit. Further more, we could refund all but $20 and save even more.

When one doesn't pay taxes, one doesn't have an investment in this country. It's like renting a house versus owning it. You don't have skin in the game.

Now, I've said it before, I also believe congressmen shouldn't get as much as they do for their staff. I found an article that said that the house representatives get something like $500,000 for their employees. Do small business owners get that? No, they pay out of their own pay. No one pays them a $174,000 salary, plus giving them $500,000 for their employees. If you consider that, congressmen really make $674,000. What if they don't have the 18 employees they're allowed, do they get to keep the money? It would behoove them to only have one employee and pocket the rest of the money. Is that how they leave congress billionaires?

Just my 2 cents.

Democrat Scare Tactics

I'm afraid the Democrats scare tactics may be working. I first got as call from my mom (a life-long Democrat until this administration, when her and Dad started saying they were Independents) saying she was afraid she wouldn't get their social security checks. Of course, it will be the Republicans fault, even though they have put forth 2 bills, with Senator Reid flat out saying they would not pass either through the Senate. I explained to her that if we default, it's Obama's fault because he decides what gets paid.

Then today I get a call from my sister-in-law (a native of the Netherlands here on a work visa). She said a fellow employee of AT&A said his mother was in a tizzy because she wasn't going to get her Social Security check if the Republicans couldn't compromise. THEN, as I hung up, my mother-in-law called saying if Social Security checks don't go out, we probably wouldn't get our military retirement check. She wanted to know if I needed help with my bills (we have 2 mortgages). So, Mr. President, your scare tactics appear to be working. Just don't EVER talk to us about vitriol speech, or hate mongering ever again.

According to http://www.whitehouse.gov/omb/factsheet_department_state/, Obama requested $50.9 billion for foreign aid. Part of this goes to developing countries medical needs. What? He's paying to help developing countries medical needs while he tears ours apart? Use some of that money to pay out the checks.

According to the Bipartisan Policy Center:

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The BPC study found that the United States is likely to hit the debt limit sometime between August 2 and August 9. “It’s a 44 percent overnight cut in federal spending” if Congress hits the debt limit, [BPC's Jay] Powell said. The BPC study projects there will be $172 billion in federal revenues in August and $307 billion in authorized expenditures. That means there’s enough money to pay for, say, interest on the debt ($29 billion), Social Security ($49.2 billion), Medicare and Medicaid ($50 billion), active duty troop pay ($2.9 billion), veterans affairs programs ($2.9 billion).

That leaves you with about $39 billion to fund (or not fund) the following:

Defense vendors ($31.7 billion)

IRS refunds ($3.9 billion)

Food stamps and welfare ($9.3 billion)

Unemployment insurance benefits ($12.8 billion)

Department of Education ($20.2 billion)

Housing and Urban Development ($6.7 billion)

Other spending, such as Departments of Justice, Labor, Commerce, EPA, HHS ($73.6 billion)

The decision to prioritize payments would fall on the Treasury department, and Powell points out it would be chaotic picking and choosing who gets paid (in full or partially) and who doesn’t…

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I think there's a typo in there, because when I subtract, I got $66 billion. In order to get their "roughly 39 billion" I upped the active duty from 2.9 billion to 29 billion, and got 39.9 billion left over. Either way, those items can get paid. It's up to Obama how he wants to spend that $200 billion coming in. He's just trying to get it on record that it's Bush's fault (by way of the Republicans) so he doesn't have to accept any responsibility or rule in any fashion. I would like to know how much the tax payers pay every time he makes a trip to play golf? He flies on Air Force One, which ain't cheap, folks. where is that shared sacrifice?

Another way they could cut the budget is if these billionaire congressmen were forced to pay for their own staff out of their pockets, including the President and first lady. I understand Michelle has 26 "staff members," or servants. Why should we pay for her hair cuts and nails? Make her go out into the economy and get it done just like the rest of us have to. I bet if they had to pay their own staff, 1. the wouldn't be making over $100,000 a year, and 2. there would be a lot less of them.

I also have to wonder what the unemployment rate would be had Obama not hired all his cronies to work in his administration. I'm reminded of a line from Ghost Busters: "But, Binkman, you've never worked in the private sector. They demand results." (That's paraphrased, I'm not an exact geek who remembers things word for word.) And how much money could we save if they didn't pay all those Czars for a month?

So, if we default on anything (paying the debt, paying seniors and the disabled, paying our active duty military or the veterans) it will be Obama's fault because he can't budget or decide who to pay. The democrats just don't want to give up their pet projects.

Another update on me

I ended up buying compression sleeves for the lymphadema. They cost $91 EACH and I had to get two. I filed with my insurance (after getting a prescription from my oncologist), but haven't received any reimbursement yet.

I'm slowly gaining strength, and was able to go home (from Texas to Missouri) for my parents 50th anniversary. I haven't had any more problems with the insurance company, though I've run into problems with my company that handles prescriptions. My oncologist doubled my potassium (due to being on diuretics), but Express Scripts said it was too soon to refill the script. Then, my neurologist wrote a script for a name brand anti-seizure med. He found out last month they gave me a generic and said we can't do that. Apparently generics are allowed to be between 80% of the name brand up to 120%. He said that's not a problem with most meds, but we can't have that with anti-seizure meds. What happens if you get the 120% one month and the next month get 80%? It's too big of a jump. But my insurance company for meds (Express Scripts) requires prior authorization for name brand. This is something new because they used to only require the doctor to put on the script that he wanted name brand and not generic. Another problem with Obama care. They're already trying to save money but automatically substituting generics.

My son turned 21 in May and we just recently found out that our insurance company dropped him. Luckily, he's on Medicaid due to mental disability (he's Down Syndrome and autistic). They did say that we could go to any base with a pass and ID office and get the paperwork to put him on the retiree's version of the exceptional family member list. It basically says he's disabled and will live with us the rest of his life as a dependent. But I can't drive to places I haven't been before, the stress is too much in this frail state of my medical condition. I have to wait until my husband can take a day off from work and take us. So it will cost us money, as they figure the only people who need to go the pass and id office are already on the base, and they're only open during working hours. And I thought children were supposed to be covered until they were 26? Apparently not. And I have government insurance. Maybe they mean normal free-loading children, and not special needs who will require extra money to support?

Man, gotta love Obamacare. I started out being against this the first draft I read. I want to tell y'all......I told you so.

My Health Update

I'm getting a close up look at the "New" health care system. I've said before, I have Tricare Prime (military insurance, and therefore, government) because my husband gave 20 years to the United States Navy. We have it under him, but I also gave 4 years.

I dealt with breast cancer 6 years ago and defeated it, but now it comes back with both feet. It came back in my lung and on my spine. After 4 months of chemo-therapy, they think I am in remission. BUT, I have lymphadema. I am in the Dallas/Fort Worth area. I can not find a lymphadema therapist who will take my insurance, so I am forced to just deal with it. For those who don't know what lymphadema is, it means that my lymph nodes don't drain the fluid out of my arms and they swell up. Think about a finger that got smashed and the blood is collecting under your fingernail. It always feels better when the burn that hole in and let the pressure off. Well, my arms are swollen tight, an I can't go to anyone to relieve the pressure.

And why is this? Because Tricare Prime is about as bad as Medicaid. The government reemburses at a rate of about 19%. Why would they take government insurance?

And just think, pretty soon, every one will be on government insurance. Think about that one for a while.