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House Dems: Closing special tax breaks not same as raising taxes
The Hill ^ | 25 June 2011 | Alexander Bolton

Posted on 06/27/2011 6:43:15 AM PDT by jda

House Democrats have demanded that a deficit-reduction deal include measures to raise tax revenue but they argue those proposals shouldn’t be viewed as proposed tax increases.

Rep. Jim Clyburn (S.C.), the assistant House Democratic leader and a member of the debt-limit negotiating team, said Sunday that closing tax loopholes are not the same as tax increases.

“The fact of the matter is, we have on the table all kinds of revenue raises that [Republicans] keep calling tax increases. How do you call closing loopholes to oil companies that are making billions of dollars in profits, closing up these loopholes that would generate $40 to $50 billion in revenue, how do you call that a tax hike?” Clyburn said on ABC News’s "This Week".

“That is no tax hike. You only hike taxes when you raise rates,” he argued.

(Excerpt) Read more at thehill.com ...


TOPICS: Business/Economy; Constitution/Conservatism; Government; Politics/Elections
KEYWORDS: debtceiling; debtlimit; jimclyburn; taxes
Democrats are adopting a new approach: arguing that raising revenues by closing niche tax breaks is not the same as raising taxes.

For the "when is a tax not a tax" file.

This is the ultimate in entitlement mentality - they think all of the money belongs to them and forget who the money belongs to in the first place. The so-called "loopholes" are there because of legislation that instituted the tax in the first place, but provides certain exemptions or credits.

The best policy when it comes to the government - keep both hands on your billfold.

1 posted on 06/27/2011 6:43:24 AM PDT by jda
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To: jda

2 posted on 06/27/2011 6:45:40 AM PDT by KentTrappedInLiberalSeattle ("If you're not fiscally AND socially conservative, you're not conservative!" - Jim Robinson, 9-1-10)
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To: jda
House Dems: Closing special tax breaks not same as raising taxes

OK, then ending earned income tax credits for people who do not pay Federal Income tax isn't a tax increase, either.

3 posted on 06/27/2011 6:46:38 AM PDT by Yo-Yo (Is the /sarc tag really necessary?)
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To: jda
A loophole is when Congress means to exempt one business from taxes and other businesses start using that method without paying the Congressional "toll".

Does anyone have a summary on what this oil company loophole is? I hear the Dems harp on it constantly, but I have never seen what the "loophole" really is.

4 posted on 06/27/2011 6:50:00 AM PDT by KarlInOhio (Extremism in the defense of liberty is no vice! Tea Party extremism is a badge of honor.)
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To: jda

The Democrats promised Pres. Reagan they would cut spending if he raised taxes. They lied and spent everything that came in and more.
The Democrats promised Pres. Bush 41 that they would cut spending if he raised taxes. They lied and spent everything that came in and more.

If Republicans fall for their lies this time, they should be voted out of office next year. Democrats cannot be trusted with more money because they will simply spend it on new benefits for the labor unions and favored lobbies, and the debt will continue to balloon. They love picking the “winners” and the taxpayers are always the losers. NO NEW TAXES FOR ANYONE, RICH, MIDDLE CLASS OR BUSINESSES!


5 posted on 06/27/2011 6:53:14 AM PDT by kittymyrib
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To: jda

This from the party of oral sex isn’t sex and the meaning of “is” minions.


6 posted on 06/27/2011 6:55:06 AM PDT by N. Theknow (Milli Obama Vanilli - Just mouthing the words that show up on TOTUS)
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To: jda

Evil, stupid, and dishonest: those who make this sort of claim fit at least two of those three categories. My bet is that all three apply.


7 posted on 06/27/2011 6:55:23 AM PDT by Pollster1 (Natural born citizen of the USA, with the birth certificate to prove it)
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To: jda
How do you call closing loopholes to oil companies that are making billions of dollars in profits, closing up these loopholes that would generate $40 to $50 billion in revenue, how do you call that a tax hike?” Clyburn said

Amen, Clyburn! I'm with you, bro!

If I was President, I'd make Big Oil pay the same tax rate as General Electric. That'll learn 'em! HA!

Oh. Wait. General Electric doesn't pay any taxes. I wonder how that came to be.

8 posted on 06/27/2011 6:55:44 AM PDT by Texas Eagle (If it wasn't for double-standards, Liberals would have no standards at all -- Texas Eagle)
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To: KarlInOhio

“Does anyone have a summary on what this oil company loophole is? I hear the Dems harp on it constantly, but I have never seen what the “loophole” really is.”

I would consider it a loophole if it were unintended. The “loopholes” their talking about were not...


9 posted on 06/27/2011 6:56:28 AM PDT by babygene (Figures don't lie, but liars can figure...)
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To: KentTrappedInLiberalSeattle
Rep. Jim Clyburn, stupid yesterday, stupid today and stupid tomorrow.

He still imagines that changing depreciation from 4 years to 5 years in a period where NO ONE is paying real interest, nor are they earning serious profits on stripper wells, will generate revenue over 10 years.

No, Jim, it doesn't. So, Jim, you are brain dead. Get over it.

10 posted on 06/27/2011 6:57:15 AM PDT by muawiyah
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To: Yo-Yo
"OK, then ending earned income tax credits for people who do not pay Federal Income tax isn't a tax increase, either."
Ya know, lately FR has been loaded with the post every 2 year trolls, and assorted libs trying to pretend they are part of this board in order to sow unrest and resentment among us. But, occasionally, a true freeper comes through and makes me stand up from my office chair and yell, " YEAH BABY "...you, sir, just made me do that.... :)
11 posted on 06/27/2011 6:58:14 AM PDT by joe fonebone (Project Gunwalker, this will make watergate look like the warm up band......)
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To: jda
Report: General Electric Paid No Federal Taxes Last Year

WHITE HOUSE GE's Immelt to Head Obama's New 'Jobs and Competitiveness' Board

12 posted on 06/27/2011 7:02:32 AM PDT by Texas Eagle (If it wasn't for double-standards, Liberals would have no standards at all -- Texas Eagle)
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To: jda

Funny how this idea only came to Clyburn AFTER the RATS lost The House.


13 posted on 06/27/2011 7:03:55 AM PDT by Texas Eagle (If it wasn't for double-standards, Liberals would have no standards at all -- Texas Eagle)
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To: jda; All
Clyburn is a Clymer. Again with the B.S. "Big Oil" "billions in profits" talking point. That dog won't hunt.

From 2006 to 2010, the nation's five largest oil companies posted an average profit margin of 6.65%. By contrast, Apple's profit margin exceeded 22% and Coca-Cola's surpassed 33%.
In defense of Big Oil: The truth about those huge, hated earnings numbers

"Big Oil" profits fluctuate with the price of oil which the Obama regime has plenty of influence over in terms of withholding drilling permits, moratoriums, war on Libya, misusing the strategic reserve...

What did Clyburn pay in taxes? The Bidens (23%) and Obamas (26%) used loopholes to avoid their 35% tax bracket.

14 posted on 06/27/2011 7:07:41 AM PDT by newzjunkey (Pelosi, Obama, Biden... more millionaire "taxes for thee, not for me" hypocrites.)
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To: babygene
It's depreciation on well drilling and maintenance equipment and materials. Pipe would be a part of the deal, but so would a pump.

It involves mostly existing oil fields ON SHORE. Wells gum up, the walls cave in, etc. so even in really old fields with just a few stripper wells around working intermittently as oil drains into collection areas, the owners have to drill new wells and put in new equipment. The period alloted for capital depreciation for these wells is 4 years. The Democrats claim you can make more taxes by stretching that out 5 years. They claim the difference is a SUBSIDY.

In truth during a period where interest rates are low, profits are low, and spending is low, the analytical techniques to figure out the impact of capital depreciation over time reveal no meaningful difference between 4 and 5 years.

The reason is that in year 6 the depreciation disappears and it's no longer available as a business expense. Over 10 years the business expenses are IDENTICAL no matter what the period of depreciation is (provided it's 10 years or less).

Every now and then you'll see a Democrat pointing to some whopping big number but that only happens when they add in off-shore wells.

There the oil is being pumped from US Government owned wells ~ the oil companies pay a lease fee for the area they're drilling in, plus they pay a royalty on each barrel pumped, plus they pay taxes on profits when they sell that oil in the form of gasoline or diesel, or pavement binder.

If you increase the period of depreciation, that will reduce the amount of capital the oil companies have available for one year, and that will turn into a reduction of value of leased sites (and the rent will drop as well when leases are renegotiated periodically), and the amount of oil pumped will decline and the US government will lose the royalties, and then the other taxes incurred in marketing that oil.

It's a really big loser for the Treasury to screw with depreciation affecting offshore wells in the slightest respect. It's just a big NOTHING when it comes to the on-shore wells.

I think the Democrats are mentally ill or something.

15 posted on 06/27/2011 7:09:08 AM PDT by muawiyah
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To: jda
Words mean nothing any more. We're not at war in Libya, increasing someone's taxes by ending something called a "loophole" is not really raising taxes, oral sex isn't really sex when a Democratic president does it...

If the government has a "right" to force me to buy insurance, do I have a right to be undocumented?

16 posted on 06/27/2011 7:13:27 AM PDT by rhombus
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To: Texas Eagle
Lets see. Yesterday I paid $4.00 in tax. Today I pay $5.00 for the same income. 5 is larger than 4 by 1. Therefore there is a $1.00 Tax increase. First grade math. Perhaps the democrats have not yet achieved this advanced level of mathematics?
17 posted on 06/27/2011 7:14:06 AM PDT by cotton
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To: Yo-Yo; All
Ha-ha! I like it!

Rep. Jim Clyburn (S.C.), the assistant House Democratic leader and a member of the debt-limit negotiating team...

How the hell can you negotiate with deceptive cretins like Clyburn and company?

18 posted on 06/27/2011 7:14:06 AM PDT by newzjunkey (Pelosi, Obama, Biden... more millionaire "taxes for thee, not for me" hypocrites.)
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To: jda
Nope. I'm in favor of closing loopholes and passing targeted tax increases on the following gtoups:

These people are all WINNERS IN LIFE'S LOTTERY. Their incomes are all well above the ordinary working man's.

None of these will harm the economy in any way because none of these groups produce anything nor do they hire people.

Raising targeted tax increases for these people will increase revenues and reduce the deficit.

19 posted on 06/27/2011 7:16:36 AM PDT by eCSMaster (We will fight for America and it starts here in Madison, WI. It starts here. It starts now.)
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To: newzjunkey
"Big Oil" isn't going to be paying this tax. Rather, the guys and gals who OWN OIL WELLS will be paying it.

There are a gazillion wells around owned by small consortiums of lawyers (for example), or doctors, or school teachers, or municipal retirement funds.

Depending on the ownership arrangements there may not even be taxes of any kind paid on the wells and equipment ~ just transfer tax on bulk oil sales to marketing companies.

A friend of mine had some spare cash 30 years ago so he put it into a sort of non-taxed family trust for the future use of his daughter decades later. He directed the trust to start buying into wildcat oil wells ~ the trust got lucky! I have no idea what it's worth today, but he's not the kind of guy to let his trusts give away money.

Clymer fails to understand that existing oil fields will always have new wells to replace old failing wells, and all that "depreciation" he imagines is sitting there really isn't ~ odds are a nonprofit or tax deferred corporation owns the well.

20 posted on 06/27/2011 7:17:20 AM PDT by muawiyah
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Comment #21 Removed by Moderator

To: muawiyah
Rep. Jim Clyburn, stupid yesterday, stupid today and stupid tomorrow.

Doesn't leave him much room for advancement does it.

22 posted on 06/27/2011 8:07:20 AM PDT by dearolddad
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To: KarlInOhio

I believe they are talking about a depletion deduction, which is a tax deduction you are allowed to take because your mineral rights have been depleted. This is a normal business deduction, similar to other business deductions in other industries. The Dems however have a hatred of the oil industry that borders on irrational. They have already succeeded in knocking this deduction down from 27% to the 14% it is now.


23 posted on 06/27/2011 8:36:12 AM PDT by sportutegrl
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To: muawiyah
"...I think the Democrats are mentally ill or something..."

How about: mentally ill AND something...

24 posted on 06/27/2011 8:48:36 AM PDT by rlmorel (Sometimes, the enemy of our enemy is our friend. But not always.)
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To: sportutegrl
If that's it then they are just taking early deductions for what would be capital losses on the land. Buy a million dollars worth of land, pump out $750,000 of oil and the land isn't worth nearly as much any more. Sell the land for the $250,000 of residual value and take a capital loss on the $750,000 drop in value. Or else take a deduction on the loss in value every year as you pump. There might be some arguments over whether they are accounting for the drop in value accurately, or overstating it (claim the residual value is only $1 instead of the $250,000 above), but they will get to claim the loss of land value sometime.
25 posted on 06/27/2011 8:51:30 AM PDT by KarlInOhio (Extremism in the defense of liberty is no vice! Tea Party extremism is a badge of honor.)
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To: jda

Loopholes? I’m getting tired of the over-use of this term. Tax breaks are fine for the industries they like, but when the same exact tax breaks are used by the oil companies, suddenly they are “loopholes.”


26 posted on 06/27/2011 9:02:57 AM PDT by antiRepublicrat
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To: babygene; LucyT
“Does anyone have a summary on what this oil company loophole is? I hear the Dems harp on it constantly, but I have never seen what the “loophole” really is.” I would consider it a loophole if it were unintended. The “loopholes” their talking about were not...

This is one of the significant issues in the negotiation and everyone needs to understand the substance of the argument.

There is only one item I am aware of that affects the "big (major) oil companies who are making billions of dollars" which is the Sec. 199 credit. It is a credit for production activities in the US--originally enacted to incentivize the movie companies to make movies in the US instead of offshore. To get it, the company needs to be paying significant W-2 income to people who work in the US.

I don't think there is a great deal of money at issue on this item--in fact, for the most part, the major oil companies left the Continental US in the 70's with most production activities. Yes, there are exceptions but I don't believe they result in $50bil of tax on the 199 credit.

There are two other items that affect only "small producers" (under the Small Producer Exception). One is the Intangible Drilling Cost deduction (deduct the cost of drilling the well as paid) and Percentage Depletion (write off 15% of gross taxable revenue from the well for depletion of the reservoir). Big oil doesn't get either one of these deductions--only small producers.

And the total tax number at issue on these deductions is less than $4bil in 2011 I believe (my memory of the last CBO report I saw).

As to the IDC and Percentage Depletion--the bottom line is that most Domestic Exploration is conducted by small companies based in the midwest; most of the money comes from people like you and me who can take those deductions.

Point is that Domestic Exploration is not a particularly profitable activity. Much of the production comes from oil wells (strippers) that produce 10-20 bbls a day; or 100 Mcf of gas a day or less. Absent the IDC, these wells don't get drilled; absent the Percentage Depletion, it costs more to produce these wells than they yield and the wells get plugged. Either is bad--the individuals who do the actual work get paid decent wages and those jobs are gone; and we send the money for the energy to entities that produce the energy offshore.

Among the other negative consequences, to get a deduction (write off actual costs of producing the reserves or doing the drilling) you need an expensive engineering report showing how much your reserves are and how much you have produced etc. The Big Oil Companies have a staff that does this stuff; Small Producers do not and cannot afford to have staff to do this. Part of why the activity is not economic without the deductions.

This is the argument that has kept Congress and previous administrations from repealing these deductions.

I am not real clear about the Sec. 199 credit because it seems to me it is like your hypothetical question--it is an actual cost issue which could be added to the cost of domestic oil if it were repealed.

27 posted on 06/27/2011 9:10:54 AM PDT by David (...)
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To: KarlInOhio

I own the mineral rights to a piece of producing land. I do not own the land. I intend to keep the mineral rights for as long as I live and give it to my children. It has been producing since the 1970’s. When would you say I get my deduction?


28 posted on 06/27/2011 9:17:38 AM PDT by sportutegrl
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To: jda

tax breaks help move products which are produced and sold with peopel working at jobs.

private jets have to be flowin in the USA, maintained in the usa, stored in the usa, and paid for in the usa.

each tax break removed is another job loss, another foreclosure, another family on the street. IOW good news for democrats.


29 posted on 06/27/2011 10:53:01 AM PDT by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: KentTrappedInLiberalSeattle

If ending special tax breaks isn’t raising taxes, then ending higher tax rates that only apply to the rich isn’t giving money to the rich, either.


30 posted on 06/27/2011 10:54:00 AM PDT by sourcery (If true=false, then there would be no constraints on what is possible. Hence, the world exists.)
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