I just saw one of the most idiotic pieces of video in the history of idiotic pieces of video.
It was of Sen. Robert Menendez (D-NJ), who is up for re-election next year, touting this moronic bill that wipes out tax incentives for oil producers as a means of reducing gasoline prices. It’s not on YouTube yet, but sometime later today or tomorrow I’m sure it will be.
Understand this – 12 percent of the price at the pump is taxes. When you raise taxes, oil companies are not going to let that 12 percent increase, or at least not a lot. They’re going to pass that cost on to the consumer – which means stupid legislation designed to punish oil companies will have the effect of raising prices.
Particularly since the tax incentives being targeted by Menendez and his fellow morons and demagogues affect domestic oil production. Meaning, oil which generates revenue for Americans (royalties to landowners or governments) when it comes out of the ground. Oil the production of which generates jobs for American taxpayers, not Egyptians or Nigerians or Angolans or Saudis or whatever they call people who live in Brunei.
Should companies get special tax breaks from the government? No. They get those tax breaks, though, as a tacit admission that our corporate income tax rate is a disgrace. We’re at 35 percent. No country on earth where they actually have corporations, rather than warlords or witch doctors, taxes them at such a rate.
Is Menendez advocating that we wipe out all the tax breaks – including not just the ones oil companies get but the ones Harry Reid’s buddies in gold mining get and the ones the people who make mindmills and solar panels get, plus the wasteful subsidies we’re bestowing on makers of ethanol and other breaks – in return for a more reasonable and competitive corporate tax rate? Even President Obama said he was for that, and Obama’s debt commission said the same.
Is Menendez for that?
Instead, this is what he wants to do. Ask yourself why any oil company would even bother to look for oil in America rather than some impoverished sluicehole like the Sudan or Myanmar or Papua New Guinea once this stuff would go into effect…
- Recoup Royalty Revenue Lost to Contract Loopholes: This proposal would create an excise tax on oil and gas produced on federal lands on the Outer Continental Shelf (OCS) in order to pay back American taxpayers for contract loopholes whereby oil and gas companies avoided paying royalties on certain oil and gas produced in the Gulf of Mexico.
- End Oil Companies Abuse of Foreign Tax Credits: Would require that a dual capacity taxpayer establish that the foreign country generally impose an income tax to be able to claim a foreign levy as a creditable tax.
- Repeal Expensing of Intangible Drilling Costs: Would repeal the deduction for IDCs and require such costs be capitalized as a cost of the well or tangible property and recovered through depreciation or depletion, as applicable. Oil companies with yearly revenues of less than $100 million would retain the use of this deduction.
- Repeal Percentage Depletion for Oil and Gas Wells: This proposal would repeal percentage depletion for oil and gas properties. Oil companies with yearly revenues of less than $100 million would retain the use of this deduction.
- Repeal Deduction for Tertiary Injectants: The proposal would repeal the current deduction and instead allow oil companies to capitalize and depreciate or deplete costs for tertiary injectants. For example, supply costs would be capitalized and deducted when consumed or as part of cost of goods sold. Oil companies with yearly revenues of less than $100 million would retain the use of this deduction.
- Repeal Exemption of Passive Loss Limitations for Interests in Oil and Gas Properties: The proposal would end the exemption from passive loss rules for oil companies so they must operate under the same tax rules as other corporations. Oil companies with yearly revenues of less than $100 million would retain the use of this exemption.
- Repeal Domestic Manufacturing Deduction for Oil and Gas Production: This proposal would repeal the ability of oil and gas companies to claim oil and gas production as manufacturing, thus making the production activities ineligible for the domestic production activities deduction. Oil companies with yearly revenues of less than $100 million would retain the use of this deduction. The deduction would also be retained for oil refining and natural gas processing.
Menendez says he can raise $33 billion in 10 years with all this stuff, according to a static revenue study by the Joint Tax Committee. The truth is the American economy would lose five times that amount, the job losses would be staggering – particularly in states like Louisiana, our trade deficit would get a lot worse and oil prices would have to increase because the supply is going down.
I could accuse this guy of being an economic illiterate. I doubt I’d be wrong. Nothing about Menendez indicates he’s of even average intelligence, and when he gets his face on TV it’s almost always so he can say something your average longshoreman or the guy who drives the garbage truck could recognize is bullshit. Menendez is where he is because he was willing to dive deeper into the muck of New Jersey politics than the next guy, and his sleaze rather than his intellect is his calling card.
But I don’t think that’s why he’s proposing this crap. It’s not that Menendez is stupid. It’s that he thinks you’re stupid. He and his pals on the Democrat side pull this con every time oil prices start to run up – it must be that the oil companies are screwing us if the price is high, so let’s screw them back. Ultimately that rhetoric precedes prices going back down, but only because demand drops. They never – NEVER – back anything to increase supply.
Thankfully, this has zero chance of passing even in the Senate. The Republicans will filibuster it successfully, though it’s well worth watching to see if any of the RINO’s and squishes on the GOP side don’t vote for a filibuster so they can be targeted for electoral liquidation at the next opportunity. And once this got to the House it would be consigned to the round file immediately. So other than the source of increased blood pressure this whole thing is plenty of nothing.
But it’s indicative of the shitty leadership we have in Washington. And when you have so many shitty senators like Menendez, who spend their time in front of cameras living out the economic equivalent of that old cartoon saw about how “the beatings will continue until morale improves” rather than actually helping to make our economy competitive with the rest of the world, it’s not a surprise two-thirds of the country believes we’re on the wrong track.
It is beginning to appear that voters in New Jersey are starting to grow a collective brain – at least if Chris Christie is any indication. Hopefully they’ll continue that trend and scrape Menendez off next fall. Somebody this useless has zero business defiling the United States Senate for any more time than is absolutely necessary.