I created the new Democrat mascot "hippocrat" for times such as these. Obama and the Democrats, up to and including my own dear brother (Bless his heart!) are talking about "subsidies" to the oil companies and doing away with them, as if that would do anything other than exacerbate the high price of gasoline and further slow an already weakened economy. First, a look at the weaselly word the Democrats use to describe the activity: "subsidize". The word subsidy has the connotation of one party giving money to another. If some entity of government "subsidizes" the arts, if may be through a grant to a symphony or a ballet company or just an artist who wants to photograph a crucifix in a jar of his own urine. A subsidy to any of these groups or individuals, implies that the government will transfer money to them out of their own coffers. Write them a check, if you will, to subsidize those activities.
Imagine, if you will now, an armed robber approaches you outside an ATM. He demands your watch, your wallet, your car keys and your cash, but tells you you can keep $20 of what you withdrew, because he wants to "subsidize" you getting back home. "What a nice guy," you think, "letting me keep part of my own money! So that's what a subsidy is!"
What Obama refers to as "subsidies" to the oil companies, are what most normal people call "business deductions" when it comes to nearly any other industry. And the laws that the legislators wrote to provide those "subsidies", possibly in exchange for campaign contributions, are then called "loopholes" by those who want to raise taxes on those same companies. (Or extort more "contributions" from them!)
First of all, note the social engineering aspect of it: If you perform certain activities of which we approve, they say, we will lower your taxes and let you keep more of the money you earn. So, Congress writes the law in such a way as to give you an incentive for certain types of expenditures and activities. Think of your home mortgage deduction. To encourage home ownership, Congress writes a law that enables you to keep more of the money you earn if you use some of it to purchase a house. In ObamaSpeak, this would be referred to as a "subsidy" to you, the homeowner, if he were at all consistent, and a "loophole" that allows you to get away with paying less than your "fair share". The fact that you would be chastised for doing exactly what they wrote the law to accomplish is referred to as "irony".
Obama and the Democrats want to create enough class envy so that you'll want to punish those nasty, rich oil companies by raising their taxes. And rest assured, taking away current, legitimate business deductions will effectively be raising the taxes oil companies pay.
"Good!", you might say. "Those SOBs earn way too much on the backs of the working stiff!" Only here's how it works in the real world, and Obama knows it. Taxes are a part of the cost of doing business. In order to open a business and stay in business, taxes are an expense, just like rent or salaries. In order for you to stay in business and make a profit, any profit at all, you have to charge more than your expenses. If your expenses go up, the cost of any goods or services you provide have to go up as well. So called "business taxes" are a hidden tax on everything you buy. That makes the oil company, and any other business, a tax collector for Mr. Obama. Every gallon of gasoline you buy at the pump, a percentage of which is taxes, (less any deductions), which goes to the government. And then, the dirty little secret is, that the government then taxes the retail price of the gasoline as well. So the higher the cost of a gallon of gas, inflated by increased taxation, the higher the revenue in state and federal sales taxes they collect. In other words, taxes on top of taxes. Double dipping. On the backs of the "working stiff".
The state and federal governments are already skimming an average of fifty cents a gallon in taxes. By comparison, towards the end of 2010, Exxon was making just a little over two cents a gallon on oil products here in the US, in profits. So, who's the one robbing you blind here? The guy taking two cents a gallon or the guy who's taking fifty cents a gallon and wants to take even more?
As has been pointed out before, gasoline taxes are regressive taxes. They hit the poor hardest. The Bamboozler-in-Chief rails against the oil companies as if somehow, raising their taxes and thus, the cost of gasoline, (and virtually everything else in the economy), wouldn't be anything other than kicking the poor while they're down. It's a cruel deception. But if the poor are struggling and relying on government assistance to survive, it does make them easier to control.
Back in 2009, Obama went on the record acknowledging that it is a "bad idea" to raise taxes during a recession. Unfortunately, that has not been enough to keep him from seeking new taxes and revenues from people in every tax bracket. The old campaign promise of not raising taxes on anyone making less than $250,000 a year, unfortunately came with an expiration date. The administration that cannot stop its own rapacious spending is looking for more and more ways to feed their spending habits. Raising taxes on the oil companies directly, and you indirectly, is yet another in a long line of bad ideas. Raise your hand if you think you're not paying enough in taxes?
It's demagoguery. Barack Obama wants to raise your taxes, and the cost of everything you buy...and he wants you to thank him for it. Thank him, please, with an early retirement.
Cross posted at Proof Positive