7 Reasons nothing should stand in the way of the XL Pipeline

Discussion in 'Too Hot for Swamp Gas' started by g8orbill, Apr 25, 2014.

  1. g8orbill

    g8orbill Gators VIP Member

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    especially not political bulla bulla

    http://blog.heritage.org/2014/04/25...ion&utm_medium=email&utm_campaign=morningbell

    from the article:

    1. Can be built without the help of the taxpayer. Building and operating Keystone XL will result in real private-sector jobs that will grow the U.S. economy. This is much different from the president’s taxpayer-funded green jobs plan that merely siphons resources out of the market and forces pricier energy on the American public.
  2. rivergator

    rivergator Well-Known Member

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    so why do you think there's opposition?
  3. wgbgator

    wgbgator Sub-optimal Poster Premium Member

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    I think there is a pretty big NIMBY factor here, other than the environmental concerns. In my mind though, the jobs and evironmental impact are probably vastly overstated. Mostly, it seems Keystone has symbolic value for the "drill baby drill" and "save the whales" interests.
    Last edited: Apr 25, 2014
  4. mdgator05

    mdgator05 Premium Member

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    I like the very careful wording on that. "Can be built." Now in order to process the oil that comes out of the pipeline, we will subsidize the refineries to the tune of $1 Billion to about $1.8 billion. So yes, it can be built without the help of the taxpayer. It just can't be used without the help of the taxpayer apparently.

    http://www.midwestenergynews.com/20...billion-in-subsidies-for-keystone-xl-efining/
  5. wygator

    wygator Well-Known Member

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    Tax break, not subsidy. Big difference. This kind of rhetoric always assumes that the money belongs to the government and if we're allowed to keep a little more, it comes out of the pocket of the taxpayers.

    Most tax breaks exist for the purpose of promoting an activity considered beneficial to the country. A reliable supply of energy certainly falls into that category. Kind of disingenuous to pound these guys while the government is offering outright gifts of billions to unreliable green energy projects.
  6. wgbgator

    wgbgator Sub-optimal Poster Premium Member

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    You want to parse over words like "subsidy" vs. "tax break" as rhetorical sleight of hand, but then equate green-energy loans to "outright gifts?" At least find some consistency.
  7. wygator

    wygator Well-Known Member

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    Many of the loans haven't been repaid...I was referring to those.
  8. wgbgator

    wgbgator Sub-optimal Poster Premium Member

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    Since we're into rhetorical clarity and all, you can see how I might be confused since you refered to them as gifts, not failed loans. :)
  9. G8trGr8t

    G8trGr8t Premium Member

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    union boss on 0's recent decision. at least some of them are not happy with 0.

    But for cold political fury they have nothing on Terry O'Sullivan, who runs the Laborers' International Union that represents a half-million construction workers.
    "This is once again politics at its worst," Mr. O'Sullivan said in a public statement that deserves to be quoted at length. "In another gutless move, the Administration is delaying a finding on whether the pipeline is in the national interest based on months-old litigation in Nebraska regarding a state level challenge to a state process—and which has nothing to with the national interest. They waited until Good Friday, believing no one would be paying attention. The only surprise is they didn't wait to do it in the dark of night.
    "It's not the oil that's dirty, it's the politics. Once again, the Administration is making a political calculation instead of doing what is right for the country. This certainly is no example of profiles in courage. It's clear the Administration needs to grow a set of antlers, or perhaps take a lesson from Popeye and eat some spinach.

    "This is another low blow to the working men and women of our country for whom the Keystone XL Pipeline is a lifeline to good jobs and energy security."

    http://online.wsj.com/news/articles/SB10001424052702303825604579517990421310908
  10. Gatorrick22

    Gatorrick22 Well-Known Member

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    Because Obama's friend, Warren Buffet, owns a choo-choo train.
    Last edited: Apr 29, 2014
  11. GatorBen

    GatorBen Well-Known Member

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    The effect is the exact same as the subsidy. On both the fiscal impact to the government side, and the fiscal impact to the company side.

    If I am the government and I have you pay your normal tax rate and then write you a $2 million check, how does that differ at all from me telling you "just pay us $2 million less in taxes instead"?

    It's the exact same transaction, just processing it as a tax expenditure rather than a direct spending subsidy avoids the redundant middle steps of you writing a check to me, me depositing the check, and then me writing a check in the exact same amount and mailing it back to you.
  12. Gatorrick22

    Gatorrick22 Well-Known Member

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    Not even close to the same thing even if the end result seems, IYO, to be the same. Money earned and not given freely to the government is not money owed to anyone including the IRS..
  13. GatorBen

    GatorBen Well-Known Member

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    It is the exact same transaction. There's a base corporate tax rate that both the company the government wants to subsidize, and an indentically situated company that the government doesn't want to subsidize would pay.

    The government saying "we want to subsidize what you're doing, instead of paying the tax rate that you would normally pay send us $2 million less instead" is the exact same transaction as if I just let both comapnies pay the base tax rate that would normally be applicable to them and then mailed a $2 million check to the one I wanted to subsidize.
  14. Gatorrick22

    Gatorrick22 Well-Known Member

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    Look Ben, I'm against subsidizing several types business/industries including paying farmers not to farm. But if the government taxes you less and you receive no monetary compensation above and beyond less taxation then those are two very different things.
  15. g8orbill

    g8orbill Gators VIP Member

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    The EW's will never be for this pipeline being built and will always have no problem with the waste and maybe even fraud over the green energy companies that took billions and then went out of bidness- but hell let the guvment spend money on a refinery and oh not no but hell no
  16. GatorBen

    GatorBen Well-Known Member

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    If you're being charged less than the standard tax rate that would be applicable to a business that was situated identically in every regard other than the fact that the government wants to subsidize you and not them, it's the exact same thing.

    Look at hypothetical. I own a coal powerplant and I make $50,000 per year in corporate profit. You own a solar powerplant and you make $50,000 per year in corporate profit.

    The corporate tax rate on earnings up to $50,000 per year is 15%. So I owe $7,500 in taxes, and you would owe $7,500 in taxes. But the government thinks that solar energy is worth encouraging, so they offer you a $5,000 tax credit for being a solar energy producer.

    Now, even though our companies are identical except for the criteria being subsidized and we had identical earnings, my company is paying $7,500 in corporate income tax and your company is paying $2,500 in corporate income tax.

    Care to explain to me how that is any different than just letting us both pay $7,500 each (like we otherwise would) and then writing you a $5,000 check? The answer, of course, is that it's not. The government offered you a $5,000 subsidy for being a solar energy producer, just they chose to distribute it through the mechanism of a tax expenditure rather than letting us both mail in our $7,500 tax payments and then sending you a $5,000 check.
  17. 92gator

    92gator Well-Known Member

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    No, since your analysis rests on the presumption that the company would be profitable enough to pay the 2 mil. But if the company doesn't make any money, there would be nothing to tax (or less than enough to create $2 mil in tax liability, it would benefit less). And if the company goes under, the shareholders take the hit, not the government. And there are a thousand ways a company could go under.

    When the govm't subsidizes a company, and the company tanks, the govm't eats the loss, and the company's shareholders skate.

    The difference then, is in who is assuming the risk--and that's a pretty significant difference.
  18. GatorBen

    GatorBen Well-Known Member

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    Assuming you're looking at a direct subsidy rather than a government loan (which is the scenario that I'm addressing, a tax expenditure is the same thing as a direct subsidy, it's not the same as a loan) the entity bearing the risk is the same under each scenario. Money you got to withhold from tax payments is the exact same as money you got from a check. The government is out the same amount of money either way, and that amount of money sits in the corporate coffers just the same either way.

    While it's a nice budget trick for imaging, even really conservative tax law experts acknowledge that a tax expenditure is functionally equivalent to a direct subsidy. The only difference is in how they are reflected in budgetary numbers since the top of the fold budget number you see in newspapers doesn't count forgeone revenue as spending (even though all of the budget documents used to reach that top of the fold number and actually work out the budget do, they're included there as "tax expenditures"). Their chief advantage is that they let the government have the effect of spending money to subsidize things without having to explicitly say that they "spent money."
  19. Gatorrick22

    Gatorrick22 Well-Known Member

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    I'm all for encouraging business technology if that technology is viable and able to stand on it's own without constant funding and without killing, through over taxation, or other crafty regulations, of other competing industries. That's picking winners and loses that can backfire if your goals are cheap and affordable energy with the most possible jobs created all at the same time...

    Most of this can be handled feasibly with tax code overhaul that excludes all the loopholes/exemptions/favoritism in the current tax code/s.
  20. 92gator

    92gator Well-Known Member

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    Again though, you're only considering situations where the company is profitable enough for the tax break to be effective. Under today's circumstances, the pipeline looks to be very promising. But what if a company invested $50 mil. in a Keystone operation, and say, an earthquake--or that 'super volcano' out west erupts--and causes a huge disruption--or some new source of fuel is discovered that largely displaces the market demand for petroleum--or the dollar collapses, the stock market crashes....whatever--and the company winds up eating losses for several years (or even closing down, in bankruptcy, what have you)--did the government lose anything? Did the company gain anything? No on both counts.

    ...and who bore the risk? The Company.

    In contrast--same facts--except that the Government directly subsidized the Company--(not a loan, as you said, but straight subsidy)--the Company goes belly up. Did the Company gain? Yes. Did the Govm't lose? Yes.

    Therefore, in the latter scenario, the government at least participates in the risk.

    Goes back to WY's point, about who owns the money to begin with. Tax breaks and incentives and such, are not 'gifts' from the government; they are a backing off of their claim, to what is 'yours' to begin with--which may serve as profit incentive to influence what one does with their money.

    Direct (non-loan) subsidies otoh, help mitigate the risk (if not assume it fully, though that's not usually the case) to the private sector company.

    So I think WY's point is accurate--the difference is substantial.
    Last edited: Apr 25, 2014

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