Category Archives: economy

Oil Companies Are Raking In The Profits — And Tax Subsidies

The big 3 oil companies have reported a combined profit of $44 billion for 2012. The New York Times reported that these earnings have actually dropped based on stated expectations earlier this year. They are attributing it to the lower gas prices. They also note that the top five oil companies receive a total of $2.4 billion in tax breaks each year

According to Republicans, in order to balance our budget, they want to cut tax credits and programs that benefit the middle class, i.e., education funding for Pell Grants and public universities, tax credits like the earned income tax credit and mortgage deductions, Meals on Wheels and food subsidies for low-income families, but they absolutely refuse to end these oil and gas industry subsidies.  

The Center for American Progress Action has analyzed Romney’s tax plan and it would actually lower the top five oil and gas companies yearly tax rates by another $2.3 billion. They say this would double what they already receive in tax breaks. 

Think Progress wrote on this subject and they actually listed some of the ways these oil companies are spending their money. 

ExxonMobil:  

– Exxon spent 42 percent — or $10.7 billion — of its 2012 profits buying back its stock, which enriches executives and largest shareholders. 

– Exxon has spent $17 million lobbying for the past 18 months, making it the top spender in the oil and gas industry. It has spent more than $52 million lobbying for the first three years of the Obama presidency, 50 percent more than in the Bush administration. 

– Exxon is sitting on $18 billion in cash reserves. 

– Exxon send federal candidates $1.3 million in campaign contributions so far this campaign cycle, sending 91 percent to Republicans

– Exxon paid just 13 percent in federal taxes last year, lower than the average American family. Right after Mitt Romney, Senate Minority Leader Mitch McConnell (R-KY) is the top recipient of Exxon federal contributions

– Exxon CEO Rex Tillerson received $24.7 million total compensation.

Royal Dutch Shell

– Shell will start drilling in the Arctic this summer, but its oil spill response plan is still behind schedule. It’s off to an inauspicious start in the Arctic, recently losing control of an Arctic drilling rig. 

– Shell has spent nearly $22 million for the past 18 months, making it the second-biggest spender of the oil and gas industry. 

– Shell has more than $17.3 billion in cash reserves. 

– Shell bought back 15 percent of its second-quarter profits, or $900 million. 

– Shell CEO Peter Voser’s compensation more than doubled in 2011 to $15.3 million. His salary increased (in euros) by 113 percent. 

– In its annual report, Shell noted that the number of oil spills increased from 195 in 2010 to 207 during 2011.

Middle Class Would Find Higher Taxes Under Republican Plan

The Congressional Research Service released a report last month reviewing the Republicans proposed tax reform plan that would broaden the tax base, and what they found was that under their proposal the net result would be cutting taxes on the wealthiest Americans while raising taxes on the middle and lower class. The report was actually prepared by Democrats and they then sent their findings to be reviewed by nonpartisan tax experts including The Tax Policy Center. I have noticed this has received very little attention so I wanted to share some their findings.   

Under the GOP plan, they would replace the current tax structure with a two bracket system (otherwise known as a flat tax) — 25% and 10% — cutting the top tax rate from the current 35% to 25%. This would benefit everyone and result in a reduction of federal tax collection by $4.5 trillion dollars. Now on its face it sounds great, the middle class would pay a 10% flat tax rate. 

Here is the catch — Republicans including their golden boy Paul Ryan want to get rid of special interest tax loopholes and tax shelters. 

The Republicans have declined to specify the exact loopholes they would target, but what we do know is, based on their record, they are united in opposing ending any subsidies for industries such as oil and gas. 

The study found that the biggest loopholes that are currently in the system consist of tax breaks for employer-provided health insurance, mortgage interest, state and local taxes, and retirement savings, and these all disproportionately benefit the middle class. 

According to the Joint Economic Committee, “although households earning $100,000 to $200,000 a year would save about $7,000 from the lower tax rates in the GOP plan, those savings would be swamped by eliminating major deductions.” 

This would result in married couples falling in that income range would pay an additional $2,700 annually to the IRS, on top of the tax increases Bush tax cuts that are set to expire at the end of the year. Households earning more than $1 million a year would get a tax cut of about $300,000 annually (multi-millionaires would receive a huge tax break) while people making under $200,000 will see their taxes rise

Roberton Williams of the Tax Policy Center has reviewed the Committee’s report and he says:

That even though the numbers are rough its conclusions are largely accurate. Even with eliminating fairly major tax preferences, the Ryan tax plan remains regressive. That’s the bottom line. Unless you go after the tax preferences that benefit the wealthy, i.e., capital gains, dividends, tax-free interest on municipal bonds, it’s really hard to undo the regressivity of the rate changes. You’ll be shifting the burden of the tax code toward the middle class

I guess there is a reason why whenever Mitt Romney and his fellow Republicans are asked to give specifics on their flat-tax plan, they refuse and then go to their usual talking points, i.e., we need to broaden the base, let everyone have skin in the game…my favorite….we can’t raise taxes on the job creators, etc. This is yet another example that shows who Republicans are working for…the rich.

The Buffett Rule and Its Potential Impact On Our Economy


On Wednesday Senate Democrats proposed legislation that would ensure all millionaires pay a minimum federal tax of 30 percent, otherwise known as the Buffett Rule. The people over at Citizens for Tax Justice have come out with a study on the Buffett Rule (full report here) and the kind of impact it would have on our economy. I have broken down some of their findings below. 

Revenue Impact Depends on the Extension or Expiration of the Bush Tax Cuts 

The Buffett Rule would raise about $25 billion annually in years after 2012, while ending tax preferences for investment income would raise around $70 billion annually. These estimates assume the Bush tax cuts expire after 2012 as scheduled. 

In 2012, or in any year in which the Bush tax cuts are in effect, the Buffett Rule would raise around $50 billion while ending tax preference for investment. 

In other words, either of these policy options (the Buffett Rule or ending tax preferences for investment income) would raise more revenue if the Bush tax cuts are extended — but not nearly enough to offset the cost of extending those tax cuts.  

Under the Bush tax cuts, long-term capital gains are taxed at a top rate of just 15 percent while other income is taxed at rates of up to 35 percent, and stock dividends are taxed at a top rate of 15 percent also. The ability of wealthy people with investment income to pay lower effective rates than people with ordinary income is therefore greater in any year in which the Bush tax cuts are in effect. And any policy option to remedy that problem will therefore have a larger revenue impact during any year in which the Bush tax cuts are in effect. 

Of course, the Bush tax cuts include benefits that go far beyond breaks on investment income, and that’s why extending the Bush tax cuts would be extremely costly even if the Buffett Rule was enacted or all tax preferences for investment income were eliminated. 

The Need for the Buffett Rule 

A previous report from Citizens for Tax Justice explained how multi-millionaires like Romney and Buffett who live on investment income can pay a lower effective tax rate than working class people. As the report explains, there are two reasons for this. 

First, the personal income tax has lower rates for two key types of investment income, capital gains and stock dividends, as already explained. 

Second, investment income is exempt from payroll taxes (which will change to a small degree when the health care reform law takes effect). 

The report compares two groups of taxpayers, those with income in the $60,000 to $65,000 range (around what Buffett’s famous secretary makes), and those with income exceeding $10 million. For the first group, about 90 percent have very little investment income (less than a tenth of their income is from investments) and consequently have an average effective tax rate of 21.3 percent. 

For the second group (the Buffett and Romney group) about a third get the majority of their income from investments and consequently have an average effective tax rate of 15.2 percent. This is the problem that the Buffett Rule would solve.

New Republican Study — Millionaires Receiving Billions In Taxpayer Support

People who are protesting against the wealth inequality and a tax code that grossly favors the 1% now have a new ally, Tom Coburn, Republican Senator from Oklahoma. He has released what he describes as the “first-ever compilation of federal aid for the richest.”  

Let me be the first to say how very surprised I am by this study. Mr. Coburn is known to be a bedrock conservative who has strongly supported the no new taxes mantra, and when someone with his background starts to shine a light into the inequalities in our government I firmly believe he can do more to further the Occupy Wall Street cause than any encampment ever could. 

The study reveals some startling findings. For example, in 2009, $21 million in unemployment insurance was collected by people who earned more than a million dollars. Also, the U.S. Treasury pays out more than $30 billion a yearto people who make more than a million a year. Mr. Coburn says what the study “reveals is sheer Washington stupidity with government policies pampering the wealthy costing taxpayers billions of dollars every year.”   

In a letter that accompanied the study, Mr. Coburn wrote, “The income of the wealthiest 1 percent of Americans has risen dramatically over the last decade. Yet, the federal government lavishes these millionaires with billions of dollars in giveaways and tax breaks,” as noted in the recent Congressional Budget Officestudy that examined the growing income gap over the last 30 years.  

“From tax write-offs for gambling losses, vacation homes, and luxury yachts to subsidies for their ranches and estates, the government is subsidizing the lifestyles of the rich and famous. Multimillionaires are even receiving government checks for not working. This welfare for the well-off — costing billions of dollars a year — is being paid for with the taxes of the less fortunate.” 

“The government’s social safety net, which has long existed to catch those who are down and help them get back up, is now being used as a hammock by some millionaires, some who are paying less taxes than average middle class families.” 

The following list was compiled by Mr. Coburn showing federal money handed out to millionaires over several years: 

  • $18.15 million in child care tax credits 
  • $74 million in unemployment checks 
  • $89 million for preservation of ranches and estates 
  • $316 million in farm subsidies  
  • $608 million in business entertainment deductions 
  • $9 billion in retirement checks 
  • $21 billion in gambling losses 
  • $28 billion in mortgage breaks for mansions, vacation homes and yachts 

These are powerful findings and they are coming out at a crucial time during which we are debating cutting such vital programs like Medicare, Medicaid, Social Security, Education, etc.

CBO Debunks GOP’s Economic Plan

GOP has been very persistent in their claims of the way to fix our economy is through austerity — spending cuts to programs such as Medicare, Medicaid, Social Security, Education, Infrastructure, etc. Democrats have countered their plan with a balanced approach of spending cuts but with a focus on spending that would not hurt the most vulnerable in our society and increased revenue through modest tax increases and eliminating tax loop holes and tax subsidies.  

Politico is reporting the Congressional Budge Office came out with a report on Tuesday that shows spending cuts alone will not fix our budget problems. 

Indeed as measured by CBO, 2011 was a year that saw spending trends break heavily in favor of deficit hawks. The combined federal outlays for Medicaid, Medicare and Social Security rose by a little more than 3 percent — less than half of what had been the five-year average. Military spending grew by 1.1 percent, and after a 7.2 percent increase in 2010, other government activities fell by a negative 2.2 percent.   

Yet even in this climate, the deficit in 2011 ended up well north of $1 trillion for the third year in a row, all underscoring the poor economy but also the need for more change on both sides of the ledger. Addressing this gap was the great hope attached to the House-Senate supercommittee created by the August debt-limit agreement, but two weeks before the Nov. 23 deadline, taxes remain such an ideological stumbling block that it puts the whole enterprise in serious jeopardy. 

GOP did come out with a proposal this past week for $300 billion in increased revenue, however, as I wrote earlier this week, it did not appear to be the compromise they wanted everyone to think it was. It was clearly an effort to try to shed that ‘do-nothing Congress’ image.  

On November 2nd Treasury Secretary Timothy Geithner and Senate Minority Leader Mitch McConnell meet to talk about the Super Committee’s deficit plan. 

Geithner had come to the Capitol to meet with the Kentucky Republican prior to leaving for the G-20 summit in France, but McConnell steered the conversation back to the deficit-reduction talks and asked if the White House was hoping the supercommittee would fail. 

This has been a favorite theory of conservatives, who argue that failure serves President Barack Obama’s short-term interests by giving him another example of a “do-nothing” Congress. And it has especially rankled McConnell, who was pivotal to the August agreement and is invested in the 12-member panel.  

Geithner, who also was part of the August debt talks, pushed back, saying no, that Obama wanted a successful outcome and had submitted significant detail in September to help the panel meet its target. McConnell then criticized Democrats for being unrealistic in asking for $1.3 trillion as part of a larger $3 trillion deficit-reduction plan. The secretary answered by walking through the Republican counteroffer and showing that its claim of $640 billion in new government receipts was unrealistic itself, since so little of the total represented real tax revenue.  

McConnell was described as silent, and the meeting ended without any counterproposal to find middle ground.  

Just a few more tidbits of GOP’s proposal for the Super Committee’s deficit plan. They include drilling for oil and cutting the top tax rate to 28%. That’s right….MORE tax cuts for the wealthy.  

The former president of the Club for Growth, Toomey irritated Democrats by including ANWR drilling as one illustration of how government royalty revenue might be increased. And his approach to tax overhaul is to lock in such a low top tax rate in advance—28 percent—that tax experts say it would very difficult, if not impossible, to still have any room left for real deficit reduction.

Tax Subsidies — A Total of 56% Go To Just 4 Industries

Darrel Issa, Chairman of the House Oversight and Government Reform Committee, along with his fellow Republicans have been pushing for an investigation into the now bankrupt Solyndra, a solar company that received approximately $500 million in subsidies from the Obama administration. They are saying this has resulted in huge losses for the tax payer. This may turn out not to be true.  

CNN Money reported that during the bankruptcy hearing it was revealed the company had $859 million in assets and $749 million in liabilities at the start of 2011, and as a result there are some in Washington that believe we can actually recoup a big chunk of its cash. 

“The federal government owns the assets of borrowers that default and can manage or sell them,” Mark Muro, policy director at the Brookings Institution’s Metropolitan Policy Program, wrote in an article earlier this week. “It’s conceivable that taxpayers will not lose any money.”  

I think we should be looking at the other industries receiving subsidies from our government. This is something Republicans really don’t want to do as they are some of their biggest contributors. They have been resistant since tax reform has become the main topic in our political debates on ending these subsidies as they consider these to be a form of tax hikes (thanks to the Grover Norquist tax pledge). In all fairness though, Democrats also receive contributions from the very same industries, but they have been very focal at ending these subsidies. 

Citizens for Tax Justice has analyzed corporate tax rates from 2008 to 2010. They have examined over half of the Fortune 500 companies and it should be to no ones surprise that the richest industries are the ones that get the biggest subsidies. They found that 56 percent of the total tax subsidies went to just four industries: Financial, utilities, tele-communications, and oil, gas & pipelines.   

So I ask you, who are the biggest crooks in this system.

Republicans — A Party of Ebenezer Scrooges

In Bill Maher’s latest list of rules he compares the Republicans to Ebenezer Scrooge. In my opinion, it is not much of a stretch. If you have been keeping track of the political debates and stump speeches by the GOP presidential candidates, their views and ideas are so radical they are almost laughable. 

Here are some of their ideas for privatizing Social Security and Medicare….I guess they think we have forgotten all about that whole Wall-Street-created financial collapse thing in 2008. 

MITT ROMNEY: He pushed for the creation of Social Security personal accounts three separate times. In his 2010 book No Apology, he stated “individual retirement accounts would encourage more Americans to invest in the private sector that powers our economy.” Great idea…..we would be bankrupt after the 2008 financial crisis.

MICHELE BACHMANN: : Last year Bachmann said young workers “need to have some options in their life, so that going forward they can have ownership for their own Social Security, their own retirement, something they can pass on to the beneficiary of their choice.”

RON PAUL: During one of the presidential debates, he stated, “What I would like to do is to allow all the young people to get out of Social Security and go on their own!”

RICK SANTORUM: He launched his 2012 presidential campaign by declaring that he supports the President George W. Bush’s style of privatization accounts.

HERMAN CAIN: During the Tea Party debate, he stated “I support a personal retirement system option in order to phase [out] the current system. We know that this works.”

NEWT GINGRICH: He supported the House Budget Chairman Paul Ryan’s plan to create personal accounts.  

If that isn’t enough to scare you, the candidates have called for ending student loans, turning Medicare into a voucher program, repealing the “burdensome” regulations passed for Wall Street and the oil and gas industry, repealing the Affordable Care Act, and completely doing away with government entities such as the Department of Education and the EPA.

It should be noted that all of these proposals have received HUGE applause from the crowds. After listening to these guys, it makes you wonder are there any rational Republicans out there.

The video is below…enjoy!!