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Politics : Politics of Energy -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (24832)	1/14/2011 12:48:16 PM
From: TimF	2 Recommendations Respond to of 86355

But one thing about them is easy to summarize: They are heavily tilted toward fossil fuels. Except that they aren't. As Brumar pointed out many of the things counted as subsidies for fossil fuels are fairly ordinary tax deductions. Depending on the specific deduction, I might support getting rid of them anyway as part of a more general tax reform, simplifying the tax code, causing it to shelter or effectively subsidize less, while lowering rates, but the are often the type of tax deductions that are widely available in our current tax code. Also even if you count them, the subsidy per unit of energy is much smaller for fossil fuels than for alternatives. The only reason any count of subsidies (even if broadly defined, and defined in such a way as to increase the measured subsidy for fossil fuels), can say that the fossil fuels get more, is because so much more of our energy comes from them. If the current subsidies for alternatives where maintained, and alternatives became a larger portion of our total energy supply, even this count would show the subsidies for alternatives as dwarfing the subsidies for fossil fuels. The fossil fuel that does get a lot of real subsidies or tax breaks that have the effect of subsidies (or are subsidies for broad definitions of the term), is coal. Not for ordinary coal, but for "clean coal". Which receives a lot of subsidies and produces little energy, so its perhaps the most heavily subsidized per unit of energy produced (unless you count basic research activities such as fusion power). Those subsidies are fossil fuel subsidies, but they are also "alternative" subsidies, since they are not subsidies for a conventional power source. In addition to all of that profitable conventional sources pay taxes. They pay income taxes that some alternatives don't pay because they don't make profits. They also pay specific extra taxes that greatly exceed the cost of the subsidy. The net subsidy for oil is negative, since the oil taxes are greater than the subsidies even broadly defined (in fact governments in the US make a much higher profit from oil than the American oil companies do.)

To: Road Walker who wrote (24832)	1/14/2011 3:23:31 PM
From: Alastair McIntosh	2 Recommendations Read Replies (1) \| Respond to of 86355

The deduction of "intangible drilling costs” as a current business expense isn't much of a subsidy (if any). In any for-profit business allowable costs incurred to produce revenue are deducted from that revenue, the balance being taxable income. Some expenses benefit more than one business period and a portion of the expense is usually deducted each year until all of the expense is accounted for. To encourage certain activities governments sometimes allow accelerated write-offs. However, in all cases all of the expense is eventually written off. The only subsidy would be the interest saved because of a quicker write-off. To state that the write-off of "intangible drilling costs” is a notoriously abused provision of the tax code is pure fiction. If the accelerated write-off were not allowed and higher borrowing was required the additional interest would be an allowable expense for tax purposes. If most of the so-called subsidies are in the form of tax benefits for accelerated write-offs the amount of the subsidies are quite small. irs.gov