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Those figures seem to come from here: https://www.cbo.gov/publication/43993#section0 https://www.cbo.gov/publication/43993#section0 In particular, the $3.2bn/

Those figures seem to come from here: https://www.cbo.gov/publication/43993#section0 https://www.cbo.gov/publication/43993#section0 In particular, the $3.2bn/year is a tax write-off sort of 'subsidy', not a grant sort of subsidy, which I believe solar has received recently (section 1603). Without doing more digging, I can't tell whether what those oil and gas write-offs are for. Exploration? Research?

smallnamespace 10y ago
Why is that an important distinction here? Both direct subsidies and tax credits/rebates/write-offs have the same net effect on the government's coffers. The Wikipedia article cites another article that has the breakdown (over a period of years): 1. Foreign tax credit ($15.3 billion) 2. Credit for production of non-conventional fuels ($14.1 billion) 3. Oil and Gas exploration and development expensing ($7.1 billion) https://www.eli.org/sites/default/files/eli-pubs/d19_07.pdf https://www.eli.org/sites/default/files/eli-pubs/d19_07.pdf
- CountSessine 10y ago
  Have you read that pdf you linked to? Similarly, the study counts funds used to support carbon capture and storage programs1 as a fossil fuel subsidy, despite their potential to reduce the emissions associated with burning coal. If that's counted against oil and gas 'subsidies', that doesn't seem right. Foreign Tax Credit ($15,300) - IRC Section 901. This is a generally applicable credit that is intended to enable taxpayers earning income or profits abroad to avoid double taxation. Wait - so a good 40% of the total is actually a non-subsidy that is the consequence of the US having a tax treaty with a foreign country? Not being able to double-tax oil and gas companies is considered a 'subsidy'? The US has a tax treaty with just about every civilized country in the world that has provisions to avoid double-taxation because to do otherwise would be pathological. Counting that is 40% of the 'subsidy'?
  - mikeyouse 10y ago
    The foreign tax credit is an oil subsidy since the 'creative' oil companies started structuring their royalties to foreign governments as taxes, so they can deduct them against profits. If Exxon has to pay a royalty of $1/barrel to Nigeria for access to their oil fields, rather than account for the royalty 'properly', they structure the deal to pay a $1/barrel tax to Nigeria. Then they can claim that they paid taxes instead of royalties and get the offset from the foreign tax credit.
    - linkregister 10y ago
      I don't doubt you but can you explain this in greater detail? I have filed for the foreign tax credit and it disqualifies most non-income taxes. I would presume royalties would be covered by this.
      - mikeyouse 10y ago
        Royalties are excluded, and the IRS has clamped down more in defining what exactly counts as income tax, but it's still common for oil and gas companies to structure their payments as taxes to get the credits. For instance, in Saudi Arabia, there is an 85% corporate tax rate on oil/gas companies and a 20% corporate tax rate on the average business. It sure looks to me like that's a 20% tax rate plus a 65% royalty rather than an 85% rate, no? http://taxfoundation.org/blog/treating-royalties-governments-taxes-they-are http://taxfoundation.org/blog/treating-royalties-governments...
    - CountSessine 10y ago
      <citation required>
      - mikeyouse 10y ago
        http://taxfoundation.org/blog/treating-royalties-governments-taxes-they-are http://taxfoundation.org/blog/treating-royalties-governments...
- efaref 10y ago
  > Why is that an important distinction here? Both direct subsidies and tax credits/rebates/write-offs have the same net effect on the government's coffers. It has a different effect on the entity being taxed. A tax write-off increases the rewards for an already profitable proposition, but tax write-off don't normally incentivise someone to do something that is a loss (unless the write-off is transferrable to other profits, but that's a separate question). Subsidies, however, can make a loss into a profit, incentivising people to do it. That's exactly the point of the original solar subsidies. Now that the solar industry appears to be relatively well bootstrapped, it's not unreasonable to remove the straight subsidies. I think solar still enjoys many if not all of the same tax write-offs as other energy sources.

smallnamespace 10y ago

Why is that an important distinction here? Both direct subsidies and tax credits/rebates/write-offs have the same net effect on the government's coffers. The Wikipedia article cites another article that has the breakdown (over a period of years): 1. Foreign tax credit ($15.3 billion) 2. Credit for production of non-conventional fuels ($14.1 billion) 3. Oil and Gas exploration and development expensing ($7.1 billion) https://www.eli.org/sites/default/files/eli-pubs/d19_07.pdf https://www.eli.org/sites/default/files/eli-pubs/d19_07.pdf

CountSessine 10y ago
Have you read that pdf you linked to? Similarly, the study counts funds used to support carbon capture and storage programs1 as a fossil fuel subsidy, despite their potential to reduce the emissions associated with burning coal. If that's counted against oil and gas 'subsidies', that doesn't seem right. Foreign Tax Credit ($15,300) - IRC Section 901. This is a generally applicable credit that is intended to enable taxpayers earning income or profits abroad to avoid double taxation. Wait - so a good 40% of the total is actually a non-subsidy that is the consequence of the US having a tax treaty with a foreign country? Not being able to double-tax oil and gas companies is considered a 'subsidy'? The US has a tax treaty with just about every civilized country in the world that has provisions to avoid double-taxation because to do otherwise would be pathological. Counting that is 40% of the 'subsidy'?
- mikeyouse 10y ago
  The foreign tax credit is an oil subsidy since the 'creative' oil companies started structuring their royalties to foreign governments as taxes, so they can deduct them against profits. If Exxon has to pay a royalty of $1/barrel to Nigeria for access to their oil fields, rather than account for the royalty 'properly', they structure the deal to pay a $1/barrel tax to Nigeria. Then they can claim that they paid taxes instead of royalties and get the offset from the foreign tax credit.
  - linkregister 10y ago
    I don't doubt you but can you explain this in greater detail? I have filed for the foreign tax credit and it disqualifies most non-income taxes. I would presume royalties would be covered by this.
    - mikeyouse 10y ago
      Royalties are excluded, and the IRS has clamped down more in defining what exactly counts as income tax, but it's still common for oil and gas companies to structure their payments as taxes to get the credits. For instance, in Saudi Arabia, there is an 85% corporate tax rate on oil/gas companies and a 20% corporate tax rate on the average business. It sure looks to me like that's a 20% tax rate plus a 65% royalty rather than an 85% rate, no? http://taxfoundation.org/blog/treating-royalties-governments-taxes-they-are http://taxfoundation.org/blog/treating-royalties-governments...
  - CountSessine 10y ago
    <citation required>
    - mikeyouse 10y ago
      http://taxfoundation.org/blog/treating-royalties-governments-taxes-they-are http://taxfoundation.org/blog/treating-royalties-governments...
efaref 10y ago
> Why is that an important distinction here? Both direct subsidies and tax credits/rebates/write-offs have the same net effect on the government's coffers. It has a different effect on the entity being taxed. A tax write-off increases the rewards for an already profitable proposition, but tax write-off don't normally incentivise someone to do something that is a loss (unless the write-off is transferrable to other profits, but that's a separate question). Subsidies, however, can make a loss into a profit, incentivising people to do it. That's exactly the point of the original solar subsidies. Now that the solar industry appears to be relatively well bootstrapped, it's not unreasonable to remove the straight subsidies. I think solar still enjoys many if not all of the same tax write-offs as other energy sources.