Tuesday, April 26, 2011
oil vs $
NEW YORK (CNNMoney) -- President Obama repeated his call Tuesday for an end to $4 billion in oil industry tax breaks as gas prices approach $4 a gallon and after a top lawmaker indicated a possible shift in Republican policy.
"I don't think the big oil companies need to have the oil depletion allowances, but for small, independent oil and gas producers, if they didn't have this, there'd be even less exploration in America than there is today," Boehner said on ABC's World News Tonight. "It's certainly something we need to be looking at."
Nonetheless, Obama took the chance to pounce, saying in his letter that he was "heartened that Speaker Boehner yesterday expressed openness to eliminating these tax subsidies."
Domestic manufacturing tax deduction: This is the largest single tax break, and would save over $1.7 billion a year if eliminated.
The tax deduction, passed in 2004, is designed to keep factories in the United States. Companies that manufacture here can deduct 9% of their income from operations that are attributed to domestic production.
But some question if that incentive is really appropriate for oil companies. "What are they going to do, move the oil field to the North Sea," said one staffer at the Center for American Progress said in an interview earlier this year.
No, but higher costs in the United States may make them move the drill rigs to the North Sea or some other place.
Eliminating the tax breaks "would actually discourage new energy projects and new hiring in one of the nation's most dependable job-creating industries," the American Petroleum Institute said in a statement at the time, noting the industry currently supports over 9 million jobs.
But critics say oil in the ground is not capital equipment, but a national resource that the oil companies are simply using for their own profit.
The foreign tax credit: This provision gives companies a credit for any taxes they pay to other countries. Altering this tax credit would save about $850 million a year.
Foreign governments can collect money from oil companies through royalties -- fees for depleting their national resources -- and income taxes.
A royalty would be deducted as a cost of doing business, and would likely shave about 30% off a company's tax bill. Categorized as income tax, it is 100% deductible.
Foreign governments long ago grew wise to the U.S. tax code. To reduce costs for everyone involved and attract business, they agreed to call some royalties income taxes, allowing oil companies to take the 100% deduction on a bigger slice of their bill.
Intangible drilling costs: This lets the industry write off about $780 million a year for things like wages, fuel, repairs and hauling costs.
In a letter to congressional leaders, the president said the oil industry is profitable enough without the tax incentives and that the money should be spent on alternative energy sources and conservation.
"CEOs of the major oil companies have made it clear that high oil prices provide more than enough profit motive to invest in domestic production without special tax breaks," said Obama. "As we work together to reduce our deficits, we simply can't afford these wasteful subsidies."This week those profits are going to be front and center. BP (BP) is expected to report earnings on Wednesday. Exxon (XOM, Fortune 500) is slated to announce its results on Thursday. Some analysts expect the company's profits to jump 50% from last year. Chevron (CVX, Fortune 500) is scheduled to make its earnings announcement on Friday.
The oil industry and many of its supporters in Congress have long argued that the tax breaks encourage domestic oil production and provide jobs for millions of Americans. Republicans in particular have resisted efforts to eliminate these tax breaks, something many Democrats have been trying to do since at least 2008.
But on Monday night, Speaker of the House John Boehner indicated he might be open to taking some of those breaks off the table."I don't think the big oil companies need to have the oil depletion allowances, but for small, independent oil and gas producers, if they didn't have this, there'd be even less exploration in America than there is today," Boehner said on ABC's World News Tonight. "It's certainly something we need to be looking at."
Depletion allowances let oil companies treat the oil in the ground as capital equipment, and they can write off a certain percentage for each barrel that comes out.
On Tuesday the speaker appeared to backtrack from those comments, with an aid telling CNN that "what the President has suggested so far would simply raise taxes and increase the price at the pump."Nonetheless, Obama took the chance to pounce, saying in his letter that he was "heartened that Speaker Boehner yesterday expressed openness to eliminating these tax subsidies."
This all comes as the price of gasoline surges above $4 a gallon in many states, making it increasingly difficult politically to defend Big Oil.
As gas prices approach their record highs set in 2008 they are threatening to derail the nation's nascent economic recovery.The tax breaks in question
The Obama administration is targeting nine tax breaks, according to a paper from the left-leaning Center for American Progress. Four account for the lion's share of the money:Domestic manufacturing tax deduction: This is the largest single tax break, and would save over $1.7 billion a year if eliminated.
The tax deduction, passed in 2004, is designed to keep factories in the United States. Companies that manufacture here can deduct 9% of their income from operations that are attributed to domestic production.
But some question if that incentive is really appropriate for oil companies. "What are they going to do, move the oil field to the North Sea," said one staffer at the Center for American Progress said in an interview earlier this year.
No, but higher costs in the United States may make them move the drill rigs to the North Sea or some other place.
Eliminating the tax breaks "would actually discourage new energy projects and new hiring in one of the nation's most dependable job-creating industries," the American Petroleum Institute said in a statement at the time, noting the industry currently supports over 9 million jobs.
The percentage depletion allowance: This lets oil companies deduct about 15% of the money generated from a well from its taxes. Eliminating it would save about $1 billion a year.
The deduction essentially lets oil companies treat oil in the ground as capital equipment. For any industry, the value of that equipment can be written down each year. But critics say oil in the ground is not capital equipment, but a national resource that the oil companies are simply using for their own profit.
The foreign tax credit: This provision gives companies a credit for any taxes they pay to other countries. Altering this tax credit would save about $850 million a year.
Foreign governments can collect money from oil companies through royalties -- fees for depleting their national resources -- and income taxes.
A royalty would be deducted as a cost of doing business, and would likely shave about 30% off a company's tax bill. Categorized as income tax, it is 100% deductible.
Foreign governments long ago grew wise to the U.S. tax code. To reduce costs for everyone involved and attract business, they agreed to call some royalties income taxes, allowing oil companies to take the 100% deduction on a bigger slice of their bill.
Intangible drilling costs: This lets the industry write off about $780 million a year for things like wages, fuel, repairs and hauling costs.
All industries get to write off the costs of doing business, but they must take it over the life of an investment. The oil industry gets to take the drilling credit in the first yearhttp://money.cnn.com/2011/04/26/news/economy/oil_tax_breaks_obama/index.htm
Wednesday, April 13, 2011
Artest speaking up on health
In the Human Factor, we profile inspiring figures who've confronted a challenge, tapped their inner strength and found resilience they didn’t know they possessed. This week Chief Medical Correspondent Dr. Sanjay Gupta talks to LA Lakers forward Ron Artest, who became notorious for storming the stands in pursuit of a fan. Today he champions counseling, saying more people need access to mental health care
http://thechart.blogs.cnn.com/2011/04/13/human-factor-ron-artest-says-im-an-example/
http://thechart.blogs.cnn.com/2011/04/13/human-factor-ron-artest-says-im-an-example/
Monday, April 11, 2011
Mexican drug trafficking
Although Mexico has been a producer and transit route for illegal drugs for generations, the country now finds itself in a pitched battle with powerful and well-financed drug cartels.
The government says more than 34,600 have been killed in the four years since President Felipe Calderón took office and threw the federal police and military at the cartels, with the toll for 2010, 15,237, the heaviest yet.
Mexican and American officials, crediting American training of the military and what they consider to be an increasingly professional federal police force, point out that more than half of the 37 most wanted crime bosses announced last year have been captured or killed. The government also maintains that the last quarter of 2010 showed a decline in the pace of killings.
But the public does not seem to believe it. A poll released Jan. 11 by Mexico’s national statistics institute found that more than 70 percent of respondents believed the country’s security had worsened since 2009.
Both Mexican and American officials, who say the two countries have never worked closer in fighting crime, are facing growing pressure to prove that their strategy is working. With Republicans now in control of the House, the Obama administration will face renewed scrutiny to account for the $1.4 billion, multiyear Merida Initiative, the cornerstone of American aid in Mexico’s drug fight.
The violence has in some cases spilled over the border and become a source of mounting concern in states in the Southwest. And in June 2010 a Justice Department report described a "high and increasing" availability of methamphetamine mainly because of large-scale drug production in Mexico.
In October 2010, the government announced that it was preparing a plan to radically alter the nation’s police forces, hoping not only to instill a trust the public has never had in them but also to choke off a critical source of manpower for organized crime. It would all but do away with the nation’s 2,200 local police departments and place their duties under a “unified command.”
In February 2011, the Pentagon began flying high-altitude, unarmed drones over Mexican skies in hopes of collecting information to turn over to Mexican law enforcement agencies. A Homeland Security drone was said to have helped Mexican authorities find several suspects linked to the Feb. 15 killing of Jaime Zapata, a United States Immigration and Customs EnforcementImmigration agent.http://topics.nytimes.com/top/news/international/countriesandterritories/mexico/drug_trafficking/index.html
The government says more than 34,600 have been killed in the four years since President Felipe Calderón took office and threw the federal police and military at the cartels, with the toll for 2010, 15,237, the heaviest yet.
Mexican and American officials, crediting American training of the military and what they consider to be an increasingly professional federal police force, point out that more than half of the 37 most wanted crime bosses announced last year have been captured or killed. The government also maintains that the last quarter of 2010 showed a decline in the pace of killings.
But the public does not seem to believe it. A poll released Jan. 11 by Mexico’s national statistics institute found that more than 70 percent of respondents believed the country’s security had worsened since 2009.
Both Mexican and American officials, who say the two countries have never worked closer in fighting crime, are facing growing pressure to prove that their strategy is working. With Republicans now in control of the House, the Obama administration will face renewed scrutiny to account for the $1.4 billion, multiyear Merida Initiative, the cornerstone of American aid in Mexico’s drug fight.
The violence has in some cases spilled over the border and become a source of mounting concern in states in the Southwest. And in June 2010 a Justice Department report described a "high and increasing" availability of methamphetamine mainly because of large-scale drug production in Mexico.
In October 2010, the government announced that it was preparing a plan to radically alter the nation’s police forces, hoping not only to instill a trust the public has never had in them but also to choke off a critical source of manpower for organized crime. It would all but do away with the nation’s 2,200 local police departments and place their duties under a “unified command.”
In February 2011, the Pentagon began flying high-altitude, unarmed drones over Mexican skies in hopes of collecting information to turn over to Mexican law enforcement agencies. A Homeland Security drone was said to have helped Mexican authorities find several suspects linked to the Feb. 15 killing of Jaime Zapata, a United States Immigration and Customs EnforcementImmigration agent.http://topics.nytimes.com/top/news/international/countriesandterritories/mexico/drug_trafficking/index.html
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