Corporate taxes….

An article appeared yesterday on Worldnetdaily titled, “Most companies in US avoid federal income taxes“. Not long after reading this, I saw the latest Obama commercial about how unfair it is that Oil companies are reaping record profits while we the people are suffering thru really high gas prices, so as Prez he would tax corporate profits to give a rebate to the ‘poor’. 

Marry that up with this quote off of Worldnetdaily by the ‘good’ Senator from North Dakota, ‘”It’s shameful that so many corporations make big profits and pay nothing to support our country,” said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich.’

These ideas tread on VERY VERY slippery ground.  First, most if not all of our 401k or similar retirement funds are in mutual funds of which the majority of have oil stocks.  Good performance for the corporation is good performance for the investors.  The price of the stock goes up which means the balance on our retirement funds goes up.

I’m not business accountant or attorney, but as I understand the tax laws, corporations (and I mean ALL corporations) are different then individuals in that they Earn Profit, Pay expenses, then Pay Taxes on what’s left.  As worker-bees, we work to earn Pay, Pay taxes, and then Pay expenses.  Its been set up that way since I don’t know when.  A very well run small business will carefully balance their income with expenses so that at the end of the fiscal year, there is little or no profit left to pay taxes on.  If your a business owner and have a high tax bill each year, you’re probably not doing something right.

While a corporation may make huge profits but pay little to the tax man, a hugely profitable company will be a growing company, hiring more employees who do get paid and taxed and then spend what they have left on other taxable goods and services.  Comparably, a company that makes little or no profit probably won’t be around for very long.  It isn’t hard to understand by people who don’t have an economics background.

Exactly how Obama plans to tax just the big bad oil companies is another big question.  Will there be a new corporate tax on wind-fall profits specifically?  Will there be a special wind-fall tax that only applies to what ever company happens to be raking it in at a given time?  All things are cyclical.  Piling a new tax onto businesses usually doesn’t work out very well, because increased taxes just flow on down to the point-of-sale consumer.  Suddenly when oil profits are no longer considered ‘windfalls’ and someone else starts raking it in, like Electricity companies with solar or wind power generation capability, or maybe Toyota America profits are high, are they fair game for new taxes????

Sure doesn’t sound like a democratic land of opportunity to me, sounds an awful lot like communism or socialism….take what every company or individual earns, an redistribute it to the populace…..

Scary, very scary!..

I’m not saying McCain is much better, but on at least this one issue….

Keep oil & gas private: Do we ever learn from history?

Good day world!

I just read an article reporting a push among Dems in Congress to nationalize all the refineries so that the government can control how much fuel is on the market and avoid price manipulation.   The statement was made more as a threat to the big oil companies that if prices as the pump don’t come down, the govt will do it by controlling the refineries and their output levels.  This of course makes no sense because ANYTIME the government steps in to provide a service, it virtually ALWAYS costs MORE.  Government brings with it bureaucracy and hosts of additional Federal employees to oversee new agencies and services.  Its the nature of the beast.  Of course, the lemming consume may buy into this concept – especially if prices at the pump were lower.  But the shell game will be lower gas at the expense of HIGHER TAXES to pay for the operations, maintanence, and oversight of the service.

Its a bad idea.  Just as nationalized medicine is a bad idea.  Want to look at a micro-example of a national health-care system, look at the military provided health care and VA services.  Or the NHS in the UK or Canada.  Long waits, substandard service when compared to private service provisions.  The claim they want you to believe is that these nationalized services are cheaper and better.  The reality is that things may be cheaper at the point of service (doctors office, hospital, gas pump) but the higher taxes that go to subsidize all of these gets ignored.

To think that the government can provide something better and cheaper than a for-profit company is fools folly.

There’s a Hyundai commercial that advertises “think about it”. We as a populace need to start using our BRAINS and our VOICES.  Don’t just listen to a little new-clip or sound-bite on the news and accept what is said at face value.  Most issues are complex and warrant more investigation and analysis before just venturing down the road.

Case in point is the quick fix that Ethanol/Bio-fuels are the solution to both high fuel prices and green-house gas emissions.  The amounts of energy (and greenhouse gases) emitted by the production of these fuel alternatives make any savings a wash.

Congress may want you to believe that immediately opening up more US lands for drilling and oil production will solve the gas price crisis.  They also like to say we need to end our dependence on Middle East Oil.  What is never ever mentioned is how long it will take to locate the oil, drill the wells and start the oil flowing.  Months or years.  Nevermind that we would simultaneously need to build some additional refineries to process that new oil there by impacting the supply/demand equation.  They also don’t like to include the percentages on where oil comes from.  Last I checked, the majority of our oil imports are from either Canada or South America with Saudi Arabia the biggest mid-east contributor.

High gas prices will eventually lead to commercial solutions reducing the overall impact of the increases.  Car manufacturers will finally start building more fuel efficient vehicles.  NOT just hybrids or tiny death-mobiles but also more fuel efficient engines.  The technology will come.  Electricity production will become more efficient.  Its going to be painful for a while, but the solutions will come and they will come from for-profit companies seeking to scratch the consumers itch.  MORE help from BIG government with the piling on of more taxes isn’t the solution in my opinion.

Taking moral stances with ‘Christianity a la Carte’…

Over the weekend while having a friendly conversation with an acquaintance at the pool, the topic (strangely) of gay marriage came up in the form them asking “Do you support gay marriage because we are against it”. Literally the question popped up with no relevance to any other previous topic in the conversation. For the record, I am not gay nor do I personally have any gay friends or family members. I do find it interesting how polarizing the subject is, especially among my friends, acquaintances and co-workers who regularly attend church. I find it bothersome when arbitrary and inconsistent standards are applied by one group to another.

Today I read this article about the start of legalized same-sex marriages in California.  Its a pretty far stretch in the article to conclude that allowing same-sex marriage will lead to the legalization of incest and polygamist marriages.  Seems to me  multiple wives or husbands appears to already be happening in some states.  The restriction close blood relations getting married has more to do with genetic problems associated with reproduction and not much else.  But on to the topic of same-sex marriage…..

I’ve attended my share of church services, bible studies and men’s groups to consider myself familiar with the Bible and its teaching/content but I am far from a Biblical scholar. I know some of what the Bible says about homosexuality and other relevant topics, but I am not going to debate in this posting what it does or doesn’t mean/say. I’m more so motivated to ask “Why?”.

Why is it that so many Christians find it okay to pick and choose which parts of the Bible to adhere to and which to interpret, translate or simply ignore?

How often have I heard it said that homosexuality is abhorrent to God and should not be tolerated? It’s not included as 1 of the 10 commandments handed down to Moses, that say we shouldn’t murder, or commit adultery, or covet our neighbors spouse or daughter or material things, and so on. But the biggest argument I’ve heard vocalized amongst the most conservative organizations, that homosexuality is the number 1 issue that God can’t stand.

While no human being is perfect when held to the standard that is the Bible, I am reminded of the story about not pointing out the splinter in our brothers eye before first removing the plank from our own. Something like that which in other words could be interpreted to mean don’t run around pointing out how ’sinful’ someone else is while we’re sinful just the same. Yet its the ever so judgmental lament of Christians in general that decry the immorality of the gay lifestyle and the issue of gay marriage.

Statistically, other moral sins such as adultery (both the physical and mental acts of it) and covetousness seem to be rampent throughout the Christian community. As cited in the CBN.com review for the book My Struggle, Your Struggle: Breaking Free from Habitual Sin:

The statistics are startling. Fifty percent of Christian men and 20 percent of Christian women admit that they are addicted to pornography (Christiannet.com June 07). Fifty-one percent of pastors say cyber porn is a possible temptation; 37 percent say it is a current struggle (Christianity Today Leadership Survey, December 2001). Of Promise Keepers attendees, one of the largest Christian men’s conferences in the U.S., 53 percent admitted to viewing pornography regularly (Internet Filter Review, 2006). Forty million adults in the U.S. regularly visit porn sites on the internet (Internet Filter Review). Forty-seven percent of families say pornography is a problem in their home (Focus on the Family Poll, October 2003).

Last time I checked, most women in the world featured in pornography were pretty much 100% the mother or daughter of a neighbor, in the general sense would imply that some 50% of Christian men are breaking the commandment about coveting.  There may be other similar statistics scoring how many of those porn viewers had viewed ‘gay’ porn featuring gay or lesbian acts – but I digress.

Divorce seems to be another moral issue appears to be okay whereas being gay or being gay and allowed to enter into a marital contract is not. According to most statistics, divorce within the Christian community is at best as high as it is within the non-Christian community, which is to say that some 40-50% of marriages end in divorce regardless of religious beliefs (Catholics excepted due to no allowance for divorce). Yet the Bible seems to offer only a couple of pretty narrow allowances for a married couple to divorce. (references http://www.adherents.com/, and http://www.religioustolerance.org/chr_dira.htm).

So on atleast 2 morals related topics, there is some resolution made that being a pornography addict or being a divorcee is more tolerable or forgivable by the Creator than is being gay or being gay and married. Is it because things more prevalent in a society or culture are are more acceptable? Majority rules? The logic may follow given the minority population of the gay community. From all I’ve ever heard or read, sin (much like the law) is pretty much a binary system. Something is either a sin or it’s not. I’ve never come across any listed levels that caveat something as ‘a little sinful’, ‘moderately sinful’, and ‘extremely sinful’.

I think there are biblical and anecdotal references that teach the lesson about not judging others behaviors unless our own selves are 100% in order. Divorce, co-habitation, domestic partnerships for any type of couples have implications on society as a whole. All should be allowed or not uniformly without prejudice to which combination of sexes are involved. But that is only my opinion…..and we all know what they say about opinions……

Democratic Debate 4/16/08: Are they stupid or do they thing we are?

I was watching the Democratic debate last night between Hillary Clinton and Barak Obama with curiosity to see where they stand on the issues, atleast for that particular debate. One specific issue that really strikes close to home for nearly all Americans had to do with what the candidates would do about the high price of gas.

Below is a transcript as excerpted from ABC News.

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GIBSON: We’re running short on time. Let me just give some quick questions here and let me give you a minute each to answer. What are going to do about gas prices? It’s getting to $4 a gallon. It is killing truckers. People are in trouble, yet the whole world pays a whole lot more for gas than we do. What are you going to do about it?

CLINTON: I met with a group of truckers in Harrisburg about a week and a half ago and here’s what I told them. No. 1, we are going to investigate these gas prices. The federal government has certain tools that this administration will not use. And the Federal Trade Commission, and other ways, through the Justice Department.

Because I believe there is market manipulation going on, particularly among energy traders. We’ve seen this movie before, in Enron, and we’ve got to get to the bottom to make sure we’re not being taken advantage of.

Number two, I would quit putting oil into the strategic petroleum reserve. And I would release some to help drive down the price globally. And thirdly, if there is any kind of gas tax moratorium, as some people are now proposing –

GIBSON: Like John McCain.

CLINTON: Like John McCain and some Democrats, frankly. I think Senator Menendez and others have said that we may have to do something because when you get to $4 a gallon gas, people are not going to be able to afford to drive to work.

And what I would like to see us do is say, if we have that, then we should have a windfall profits tax on these outrageous profits of the oil companies, and put that money back into the highway trust funds so that we don’t lose out on repair and construction and rebuilding.

But ultimately Charlie, we’ve got to have a long-term energy strategy. We are so much more dependent on foreign oil today than we were on 9/11. That is a real indictment of our leadership. I’ve laid out a comprehensive plan to move us toward energy independence that I hope I will have the opportunity to implement as president.

GIBSON: Very quickly, Senator Obama, same thing, but we’ve heard from politicians for a long time, we’re going to end dependence on foreign oil. I just have a quote, “the generation-long growth and our dependence of foreign oil will be stopped dead in its tracks right now.” That was Jimmy Carter in 1979. And it’s gotten a whole lot worse since then.

OBAMA: You’re right and that’s why people are cynical because decade after decade, we talk about energy policy. We talk about health care policy. And through Democratic and Republican administrations, nothing gets done.

I think many of the steps that Senator Clinton outlined are similar to the plans that we’ve talked about. It is absolutely true that we’ve got to investigate potential price gouging or market manipulation. I have strongly called for a windfall profits tax that can provide both consumers relief and also invest in renewable energies.

I think that long-term, we are going to have to raise fuel efficiency standards on cars because the only way that we’re going to be able to reduce gas prices if we reduce demand. You’ve still got a billion people in China and maybe 700 million in India who still want cars.

And so, the long-term trajectory is that we’re going to have to get serious about increasing our fuel efficiency standards and investing in new technologies. That’s something I’m committed to doing. I’ve talked about spending $150 billion over 10 years in a Manhattan project to create the alternative energy strategies that will work, not only for this generation, but for the next.

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Why is it that hardly ever in the news media is there any linkage made between the current price of gas/oil and the current value of the US Dollar? While there are numerous things both Obama and Clinton said regarding the current gas price crisis, I’ll not digress from the topic at hand.

Hillary’s solution of releasing oil from the strategic reserves really isn’t a solution as the current high price (in US$) per barrel of oil is more linked to the devaluation of our currency than it is driven by shortages of supplies.

Because globally, oil is traded in US$, when the currency exchange rate of the dollar depreciates in comparison to other global currencies, it takes MORE US$ to purchase the same global items. Not just oil. As the dollar value increases against Asian currencies, for example, the goods from Asia become ‘cheaper’ from a dollar perspective, and cheaper on the shelves in stores. As the dollar value decreases against Asian currencies, it takes more US$ to buy the same goods even though the actual ‘global’ price of the goods has remained unchanged.

Of course global demand for a controlled supply commodity like oil causes the price per barrel to fluctuate and over the past few years global demand for oil has grown. Quickly developing nations such as China and India require more oil to fuel their industries and the resulting increase in individual wealth allows more cars to be purchased producing an increased demand for gas. Assuming the slight impact to oil prices attributable to increased global demand moves the price for a barrrel of oil from $90 to $94 (about a realistic 4% change). But if the value of the US$ also drops by 4%, the same barrel of oil would take $98 to buy.

Another way to think of the issue. If oil were priced in Euros instead of dollars, and yesterday you could buy 1 Euro for 1 US$, the price of the example barrel of oil would still be 94Euro or $94. But if tomorrow due to financial changes, the dollar dropped in value by 4%, it would then take $1.04 to ‘buy’ 1 Euro. That barrel of oil now costs $94.00 even though countries that use the Euro for their currency are still buying it for 90 Euros.

The dollar has DECREASED against most major currencies over the past year, probably attributable to the slow-down (i.e. recession) of the US economy caused in part by the housing/credit crunch and the resulting cuts in interest rates by the FED. The charts below illustrate the change in value of the dollar against the Euro and the British Pound.

US Dollar to British Pound Exchange Rate: Past Trend, Current Value and Future Projection

US Dollar to Euro Exchange Rate: Past Trend, Current Rate and Future Projection

What the graphs show is that throughout 2007, the dollar lost value in comparison to the Euro and the Pound. A change of nearly 10% in comparison to the Euro. (Interpret the the charts as it took $1.30 to buy 1 Euro in Mar 2007, and nearly $1.55 to buy 1 Euro in Mar 2008.).

Its logical to assume that in the latter part of 2007 and the first 3 months of 2008, as gas prices went up consumer demand at worst probably leveled off, and likely decreased. Personally, we plan our trips better in an attempt to reduce our trips to the gas station. Therefore if change in demand was flat, the increase in the cost of oil can be attributed to the decline in the value of the dollar.

Solutions:

Releasing more oil into the market can only impact the price of gasoliine if the prices are being driven by supply not meeting current demand. Further, it can only reduce the price of gas if one assumes that refineries converting oil into gas have any additional capacity to produce more gas. That doesn’t appear to be the case.

To truly and significantly do something proactively in response to the gas prices today, government can only really focus on increasing the value of the dollar. As the value of the dollar comes up, the relative price per barrel of oil will come down to its real true market value. The government can also reduce the reliance on imported oil by opening up new areas for drilling — however the benefits are somewhat limited if that oil is priced at world pricing. Restoring the value of the dollar is probably a long duration effort. Balancing the budget, equalizing the trade deficit are things I understand effect the value of the US$.

One issue I’ve read about before attributed high gas prices (and somewhat related to Obama and Hillary’s reference to market manipulation) have to do with our refinery capacity. When the global supply of oil is sufficient, the next point that effects prices becomes ability to produce enough gas to meet demand. New refineries haven’t built in years, maybe decades. Refineries are owned by the petrol companies who are obligated to generate as much return on investment to their share holders as possible (these are for-profit companies!). Refiners aren’t going to be financially motivated to increase capacity if the next result is lower prices, and lower profitability of the product. But that is a different topic for a different day….

What I truly don’t understand is WHY the public isn’t given complete data and information about these and other topics (global warming, economics, war on terror, etc.). Mass media seem to tend towards over-simplifying very complex issues and unfortunately the masses seem to take what they get as Gospel. Oil and gas prices are NOT simply driven only by supply and demand. Other factors like valuation of currency play a big part in the pricing structures. Similarly, global warming isn’t simply a result of human CO2 production, yet that is the story put forward and swallowed hook line and sinker by the masses. Ditto the war on terror, and specifically the war in Iraq. Again, different topic for a different day, but the war in Iraq was NOT entered into solely to address WMDs as the media, politicians present and the masses believe.

-Trystero2008