The Classic Liberal Blog

"Never allow a crisis to go to waste" ... With the Gulf oil spill providing an easy excuse for more Hegelian Big Government crisis management, the Ruling Class is plotting an end around so they can subsidize foreign oil.

What? You say "plotting" is too strong? "Unintended consequences" is more like it?

Well, unfortunately, I believe they're too smart to be doing some of the stupid things they do. So it's gotta be intentional.

Bailing Out Foreign Oil

The Obama administration is looking to change existing, long-standing existing tax laws, which let American companies who generate income in foreign countries to use credits to offset their U.S. income tax on their foreign income. In other words, tax laws that keep American companies from being double-taxed.

Of course, double-taxing American oil companies will not only drive energy prices higher, but in effect subsidize foreign-owned (BP) and state-owned (Russia, Hugo Chavez, China) oil companies by giving them an artificial competitive edge in the global market. Meaning more American layoffs, greater family financial burdens, and increased dependence on tyrannical foreign regimes. Good stuff, uh?

More from the National Taxpayers Union (NTU):

"This is as perverse as it gets. The U.S. Congress is proposing tax hikes that would punish American energy companies, raise the price of oil to consumers, and effectively reward foreign-owned firms," NTU Executive Vice President Pete Sepp said. "At a time when our economy most needs a jobs-based recovery, this short-sighted policy makes the least sense."

The changes to the tax law are expected to be included in the Senate's consideration of a Gulf oil spill clean-up bill. One such provision, Sepp noted, would rewrite "dual capacity" rules and forbid U.S. energy producers from taking credits against U.S. taxes on their income generated overseas, which is already taxed significantly by foreign jurisdictions. In addition, the proposed repeal of the widely available domestic manufacturing income deduction (known as Section 199) – for oil and gas producers only – amounts to arbitrary tax policy.

"Ironically, if the Senate's scheme passes U.S. companies could be forced to move to safer tax harbors, costing the U.S. Treasury billions in revenue," Sepp said. "Meanwhile, firms like BP, Hugo Chavez's Citgo, and China's CNOOC would have far less trouble coping with Congress's new edicts. In a way, the bill would help bail out BP from its problems by giving it an edge in the marketplace."

U.S. energy producers are already at a significant disadvantage internationally for a number of reasons: most energy reserves are owned by much larger, state-run oil companies; the Foreign Corrupt Practices Act (FCPA) does not apply to non-U.S. firms; and more stringent U.S. environmental and safety regulations add cost burdens. Harsh tax policies can make this disadvantage much worse.

And guess who's pumping out the propaganda?

ACORN-Led ‘Think Tank’ Works In Concert With NY Times To Attack Energy Companies

Earlier this month, The New York Times ran a front page article that claimed, “an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process.” The thesis of the article was that oil companies are the benefactors of enormous subsides, primarily through complicated maneuvering of offshore assets, “tax breaks,” and “loopholes.”

Unfortunately, the copy of the American tax code that The Times used to conduct their careful analysis appears to have been heavily edited by a cadre of left leaning groups, including ACORN President Maude Hurd, Citizens for Tax Justice, Center for American Progress and the Clean Energy Works campaign.

The smoking gun comes in the form of a leaked memo from CEW communications advisor and former Democratic congressional staffer David Di Martino just days after The New York Times ran it’s wildly misguided assessment of U.S. tax policy.

In the memo, Di Martino outlines a strategy to change America’s perception of increased taxes on energy producers as a tax on consumers by arguing “the American people already have a national energy tax — The Big Oil Welfare Tax — in the form of billions of dollars in subsidies to the wildly profitable big oil companies.” The same day that Di Martino released his memo, Citizens for Tax Justice (CTJ) released their own defective and dishonest hit piece, titled “What Oil and Gas Companies Extract from the American Public.” The tax breaks referred to by Di Martino and the CTJ memo, in reality, are the same credits that every American company receives for taxes paid overseas to foreign governments on income earned abroad.

Yes. ACORN and crew are running the propaganda train behind this boondoggle full-steam ahead! Too bad their supporters don't realize it is them who will ultimately pick up the tab.

Tearing down America for the New World Order ... is something even our left-leaning American brothers and sisters will find they regret. Sad indeed.

H/T - Institute for Liberty and The Minority Report!