Tuesday, July 20, 2010

NYT Duped into Helping Push Massive New Energy Taxes

 A hat tip is in order for the Institute for Liberty, which has a response to a New York Times article calling for a massive new tax on the oil industry. The IfL has a rebuttal for each section of the article, which is being used to push for a reverse of cheap energy policies.

Take a look at the NYT article and the rebuttal in blue:

Other tax breaks were born of international politics. In an attempt to deter Soviet influence in the Middle East in the 1950s, the State Department backed a Saudi Arabian accounting maneuver that reclassified the royalties charged by foreign governments to American oil drillers. Saudi Arabia and others began to treat some of the royalties as taxes, which entitled the companies to subtract those payments from their American tax bills. Despite repeated attempts to forbid this accounting practice, companies continue to deduct the payments. The Treasury Department estimates that it will cost $8.2 billion over the next decade.

This may be the most disingenuous claim of all.  Under rules in place for over 25 years, again the most severe and substantial restrictions and limitations apply to the oil and gas industry in determining the US taxation of income earned outside the country.  As noted above, the US has a worldwide tax system and taxes the income earned outside its borders.  But under that system, it recognizes that it should not impose full taxation on such foreign income because that would amount to full double taxation.  Thus, the US permits an offset for the US taxes otherwise due--only on foreign income--for income taxes already paid on that income to foreign countries.  The tax rules only allow an offset for income taxes paid and, contrary to the assertion above, the tax rules forbid the claiming of an offset credit for a royalty.  Further, and most restrictive of all, the tax rules place the entire burden of proof on the taxpayer to show that no portion of what it claims as an income tax offset is in fact a royalty.

Take a look at the complete article for a better look at what the NYT and the left wing is up to.

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1 comment:

Sr. Frijoles said...

Wow that's junk boo NYT
how dare you call for taxes that ain't your job.