Summary: Paper industry burns their by products to power their power plants. This is very efficient, low cost, and environmentally friendly.
2005 Transportation Bill had a 50 cent subsidy for any company that uses alternative fuels in addition to Fossil fuels (coal, oil, etc) to power their plants.
Paper industry decideds to add diesel fuel to their alternative fuel (paper pulp byproducts) and collect on the subsidies. Last year, the industry got $8B in taxpayer subsidies for making their clean, low cost, energy efficient fuel dirtier.
Example of how government policies can skew the market place.
Humorous Quote from Article: Others are less charitable. "You use the toilet every day," said one hedge fund analyst who's been closely following the issue. "Imagine if you could start pouring a little gasoline into the bowl and get fifty cents a gallon every time you flushed."
Yes, I know FWF is not my blog. Found this interesting considering all the subsidies that are currently in our tax policies
It is precisely why the simplist solution to the energy problem is to hike up the gasoline tax, and let the market figure out the rest.
Wynstan
Happy Member
posted: Apr. 14, 2009 @ 2:10p
It is not the policy issue. It is the paper industry which is way too greedy. Granted, we need to patch the policy to fix this loophole. But no policy is 100% perfect either.
nycll said: It is precisely why the simplist solution to the energy problem is to hike up the gasoline tax, and let the market figure out the rest.
Amen!
wilesmt
Senior Member
posted: Apr. 15, 2009 @ 10:47a
Wynstan said: It is not the policy issue. It is the paper industry which is way too greedy. Granted, we need to patch the policy to fix this loophole. But no policy is 100% perfect either.
As an owner of a paper company(s) (through vanguard total domestic) I would be livid if they did not take a legal tax deduction to minimize their obligation.
Xnarg
Senior Member - 5K
posted: Apr. 15, 2009 @ 10:50a
Don't worry, we got rid of all the influence of lobbyists.
nycll said: It is precisely why the simplist solution to the energy problem is to hike up the gasoline tax, and let the market figure out the rest. Your proposal makes sense. That is precisely why it will never be implemented.
ananthar
Senior Member
posted: Apr. 15, 2009 @ 11:18a
This is nothing compared to the infamous "Spray and Pray" loophole exploited by any industry that normally burns coal, based (most likely) on the same law. The first step is that you "Spray" a tiny amount of gasoline on the coal and then you claim that the combination (coal + tiny amount of gasoline) is an alternative fuel and eligible for the subsidy. The next step is to "Pray" that the IRS doesn't disallow the subsidy (in practice having a lobbiest get Congress to tell IRS to back off is what really works). Since the subsidy is supposed to be for the manufacture of alternative fuels, the company needs to set up an independent company. Typically this is just a coal yard across the street that receives the coal, sprays it with a tiny amount of gasoline, then "ships" it accross the street to where the coal is really needed.
This "Spray and Pray" loophole has been in effect for many years and featured in the WSJ many years ago, yet the loophole is still protected by Congress, who forces the IRS to back off their usual rule that disallows the tax benefit of any transaction done solely to get the tax benefit : the Spray and Pray clearly falls in this category since the amount of gasoline are tiny. Moreover neither the gasoline nor the coal are alternative fuels, so it is highly questionable if the combination could ever be considered an alternative fuel (the industry argument is that some tiny amount of chemical reaction goes on between the gasoline and coal and hence the result contains some tiny amount of "synthetic" fuel).
From 2003 through 2005, TIME estimates, the synfuel industry raked in $9 billion in tax credits. That means the lucky few collectively cut their tax bills by that amount, which would be enough to cover a year's worth of federal taxes for 20 million Americans who make less than $20,000 a year and pay income taxes. How important is the tax credit to synfuel producers?
Yunno.. They could probably close these loopholes and subsidies on corporate taxes instead of raising taxes on personal income.
From 2003 through 2005, TIME estimates, the synfuel industry raked in $9 billion in tax credits. That means the lucky few collectively cut their tax bills by that amount, which would be enough to cover a year's worth of federal taxes for 20 million Americans who make less than $20,000 a year and pay income taxes. How important is the tax credit to synfuel producers?
Yunno.. They could probably close these loopholes and subsidies on corporate taxes instead of raising taxes on personal income.
michal1980 said: nycll said: It is precisely why the simplist solution to the energy problem is to hike up the gasoline tax, and let the market figure out the rest.Raise Taxes - is that your solution to all of lifes problems?Found your straw man again?
Market is able to figure things out now, why does goverment need a bigger cut?As I told you before, the market hasn't and can't solve the over dependency of foreign oil problem.
The market is not supposed to solve geopolitical problems; at least not without government intervention.
nycll said: michal1980 said: nycll said: It is precisely why the simplist solution to the energy problem is to hike up the gasoline tax, and let the market figure out the rest.Raise Taxes - is that your solution to all of lifes problems?Found your straw man again?
Market is able to figure things out now, why does goverment need a bigger cut?As I told you before, the market hasn't and can't solve the over dependency of foreign oil problem.
The market is not supposed to solve geopolitical problems; at least not without government intervention.
It hasn't because currently there is no problem with being 'depedant' on foreign oil.
Your looking for a solution, to a problem that, right now, really does not exist.
If oil dissappears, the market will find a solution.
nycll said: It is precisely why the simplist solution to the energy problem is to hike up the gasoline tax, and let the market figure out the rest. It is easier to stop someone from doing something then it is to make them do something. If the goal is to reduce gasoline consumption then the most effective means to bring this about is taxes on gasoline.
nycll said: michal1980 said: It hasn't because currently there is no problem with being 'depedant' on foreign oil.
Your looking for a solution, to a problem that, right now, really does not exist.
If oil dissappears, the market will find a solution.So the middle east accepted American values and way of life? I must have missed the news.
We have cheap energy, that has, even given all these 'problems' has not stopped.
Why when we have cheap energy, we'd want to make it more expensive makes no sense.
You see higher energy prices leading us away from oil. I dont. Unless the system is shocked, like it was last year, and even then, over time people would have adopted to it.
Unless theres a cheaper Alternative to oil, there will be no point in switching, and in the mean time you will be taking billions of dollars out of the pockets of people.
BradMajors said: nycll said: It is precisely why the simplist solution to the energy problem is to hike up the gasoline tax, and let the market figure out the rest. It is easier to stop someone from doing something then it is to make them do something. If the goal is to reduce gasoline consumption then the most effective means to bring this about is taxes on gasoline.That is a good point, which I didn't realize. My main reason was that if you need to do something, and we do need to do something, you want to do the thing that is the simplest and creates the least amount of government intrusion and loopholes like the topic in this thread. Ironically it is lot easier to create 2 dozens of subdidies politically than put up one tax which serves as subsidy to everything else.
michal1980 said: Why when we have cheap energy, we'd want to make it more expensive makes no sense.Because it won't stay cheap. Overdependence of one energy source is allowing the US economy and American way of life to be held hostage by forces in the middle east.
The gasoline tax moves money from US citizens to US government then back to US citizens. Its external effect is that US citizens collectively will pay less to foreign oil producers. Obviously you have more objections to the tax than sending more money to countries that harbor anti US terrorism.
swandown said: :inbeforeDunderMifflinjoke: cought Midstate Office Supply cough. Don't make me and Count Von Numbacruch bust out the Letter Opener of Death.
raspar
Member
posted: Apr. 15, 2009 @ 2:08p
nycll, if you "solve" the energy dependance problem by reducing the consumption of oil you will inadvertently raise other problems. One such example is the subsidies on corn to create ethanol. This created rasing prices of corn and in return rasied the cost of feed hence higher milk/food prices. Several parents at or below poverty levels couldn't afford the milk needed without further govn't assistance. The unintended effect may be worse than the problem at heart.
If your assumption about our problem is the Middle East is their "anti US terrorism." This in itself, while racist in nature, is a subset of the real problem which is that poverty levels of a nation such as Palestine, or Syria causes rampant jealousy and hatred towards wealthy countries such as america, and it's allies. It's easy to say well let's not give the money to the mideast as a retaliatory measure, but if we reduced our consumption to 0, this would effectively push those countries further into deeper poverty. Furthering the hatred and "anti US terrorism." What better way to create more enemies than to take away the only profit center those countries have.
I won't even further elaborate on the industries in america that would close up shop, and the effect on several cities, that rely on oil such as houston and various gulf states would effectively fall into a complete recession ala 1980's.
Instead I think realistically your ranting and raving is solely due to your political adgenda of espousing "environmental" reform which really a subset of anti-corporate/anti-capitalistic political leanings. Which if I recall correctly is not tolerated on this forum anylonger. If you would like to take this discussion offsite feel free. Infact I would encourage you. But please spare us from your further ranting and raving.
tazzy531
Senior Member - 4K
posted: Apr. 15, 2009 @ 2:12p
swandown said: :inbeforeDunderMifflinjoke:
Meh. I get my paper from the Michael Scott Paper Company now. Their offices aren't great.. in fact, it stinks... But can't beat the services ... My satisfation is guaranteed!
raspar said: nycll, if you "solve" the energy dependance problem by reducing the consumption of oil you will inadvertently raise other problems. One such example is the subsidies on corn to create ethanol. This created rasing prices of corn and in return rasied the cost of feed hence higher milk/food prices. [snip]That's why I don't support subsidizing 2 dozens of alternative initiatives. You need to improve your reasding skill, because I have made it clear.
I won't respond to your personal attacks, except I will warn you that I will report you to the mods next time.
ppatin
Focused.
posted: Apr. 15, 2009 @ 2:27p
raspar said: If your assumption about our problem is the Middle East is their "anti US terrorism." This in itself, while racist in nature, is a subset of the real problem which is that poverty levels of a nation such as Palestine, or Syria causes rampant jealousy and hatred towards wealthy countries such as america, and it's allies. It's easy to say well let's not give the money to the mideast as a retaliatory measure, but if we reduced our consumption to 0, this would effectively push those countries further into deeper poverty. Furthering the hatred and "anti US terrorism." What better way to create more enemies than to take away the only profit center those countries have.
Poverty is not the cause of anti-Americanism in the Middle East. Arab society as a whole has chosen to fail, and anti-Americanism is popular because it's easier to pretend to be a victim than to address the huge problems within your own society. Look at Saudi Arabia. They're a hotbed of hatred for the US and religious extremism despite the fact that they'd be one of the poorest, most backward places on the face of the Earth if it wasn't for Western demand for oil.
nycll said: michal1980 said: Why when we have cheap energy, we'd want to make it more expensive makes no sense.Because it won't stay cheap. Overdependence of one energy source is allowing the US economy and American way of life to be held hostage by forces in the middle east.
The gasoline tax moves money from US citizens to US government then back to US citizens. Its external effect is that US citizens collectively will pay less to foreign oil producers. Obviously you have more objections to the tax than sending more money to countries that harbor anti US terrorism.
Life held hostage?
Where would the middle east be without oil money? That depedance coin has 2 sides.
money going to the goverment, is money not going back into the private sector, and less money that is being used to create wealth.
If I spend more on gas due to a tax. Thats less money that I have to spend on other goods.
Money going to goverment tends to be spent on bridges to no-where.
michal1980 said: Life held hostage?I'd like to be convinced otherwise, but apparently the open society is vulnerable to terrorism. In the late 80 early 90 I was able to use others' tickets to fly when I was a student (the AMEX $99 deals).
Where would the middle east be without oil money? That depedance coin has 2 sides.Huh? As long as they have oil they will have money. DO YOU KNOW THE COST OF EXTRACTING OIL FROM GROUND? The tax is only meant to reduce, not eliminate the dependency on foreign oil. money going to the goverment, is money not going back into the private sector, and less money that is being used to create wealth...What if the tax revenue is used for a personal income tax cut, or pay down the national debt?
Big gasoline consumers will have less to spend, others will have more. Overall as a nation US will benefit from lower import prices and more robust economy, less risk to terrorist attacks.
Wynstan said: It is not the policy issue. It is the paper industry which is way too greedy. Granted, we need to patch the policy to fix this loophole. But no policy is 100% perfect either.
It's not a problem with the paper industry being too greedy - a company's goal is to maximize profits, and if there is a way to do it, they are going to find it. The problem is that the more laws you pass, the more opportunities there are for people to figure out how to exploit them in ways you never imagined.
qcumber98 said: Great, how do I get in on this finance deal?
Create Qcumber98 Paper Company, satisfaction is guaranteed.
nasheedb
Senior Member
posted: Apr. 15, 2009 @ 7:45p
nycll said: It is precisely why the simplist solution to the energy problem is to hike up the gasoline tax, and let the market figure out the rest.
Easy for someone who presumably lives in NYC to say. You probably don't even own a vehicle.
I actually need a truck, with which I average 12.7 mpg and drive over 40,000 miles a year. As far as I know, there aren't any electric vehicles even on the drawing board that would meet my needs. So from my perspective, this would simply be another tax for which I get nothing in return. Thanks.
nycll, given your Keynesian ideology I'm surprised you would want to harm the economy (short term) right now by raising gasoline taxes. That said, I'm all for it (as I have been for many years); it would help return us to a sustainable economy not only from an energy perspective but consumption in general (and in turn slash low value production/services). I would suggest that we should attempt to limit the shock of such a tax to industry and consumers by giving them plenty of time to plan (but not enough for them to think it won't be carried out). IMO, the bill should have no federal excise tax increases for a year, then 1 cent increase for each of the next two quarters, then 2 cents, then 3, then 5, 8, 13, 21, 34, 55, and finally 89, ending the three/four years in $2.50 in fed excise tax. Some portion of the tax should apply to farmers as well (time for them to change too) but most should be applied toward retiring federal debt that was acquired from massive highway spending (too bad it's too late to tax the beneficiaries for their use).
nycll said: michal1980 said: Life held hostage?I'd like to be convinced otherwise, but apparently the open society is vulnerable to terrorism. In the late 80 early 90 I was able to use others' tickets to fly when I was a student (the AMEX $99 deals).
You dont need millions or even billions of dollars to be vulnerable to terrorism. It doesnt take many people to do alot of harm.
Where would the middle east be without oil money? That depedance coin has 2 sides.Huh? As long as they have oil they will have money. DO YOU KNOW THE COST OF EXTRACTING OIL FROM GROUND? The tax is only meant to reduce, not eliminate the dependency on foreign oil.
Yes I know the costs of extracting oil from the ground, they vary widely. Is it just simple drilling? Off Shore? Deep water? Shale? Oil Sands? Sweet? Sour?
The point is, the Mid East is far more depedant on a single product being exported, then we are depdant on Mid-East oil.
Those evil Saudi, depend on oil for roughly what 70% of its income? If it just pulled its supply, its ecomony would die.
money going to the goverment, is money not going back into the private sector, and less money that is being used to create wealth...What if the tax revenue is used for a personal income tax cut, or pay down the national debt?
Big gasoline consumers will have less to spend, others will have more. Overall as a nation US will benefit from lower import prices and more robust economy, less risk to terrorist attacks.
1st) who's personal income would you cut? The evil rich guys who can generally afford the higer prices? Or the poor guy that doesn't pay any income tax, but a gas tax would take a far great chunk of his income?
2nd) Goverment with a new tax would find a new way of spending it. If it would go to paying down the debt, or helping balance the budget, that still would not change my mind, but it would be more right. However all it will do is give goverment a new source income to spend on new projects.
lgyeresi said: nycll said: It is precisely why the simplist solution to the energy problem is to hike up the gasoline tax, and let the market figure out the rest.
Easy for someone who presumably lives in NYC to say. You probably don't even own a vehicle.
I actually need a truck, with which I average 12.7 mpg and drive over 40,000 miles a year. As far as I know, there aren't any electric vehicles even on the drawing board that would meet my needs. So from my perspective, this would simply be another tax for which I get nothing in return. Thanks. If you NEED a truck then you will receive a government subsidy in the form of a tax deduction from your business income for the business use of your truck.
WalStMonky
Happy Member
posted: Apr. 16, 2009 @ 7:16a
BradMajors said: If you NEED a truck then you will receive a government subsidy in the form of a tax deduction from your business income for the business use of your truck.
I'm sure the thought that it will actually cost him an extra 60-65 cents instead of a dollar is a soothing salve.
ppatin
Focused.
posted: Apr. 16, 2009 @ 7:20a
TheMeliorist said: nycll, given your Keynesian ideology I'm surprised you would want to harm the economy (short term) right now by raising gasoline taxes.
As long as gasoline taxes were raised gradually and if (this part is crucially important) the revenue was used to lower other taxes then I don't see why higher gasoline taxes would do any economic harm.
Exactly like ppatin said, ramp it up slowly. If you boil a frog in a pot of cold water the frog won't feel it. Except in this case the economy will come out stronger, not cooked.
tazzy531
Senior Member - 4K
posted: Apr. 16, 2009 @ 7:35a
ppatin said: TheMeliorist said: nycll, given your Keynesian ideology I'm surprised you would want to harm the economy (short term) right now by raising gasoline taxes.
As long as gasoline taxes were raised gradually and if (this part is crucially important) the revenue was used to lower other taxes then I don't see why higher gasoline taxes would do any economic harm.
On the other hand, oil being inelastic demand, people will be willing to pay whatever price for gasoline no matter how much you tax it.
Gas went up to $5 recently and during that run, demand didn't change significantly.
Here's some hard data: http://www.api.org/statistics/fueltaxes/upload/State_MotorFuel_ExciseTax_Summary_4-2009.pdf
AVG gasoline tax in the US is 45.6 cents / gallon In NY, it is 60.9 cents/gallon. AVG price of gasoline in NY is about $2 (fudging for easy math). That means current tax rate for gasoline in NY is about 43.5% (60.9/1.40)
Just so we can bring the debate down to real levels and not hypotheticals... How much do you propose raising the gasoline tax?
Xnarg said: RushnRockt said: tazzy531 said: Everytime I fly over Las Vegas, Arizona, or eastern edge of California, I marvel at how much water is needed to plant grass and lawns in the desert. The reason for this is water is so cheap and people are pushing into what was previously less inhabitable pieces of land. As price increases for water to a certain point, demand will be inelastic. There is an absolute minimum amount of water to sustain life and people will pay any price set. The reason this currently doesn't happen is because supply is so large here in the US. Look at other countries where fresh water is scarce.
I bolded the false statement that you made in there. If you fly over Arizona and Las Vegas, you can see the actual water level drops in all large lakes if you were to only look down. Next time you are at Hoover Dam, check out the wide white deposits belt on the shores, that's the decrease you can see from just the last few years. If you were to read news of the past decade, you'd notice that Arizona, California and Nevada won't be able to sustain their current water consumption levels at current drought conditions. That's been an ongoing problem for many years yet the water prices have not changed to reflect that. There is, in fact, an absolute minimum amount of water to sustain life and neither one of these states is anywhere close to it because of the short term thinking "we got water now!" as opposed to long term planning which would price the water considerably higher.Ah, so we should increase taxes on water!
I would much rather tax silly comments, but you would complain that your tax burden is higher than anyone else's.
Water in these states is a perfect example of a good that is not properly priced for sustainable future. It is currently priced to encourage growth right at this moment without regard for what happens down the road. You must have missed the numerous stories over the past years talking about many communities in these states having to limit their water consumption due to drought, yet the overall strategy in water pricing and consumption for the region has not changed.
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