IPFS
How Should Government Treat Energy Producers? -- by Ron Paul
Written by Powell Gammill Subject: Economy - Economics USA
As the economy continues in its downward spiral and talks in Congress about reducing spending have only amounted to political theater, the subject of how the tax code treats energy has become a topic of controversy. Specifically, should we subsidize, enforce mandates, or give tax credits and deductions to industries like ethanol and natural gas? Having a thriving energy market domestically is a good thing and something the government should not hinder. Not only would decreasing our dependence on foreign oil simplify our foreign policy, but it would greatly enhance our anemic economy at home.
Of course, the government should neither inhibit nor
subsidize any particular type of energy. While many people agree with
that statement, there is much confusion over the difference between
government subsidies and tax credits or deductions. The difference is
night and day, yet so many times they are all lumped together as evil
government handouts. A subsidy IS a government handout. It amounts to
the government taking money from the people and giving it to a favored
interest. It is the worst sort of market manipulation and it is
something I can never support. This kind of government mischief is
anathema to the Constitution and the principles of freedom and the free
market.
By contrast, with tax credits and deductions,
industries, business, and individuals simply get to keep more of the
money they have earned. Ideally, the tax code should not be used for
social engineering, but, until we have true tax reform, I will always
support tax credits and deductions that keep more dollars in the
private sector where they are spent, saved, or invested. This means I
will support tax credits and deductions for energy producers, farmers,
homeschoolers, family child care expenditures, expenses of evacuees
from disaster areas, and even adoption expenses. I've almost never met
a tax cut, deduction, or credit I didn't like. Any measure that keeps
money in the private sector to spend, save or invest, rather than
allowing the government to waste or misallocate is a win for the
economy.
Inequities in the tax code dealing with tax credits should be solved by giving all participants equal treatment. Removing
I
oppose ethanol mandates because I do not think anyone should be forced
to use or buy ethanol. Ethanol mandates often serve as corporate
welfare for big agriculture ethanol producers. The marketplace should
decide whether or not to use ethanol, and producers of ethanol have to
discover if they can produce it at a price that makes good business
sense. No industry should be allowed to use legislation to create a
"market" for its products. The real reason ethanol mandates continue
to surface in federal legislation is that agribusiness continues to
have one of the most powerful lobbies in Washington.
Furthermore,
while I do not support providing federal grants to any industry, I do
support the tax credits contained in the NAT Gas Act, HR 1380. These
credits reduce taxes for the production or purchase of vehicles that
run on American-made natural gas. These credits are not subsidies. Of
course, we should repeal federal barriers to energy production and
reduce taxes on all forms of energy. Therefore, I have also introduced
the Affordable Gas Price Act HR 1102 which would remove governmental
barriers to offshore drilling, encourage private investment in new
refineries and suspend taxes on gasoline when the price at the pump
reaches a certain threshold. Lowering taxes to encourage the domestic
production of energy and getting government out of the way of the
American energy market is not a government giveaway; it is the way it
should be in a free country.