Corporate Welfare

[doomer]

Governments provide subsidies to elicit a behavior...training, investment, etc. Whether the company makes a trillion dollars, loses money, or no matter what they sell it doesn't make a difference. Did they exhibit the behavior or not?

[woodsrider]

Exxon made $104 million a day in 2012. Only an Exxon stockholder would argue that a company of this wealth requires a corporate welfare subsidy from Uncle Sam. Far better to take the $$ and upgrade VA hospitals.

 

Funny, I just googled Exxon subsidies 2012 and the second result was thinkprogress titled "Exxon makes $104 million in profit per day in 2012".

[Bert]

The two guys who run my neighborhood liquor store don't get a government subsidy. Why should Exxon, which made $4.3 million AN HOUR in 2012? An additional reason to turn off the gravy train is that Big Oil is going the way of typewriters and buggy whips. No need to subsidize an industry with an expiration date.

 

Where do you see that Exxon earned 9.5 Billion last quarter? I just looked it up and they earned 6.86 Billion in the Q ending 6-30-13.

 

They had 103.371 Bill in total revenue with 69.759 billion in Costs of Goods Sold (the cost to purchace crude oil from OPEC and refine it into gasoline or diesel fuel) for a Gross Profit of 33.612 Bill or a 32.52% profit margin percentage which I believe is about normal for companies with large capital spending like refiners, utilities, etc.. When I was at Louisville Gas and Electric I believe we would be in the 35% range in Gross Profit Margin also and the KY Public Service Commision which regulated LG&E and the rates LG&E charged us was OK with that.

 

Their selling, general and administrative costs (depreciation on their plants, R&D, costs for employees who don't work at plants like HR, bean counters, etc.) were 23.857 Bill for operating income of 9.755 billion. The report says net income after tax is 6.860 billion so I guess that means tax was 2.895 billion (9.755-6.86).

 

6.86 billion in net income on 103.371 billion in revenue is a 6.64% return on sales or to state in another way, for every dollar of sales, 6.64 cents is profit. I actually thought they would have a higher return on sales. At LG&E we were only allowed an 11% return on sales. If it went higher than that, the Public Service Commission would mandate a rate case hearing and force us to lower rates since LG&E was a monopoly. Don't know, interesting though.

[LIPTON BASH]

At a federal level, I think that argument can be made. At a state and local level, corporate welfare is very, very real... and it often goes hand in hand with cronyism... which I think was part of the point Bert was originally trying to make.

 

If we are talking rewarding contracts I agree. If we are talking tax incentives I disagree. Tax incentives cannot be classified as welfare. If all you are doing is allowing an entity to keep more of its own money it isn't welfare.

[Twotoplace]

Where do you see that Exxon earned 9.5 Billion last quarter? I just looked it up and they earned 6.86 Billion in the Q ending 6-30-13.

 

They had 103.371 Bill in total revenue with 69.759 billion in Costs of Goods Sold (the cost to purchace crude oil from OPEC and refine it into gasoline or diesel fuel) for a Gross Profit of 33.612 Bill or a 32.52% profit margin percentage which I believe is about normal for companies with large capital spending like refiners, utilities, etc.. When I was at Louisville Gas and Electric I believe we would be in the 35% range in Gross Profit Margin also and the KY Public Service Commision which regulated LG&E and the rates LG&E charged us was OK with that.

 

Their selling, general and administrative costs (depreciation on their plants, R&D, costs for employees who don't work at plants like HR, bean counters, etc.) were 23.857 Bill for operating income of 9.755 billion. The report says net income after tax is 6.860 billion so I guess that means tax was 2.895 billion (9.755-6.86).

 

6.86 billion in net income on 103.371 billion in revenue is a 6.64% return on sales or to state in another way, for every dollar of sales, 6.64 cents is profit. I actually thought they would have a higher return on sales. At LG&E we were only allowed an 11% return on sales. If it went higher than that, the Public Service Commission would mandate a rate case hearing and force us to lower rates since LG&E was a monopoly. Don't know, interesting though.

Believe I stated Exxon made $9.5B in first quarter of '13. That would be the quarter ending 3-31-13. Just to be clear, no CEO would ever turn down a federal subsidy check. If he did, he wouldn't be CEO for long. The larger problem is getting rid of these federal corporate welfare programs after they've outlived their usefulness.

[Twotoplace]

You obviously are not interested in having an intellectual debate. You continue to throw out numbers like "$4.3 million an hour" to try and sensationalize your post and demonize the big bad corporation. The problem is you have yet to address the fact that Exxon still pays $29+ Billion in tax after your so called subsidy.

That's $72,166 a minute.

[Twotoplace]

For those interested, here's a link to a July 2012 policy analysis by the Cato Institute. The title is: "Corporate Welfare in the Federal Budget."

 

http://www.cato.org/sites/cato.org/files/pubs/pdf/PA703.pdf

 

Fourth paragraph of the report:

 

"Corporate welfare doesn't aid economic growth and it is an affront to America's constitutional principles of limited government and equality under the law. Policymakers should therefore scour the budget for business subsidies to eliminate. Budget experts and policymakers may differ on exactly which programs represent unjustified corporate welfare, but this study provides a menu of about $100 billion in programs to terminate."

[woodsrider]

That's $72,166 a minute.

Zero substance...thanks for playing.

[Twotoplace]

Zero substance...thanks for playing.

It's good to laugh a little. Life ain't a Russian novel. If you want substance, read the Cato report on corporate welfare. Also google "New Hampshire senators" and "sugar subsidy."

[Bert]

Believe I stated Exxon made $9.5B in first quarter of '13. That would be the quarter ending 3-31-13. Just to be clear, no CEO would ever turn down a federal subsidy check. If he did, he wouldn't be CEO for long. The larger problem is getting rid of these federal corporate welfare programs after they've outlived their usefulness.

 

You will never hear me argue that there are some fed money distributed that is pretty stupid but I cannot deny some does have muh more benefit than the dollars dished out. Examples would be: incentives to hire released prisoners or those who have been on welfare. The money put up front to offer an incentive to hire them and turn them into tax payers more than outweighs doing nothing and letting the continue to draw from the system.

[Bert]

"Corporate welfare doesn't aid economic growth and it is an affront to America's constitutional principles of limited government and equality under the law. Policymakers should therefore scour the budget for business subsidies to eliminate. Budget experts and policymakers may differ on exactly which programs represent unjustified corporate welfare, but this study provides a menu of about $100 billion in programs to terminate."

 

I probably would not have a problem with 75% of those cuts. I would just want the cutters to think twice before cutting something just in case it may provide more dollars back than what draw from the government, ie incentives to hire those released from prison, those on welfare or to offer a carrot to builders/developers to revive blighted areas of town.

[Bert]

That's $72,166 a minute.

 

While I think you and I have had a decent and civilized arguement, what difference does it make how much Exxon or any other entity makes in a certain period of time when it comes to getting subsidies, government waste is government waste regardless to wherever it goes. To the profitable Fortune 500 to smaller closely held company on the verge of bankruptcy? I am more concerned what do the dollars provide for tax payers? If no real benefit, then cut the subsidy regardless to whether it went to Big Inc or a small farm. If a true benefit greater than the cost, great regardless to who the beneficiary is.

[75center]

I probably would not have a problem with 75% of those cuts. I would just want the cutters to think twice before cutting something just in case it may provide more dollars back than what draw from the government, ie incentives to hire those released from prison, those on welfare or to offer a carrot to builders/developers to revive blighted areas of town.

 

Agreed, Corporate subsidies should be restricted to where a greater good, financial or otherwise, can clearly be shown to occur.

[LIPTON BASH]

Believe I stated Exxon made $9.5B in first quarter of '13. That would be the quarter ending 3-31-13. Just to be clear, no CEO would ever turn down a federal subsidy check. If he did, he wouldn't be CEO for long. The larger problem is getting rid of these federal corporate welfare programs after they've outlived their usefulness.

 

Do you understand when you pay a net positive in taxes at a very large margin it can not by definition be welfare. I want to help you understand what welfare actually is.

[LIPTON BASH]

Agreed, Corporate subsidies should be restricted to where a greater good, financial or otherwise, can clearly be shown to occur.

 

I agree any tax incentives should lead to greater good for the economy as a whole. Some incentives are not needed.