Friday, May 20, 2011

Battle of the Oligarchs 2: The Kochs versus Pickens

The billionaire Koch brothers don't seem to be happy just battling George Soros. According to NYT,  the brothers are in a hell raiser of a battle with another billionaire, T. Boone Pickens.

Writes NYT:
At issue is a proposal, backed by 185 lawmakers in both parties, to give tax incentives to buyers and makers of natural gas-powered vehicles and related infrastructure. The bill would be a big leap toward Pickens' strategy for slashing oil use by boosting natural gas and wind power, but it is running into a wall of criticism from influential voices on the right that want the government out of the alternative fuel-promotion business...

But it is not lost on the bill's backers that many of the right-leaning groups who blast the legislation as a giveaway to Pickens have received funding in recent years from foundations or other entities connected to Charles Koch and his brother David.

"I understand that some of the opposition is arising from the Koch brothers, and others that have alternative interests or interests in oil," Rep. John Larson of Connecticut, House Democratic caucus chairman and a major proponent of the natural gas proposal, said late last week.

 Pickens himself subtly acknowledged his critics during an appearance last month with Ted Turner. "The Koch interests, and also the Heritage Foundation, are not for me," he said at the time.

As I have pointed out before, a tax-break is not a subsidy and the true libertarian stance should be not to battle against a tax-break but to call for even more tax-breaks, the more the merrier. Yet, this has somehow been lost on the Kochs and the Beltway libertarians they finance.

Now, Pickens is no saint when it comes to playing footsie with government. In addition to calling for tax-breaks, he would have no problem calling for cash subsidies for his windmill and gas operations, and I'm sure he wouldn't mind if the President called on Seal Team 6 to lay power lines down for the transfer of power from his windmills to the power grid. That said, the principled libertarian stand is that a tax-break is a tax reduction and they should never be opposed.

Most curious about the opposition, by conservative/beltway libertarian groups, to the tax-break is that they don't seem at all concerned about a similar tax-break for the oil industry, in fact they see it as a positive. NYT again:
Into that circular firing squad among oil, ethanol, and gas supporters last week marched Rep. Mike Pompeo (R-Kan.), a former natural gas equipment salesman whose district includes Koch Industries' headquarters. He and two fellow Republicans proposed a House resolution Friday that calls for "no new energy subsidies" and the "eliminat[ion of] existing energy subsidies" -- while specifically and cautiously defining the S-word.

According to Pompeo's resolution, which was endorsed by Norquist and the chief of the Heritage Foundation's affiliated advocacy arm, "deductions and cost-recovery mechanisms available to all energy sectors are different than credits, loans and grants, and are therefore not taxpayer subsidies." In addition, the measure exempts "cost recovery with respect to timing" from its anti-subsidy push.

Those exceptions appear to apply to several of the oil-industry tax benefits targeted by Democrats, including the percentage depletion allowance and immediate expensing of capital costs.
Got that? Tax breaks for Pickens are bad, tax breaks for the Kochs are good, according to Beltway libertarians and politicos.

Bottom line, there is no principled battle here. This is a battle between two oligarchs attempting to use government as a tool to give them an edge over the other.


  1. "According to Pompeo's resolution, which was endorsed by Norquist and the chief of the Heritage Foundation's affiliated advocacy arm, "deductions and cost-recovery mechanisms available to all energy sectors are different than credits, loans and grants, and are therefore not taxpayer subsidies." In addition, the measure exempts "cost recovery with respect to timing" from its anti-subsidy push."

    It seems to me this is a true statement, if (and only if) "credits" mean "refundable" credits -- which involve outlays.

  2. I have to take exception with your notion that "the principled libertarian stand is that a tax-break is a tax reduction and they should never be opposed." There is a fine line between principles and blind faith. If a tax break for one sector is going to result in tax increases for others, then hell yes it should be opposed. Especially if that tax break is not going to help the middle class, but instead help oligarchs by freeing up money with which they can buy more politicians. I believe the principled libertarian stance is to support tax breaks when they apply to everyone, or when they apply to any group who is currently paying a higher percentage of income (corporate or personal) than other groups. To do otherwise is shooting ourselves in the foot.

  3. @Jule Herbert

    That's exactly the point. The Koch machine seems to be in favor of some tax-breaks, that tend to benefit the oil industry, but not in favor of other tax breaks.

  4. @Matthew - I respectfully ask that you reconsider framing issues in terms of whether it will "help the middle class" ... the real issue is getting the State, its cronies and the parasites it enables out of everyone's lives and business (and preferably ending the State entirely) ... class is nothing but a fictitious construct that helps the State far more than it hurts ... it divides and it distracts ... this is all coming from a many years ago reformed social anarchist haha

  5. I agree that a tax break isn't a subsidy, but I'm wary of a complex tax code. Seems to me it just allows the state and allies even more power, more distortions, etc.

  6. The problem is that a tax break is still the government picking winners and losers in an inverse way. Suppose that in some iron clad government subsidy was made illegal. What would congress do? It would pass a high tax rate and then give tax breaks to those who properly purchased influence.

    While I understand the view of chipping away at taxes, the taxes with selective breaks still cause distortions in the market. They are likely greater distortions than those caused by broad taxation.

  7. To all the people here squeamish about tax breaks -- you are part of the problem! If libertarians can't be expected to argue in favor of tax breaks at all times, then who else can? Less theft is always better, even if it is less theft from oligarchs. The idea that the government must keep in place all taxes until other parts of government can be rolled back perpetuates the problem.

    This libertarian opposition to tax breaks reminds me of libertarian I was debating who said that food stamps are necessary because state intervention in the economy has made finding employment more difficult. Lumping one intervention on top of another to fix an initial problem caused by the state merely exacerbates the problem and requires continual government interventions to fix previous problems until the government has grown out of control.

    As for those alleged libertarians who think that oligarchs should be punished by the government because of their too-cozy relationship with the government, this kind of thinking brought about the implementation of Marxism and socialism. Instead of advocating further taxation of the rich, a defender of liberty should argue for total separation of government and business. This separation would expose the oligarchs to the one regulation from which the government currently protects them and the regulation that they most fear: the competitive forces of free market.

  8. @Danger Pioneer: To be fair, my framing the issue in terms of the middle class was disingenuous. What I really meant to say is that if lower taxes for anyone with an income higher than mine means higher taxes for ME, then I might take issue with it, seeing as my tax burden (including social security) winds up being about 30% of my meager income.

  9. For some reason, when I think about rate cut or deduction, I like rate cut more. *shrug*

    I guess a differential tax policy by politicians can apply to rates as well and not just the broader code, so in reality I guess take the rate cut AND deduction you can get is as good as it gets, but something still nags at me that the rate could've been lower. -.-

  10. A principled libertarian stand would be to reduce taxes for everyone. A tax break for certain industries or companies is using government to favor one group over another. In my opinion thats is not very libertarian.

  11. As it took thousands of small steps to reach our current threshold of taxation/oppression, it is completely conceivable that it may take millions of even smaller steps to get back to liberty. As long as we don't lose sight of the end we seek, an elimination of the looting. Too often a tax break ends up being just another transfer of who enjoys the loot.

  12. In what parallel universe is paying less taxes a bad thing? Is it fair that some pay less in taxes than others? No, but paying taxes isn't fair in the first place; in fact, taxation is stealing.

    So, instead of clamoring how one industry has an advantage over another, let's point out how much more efficiently less taxation allows them to run and advocate less taxation for everyone.

    On another note, the oil and gas industry to run by the corporatist elitist bastards (like the british monarchy) who wage the countless wars of aggression. If we didn't have the taxes, we couldn't have the over-sized monstrosity governments of the world today, and said governments couldn't be strong armed into waging wars for these evil men.

  13. The problem for Wenzel is that less taxation for one person ALWAYS means more for another, unless spending is reduced by a similar amount. A transfer payment is not a tax reduction.

    Which is why you guys are wrong, and quite frankly, why I ignore whatever's going on with the tax code. Only government spending matters.