This is a complex matter, because it most greatly affects those who cannot afford it. In energy, for example, due to the advanced age of our oil fields, oil companies, large and small, were given tax breaks to make the oil production profitable, since huge expenditures are required for what we call secondary phase recovery. This oil is very expensive to recover, compared to historical prices, and tax breaks were given so that a production company could make a little profit, and in doing so, kept prices lower for the consumer.
Now, we have the accusation that this is "corporate welfare" and that it is wrong, when it had only two intentions: produce more American oil, keep the same American oil at global market prices and thereby keep gasoline prices lower to the consumer. Now, we have today's prices for oil and gasoline. Even though gasoline prices are really only at inflation-adjusted historical levels, the perception is that the prices are high, because we have been paying below inflation level prices for so long. At today's oil prices (which is headed below $90/BBL, down from $140/BBL earlier this year), perhaps it is time to remove the tax breaks -- but prices will go up to the consumer (the consumer always pays for corporate taxation, because companies have to make a profit to survive), and such increases always hurt the lower economic groups more than anyone else.
Many are pushing for"corporate welfare" for alternative energy, I mean, err, tax breaks. What is the purpose? What is the policy? What is the end game? (If tax breaks are good for struggling businesses, what about us struggling individuals?). That means that we, the tax payer, gets a reprieve for using these technologies by their inherently high cost being kept lower (still incredibly expensive for the consumer). I like tax breaks, and I think tax breaks for alternative energy solutions should extend to individuals who install them. The capital required is still large, but if I can get a huge tax break for doing so, it can make financial sense for me in the long run. At what point, however, do we lift such tax breaks at the corporate level? At what point are we, as individuals, paying more personal tax because these alternate energy corporations are not paying enough?
I prefer no government subsidies or special tax breaks for anyone -- a free, though volatile, market. We both know it is not as simple as that. The more alternative energy is pushed, the more tax breaks (corporate welfare) will be required for it to make financial sense for people like you and me (maybe it will always be a utility level implementation), and if utility companies are forced to a certain level of alternative energy output, the energy bill received by homeowners will increase substantially, again, hurting the lower economic groups the most.
How do we balance all of these factors without creating another expensive bureaucracy in the government (which increases the pain on consumers at all levels due to the tax increases required to support such a bureaucracy)? Maybe alternative energy is served best by competing in a free market (level playing field, no one (meaning anyone in the energy business) getting special tax breaks, higher energy prices for the consumer) where innovation will be the key to profitability. I know the same would happen for the oil production companies, large and small, if their tax breaks were removed.
This is why we must be clear on what we want to accomplish via our energy policies; the same is something you and I need to communicate to our Congressmen and Congresswomen. Is the priority energy independence? Is the priority lower prices? Is the priority alternative energy no matter how high the price? Whichever one of these is first, necessarily shapes a different energy policy. If everything is a priority, then nothing is a priority. The answer and its repercussions cannot be reduced to a sound bite. Personally, I say shape our policy around independence. Whatever your view, think your view all the way through the economic chain, and let your people in Congress know your thoughts. They work for you.
