Most major industries have bought virtually all Republicans and a few Democrats to evade their fair share of the tax burden. Big Oil have been the most successful of all.
…President Obama’s 2011 budget, proposed before the spill, would eliminate $4 billion in annual tax breaks for oil and gas companies. Bills in both houses introduced after the spill would achieve many of the same results. Industry has spent $340 million on lobbying over the last two years to block these sorts of initiatives, and until recently Congress has been eager to do its bidding. This year could be different.
The White House has proposed eliminating nine tax breaks. Some are modest, all are complicated, but in toto they provide a range of cushy benefits — fast write-offs for upfront drilling expenses, generous depletion allowances, and the like — that are available at virtually every stage of the exploration and production process.
The net result, as The Times reported recently, is an effective tax rate on investment far lower than that paid by other industries. That, the Treasury Department argues, has encouraged overinvestment in oil and gas drilling at the expense of other parts of the economy.
Industry argues that these and other breaks are vital to robust domestic production and that both investment and employment would fall if they were eliminated. These arguments, which may have made sense years ago, are much less compelling when oil prices are hovering near $80 a barrel and oil companies — including BP — have been racking up huge profits.
Moreover, a Treasury Department analysis says that ending these breaks would reduce domestic production by less than 1 percent. A separate study by Congress’s Joint Economic Committee says that ending the biggest of the deductions — 9 percent of qualified income from gas and oil produced in the United States — would have zero effect on consumer prices.
Apart from these benefits, two other areas cry out for reform. One is the royalty relief program, enacted by Congress in 1995 to encourage the kind of deepwater drilling that has now landed the gulf, its wildlife and its neighboring citizens in so much trouble. Royalty rates are currently 12.5 percent of the per-barrel price for onshore leases, and up to 18.75 percent offshore.
The law suspended royalties as long as oil remained below a threshold price of $28 a barrel. Prices have long since exceeded that threshold, even adjusted for inflation; and because the law was not tightly written, companies have been able to exploit its ambiguities to save themselves billions of dollars…
…The administration also needs to look carefully at the oil industry’s use of tax havens abroad. The Senate Finance Committee has already announced that it will examine whether Transocean, the operator of the Deepwater Horizon drilling rig, exploited tax laws when it moved its headquarters first to the Cayman Islands, then to Switzerland. Other oil companies also have foreign subsidiaries; the question is whether and to what extent they use them to dodge taxes. The Times article reported that Transocean alone had saved $1.8 billion in taxes since moving overseas in 1999.
Instead of enriching the oil companies, Congress should end these unjustifiable breaks and focus on encouraging alternative fuel sources that create cleaner energy and new clean-energy jobs. [emphasis added]
Inserted from <NY Times>
The editorial staff missed what I consider the most important reason to stop subsidizing the world’s most profitable industry. America desperately needs to move away from an oil based economy. The industry’s inability to safeguard the environment has led to accident after accident, most recently the devastation to the Gulf of Mexico, its wetlands, and its wildlife. Possibly even worse, we are already at the tipping point for atmospheric carbon with respect to global climate change. Just maybe we can clean up the wetlands’ pollution from the GOP gusher, but if sea level rises three feet, what’s the point? Subsidizing big oil is a disincentive for the development of green energy, because it makes green energy less competitive. Isn’t that the last thing we want to do?
24 Responses to “End Tax Breaks for Big Oil”
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TomCat,
Weird—I went to post my comment and then it shot me off the page!
I’m sorry you’ve had to endure such terrible heat, and I hope it cools down soon for you. That is exhausting.
As for tax breaks for big oil, giving those assholes any more tax breaks or subsidies is as insane as paying a burglar to break in and then allowing him to shit in every room of your house.
That is weird, Jack. Sorry about that! I have no idea why.
Thanks. I appreciate that.
I fullu agree with your most delicate comment. 😉
I’m with Jack on this – these tax breaks/incentives need to stop. These people are raping the planet and we’re paying them to do it. Aside from the obscene profits that they make.
Ditto, Lisa.
If we are going to give any segment of the energy industry subsidies it should be emerging new, non-carbon based technologies. The oil companies days are numbers. They are becoming like buggywhip companies — obsolete.
Jerry, I don’t think that oil companies are obsolete, because our econony is so thorouhly entwined with it, but it needs to become obsolete in the shortest possible time.
Obsolete is a little strong. There will always be a need for some petroleum based products, at least for a long time, just like there is still a small market for buggy whips, but it is not very large.
And may we see that day.
Tom, what you have written commentary at the end of the post is excellent thinking and I agree 100% with you. But I never did vote on the latest poll and it tol’ me I did! LOL LOL LOL
Chicken one day
feathers the next…eh?
WHo’s ur pal?
ghb
Thanks, Gwen.
It wouldn’t let you vote?!!? 😯 Oh No!! I must be infested with Repuglicans!! 😉 Clear your cookies and try again.
You are!
No reason to doubt oil is the world’s most profitable industry, but it definitely is here in the USA:
1. Gulfport Energy [$ 23.63 billion per year]
2. Exxon Mobil [$ 19.68 billion per year]
3. BP Plc [$ 18.41 billion per year]
4. Petrobras Petro’leo Brasileiro [$ 16.58 billion per year]
5. Microsoft [$ 16.26 billion per year]
6. Wal-Mart [$ 14.64 billion per year]
[Null – Holder]
8. IBM [$ 13.73 billion per year]
9. Procter & Gamble [$ 13.05 billion per year]
10. Johnson & Johnson [$ 12.77 billion per year]
(rankings based upon US companies only)
Source:
http://www.wolframalpha.com/input/sources.jsp?sources=FinancialData
Obscene, isn’t it?
I don’t understand how “fiscally conservative” Republicans (and some “moderate” Democrats) could find it acceptable to allow such tax breaks to continue – especially those free market loving right-wingers. What do they have to say about the subsidization of a profitable industry?
Because they are being bribed.
Best politicians money can buy! 🙁
Jerry beat me to it.
Tax breaks for the Oil industry, Maybe Barton should apologize for this…
Fat Chance. He wants more tax breaks for big oil.
I also agree with your comment totally.
The public seems to think Jimmy Carter was one of our worst Presidents, but he was right about oil and energy. Reagan comes in and for the next 30 years we neglect the problem. Now we have 30 years of catching up to do. Just like the auto companies, the oil companies deserve to die, for not foreseeing and meeting the needs of the country. They should have invented (innovation) a better source of fuel, and they still could of had the monopoly on that new source.
Mr. Peanut was the only completely honest President in my memory. Both sides rejected him, because he would not play money politics.
I remember seeing a history program that when cars started being produced in large numbers industries that were threaten by the growing number of cars fought back to protect their interests. So I agree with what Jerry wrote but I worry that todays oil companies have far greater power than those old and outdated industries cars and oil replaced.
When general merchendise department stores (like Sears) first opened, Congress passed a law against them due to lobbying pressure from single category stores.
And while we’re at it, we need to bring gas taxes for everyone up to 1975 levels. We have to make inefficient vehicles unattractive, or Americans will get the same amnesia they got after 1974, and 2008.
JR, as much as I would hate to see more cost imposed on the poor and middle classes, I would agree if the receipts were target to subsidizing alternate fuel (except biodiesel) vehicles and public transit.