Written by Andrew Parker
|Thursday, 11 August 2011|
Oil Tax Breaks
If we choose to keep those tax breaks for millionaires and billionaires, if we choose to keep a tax break for corporate jet owners, if we choose to keep tax breaks for oil and gas companies that are making hundreds of billions of dollars, then that means we've got to cut some kids off from getting a college scholarship, that means we've got to stop funding certain grants for medical research, that means that food safety may be compromised, that means that Medicare has to bear a greater part of the burden.1President Obama offered an argument that has become quite familiar in recent years—that oil companies already making billions of dollars in profit each year, are benefiting from tax breaks that cost the government money and could be redirected toward many other programs in need of funds. Oil companies disagree, of course, claiming that such a change would threaten America’s move toward energy independence and would unfairly single out an industry that already pays billions of dollars in taxes each year.2
The basic framework of this debate has been covered over and over by the media, but few reports have delved deeper into the issue to look at the specific tax breaks that exist, when they were created, and how much money they are worth to oil companies. That information is exactly what you will find below, and hopefully it will shed a little more light on a complex issue that receives only superficial media coverage.
Top 4 Major Tax Breaks
1. Oil Depletion Allowance
2. Intangible Drilling Costs
3. Foreign Tax Credit
4. Domestic Manufacturing Tax Deduction
Politics of Oil Tax Breaks
The tax breaks listed above are only a sampling of the full list. President Obama’s 2011 budget plan, for example, highlighted these four as well as five others and recommended that they all be removed.20 Democrats have been pushing hard for the elimination of these tax breaks in recent years, but so far they have not been successful. The issue came up last year during the oil spill in the Gulf of Mexico , and was raised again earlier this year as Congressional Democrats put together a proposal to end certain tax deductions for the five largest oil companies. The plan, which was projected to net the government about $21 billion over the next ten years, received 52 votes in the Senate but fell short of the 60 needed for passage.21 Those who are critical of the oil industry’s influence in politics were quick to point out that the Senators opposing the bill received, on average, five times as much in campaign contributions from oil companies as those who voted in favor.22
President Obama brought up the tax break issue once again during the debt ceiling negotiations, but again failed to achieve any changes to the oil company tax breaks in the final deal. He signaled that he would continue to pursue this issue, saying after the debt ceiling bill was passed that the country needed to start “reforming our tax code so that the wealthiest Americans and biggest corporations pay their fair share… [and] getting rid of taxpayer subsidies to oil and gas companies, and tax loopholes that help billionaires pay a lower tax rate than teachers and nurses.”23 As long as the economy continues to struggle and oil companies continue to report large profits, these tax breaks are sure to remain a contentious issue.
15 Id.; http://money.cnn.com/2011/04/26/news/economy/oil_tax_breaks_obama/index.htm
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|Last Updated ( Thursday, 11 August 2011 )|