{"id":2219,"date":"2010-07-12T04:33:45","date_gmt":"2010-07-12T11:33:45","guid":{"rendered":"http:\/\/www.politicsplus.org\/blog\/?p=2219"},"modified":"2010-07-12T04:33:45","modified_gmt":"2010-07-12T11:33:45","slug":"end-tax-breaks-for-big-oil","status":"publish","type":"post","link":"https:\/\/www.politicsplus.org\/blog\/2010\/07\/12\/end-tax-breaks-for-big-oil\/","title":{"rendered":"End Tax Breaks for Big Oil"},"content":{"rendered":"

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.<\/font><\/p>\n

\n

\"12oil\"<\/a> …President Obama\u2019s 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<\/strong>, and until recently Congress has been eager to do its bidding. This year could be different. <\/p>\n

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 \u2014 fast write-offs for upfront drilling expenses, generous depletion allowances, and the like \u2014 that are available at virtually every stage of the exploration and production process<\/strong>. <\/p>\n

The net result, as The Times reported recently, is an effective tax rate on investment far lower than that paid by other industries<\/strong>. That, the Treasury Department argues, has encouraged overinvestment in oil and gas drilling at the expense of other parts of the economy<\/strong>. <\/p>\n

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 \u2014 including BP \u2014 have been racking up huge profits. <\/p>\n

Moreover, a Treasury Department analysis says that ending these breaks would reduce domestic production by less than 1 percent. A separate study by Congress\u2019s Joint Economic Committee says that ending the biggest of the deductions \u2014 9 percent of qualified income from gas and oil produced in the United States \u2014 would have zero effect on consumer prices. <\/p>\n

Apart from these benefits, two other areas cry out for reform. One is the royalty relief program<\/strong>, 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. <\/p>\n

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<\/strong>…<\/p>\n

…The administration also needs to look carefully at the oil industry\u2019s use of tax havens abroad<\/strong>. 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. <\/p>\n

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<\/em>]<\/p>\n<\/blockquote>\n

Inserted from <NY Times<\/a>><\/p>\n

The editorial staff missed what I consider the most important reason to stop subsidizing the world\u2019s most profitable industry.  America desperately needs to move away from an oil based economy.  The industry\u2019s 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\u2019 pollution from the GOP gusher, but if sea level rises three feet, what\u2019s the point?  Subsidizing big oil is a disincentive for the development of green energy, because it makes green energy less competitive.  Isn\u2019t that the last thing we want to do?<\/font><\/p>\n","protected":false},"excerpt":{"rendered":"

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\u2019s 2011 budget, proposed before the spill, would eliminate $4 billion in annual tax breaks for oil and gas companies. Bills in both houses […]<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-2219","post","type-post","status-publish","format-standard","hentry","category-politics","category-5-id","post-seq-1","post-parity-odd","meta-position-corners","fix"],"_links":{"self":[{"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/posts\/2219","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/comments?post=2219"}],"version-history":[{"count":0,"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/posts\/2219\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/media?parent=2219"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/categories?post=2219"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.politicsplus.org\/blog\/wp-json\/wp\/v2\/tags?post=2219"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}