START A PETITION 25,136,189 members: the world's largest community for good
START A PETITION
x
1,292,558 people care about Politics

The Obama Budget Drains Tax Breaks For Big Oil

The Obama Budget Drains Tax Breaks For Big Oil

Written by Dan Weiss

President Barack Obama’s budget proposal for fiscal year 2014 would eliminate $39 billion of special tax breaks for Big Oil companies over the next decade as part of comprehensive business tax reform. These companies earned billions of dollars in recent years due to high oil and gasoline prices and do not need additional support from taxpayers.

These tax breaks emerged over the past 100 years to help the then-nascent industry develop, and they relieved the oil and gas industry of $466 billion in tax payments to the federal treasury between 1918 through 2009, according to DBL Investors. Now that the oil and gas industry is fully developed and mature, President Obama’s budget would end this century of largesse.

The five largest oil companies — BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — earned a combined total of $255 billion in 2011 and 2012, largely a result of higher oil prices. Meanwhile, these companies are producing less oil, have $72 billion in cash reserves, and are using one-quarter of their profits to buy back their own stock to enrich their largest shareholders (see Table 1). Reuters reported last year that Chevron, ConocoPhillips, and ExxonMobil — the three largest American oil companies — paid half or less of the standard corporate tax rate. President Obama’s budget recognizes that oil companies no longer need tax relief.

In contrast, the House of Representatives would continue to provide tax subsidies for one of the richest industries in the world. It passed an FY 2014 budget authored by Rep. Paul Ryan (R-WI) that retains these existing special tax preferences and provides yet another tax break on top of them. What’s more, the House budget cuts the corporate tax rate by nearly one-third, which would provide more than $2 billion annually in additional tax relief to the five largest oil companies.

The American Petroleum Institute, or API, serves as Big Oil’s lobbying arm and is spending tens of millions of dollars on ads and lobbying to pressure Congress to retain these special tax breaks. API equates eliminating special tax breaks with tax increases, when in actuality such legislation would simply make Big Oil pay its fair share of taxes. Economists recognize that tax breaks are simply federal government spending through the tax code, which also contributes to the budget deficit.

Donald Marron, the director of the independent nonpartisan Washington research group Tax Policy Center, explains that “a great deal of government spending is hidden in the federal tax code in the form of deductions, credits, and other preferences — preferences that seem like they let taxpayers keep their own money, but are actually spending in disguise.”

Many influential conservatives also understand that tax expenditures have the same budgetary impact as direct government expenditures. Martin Feldstein, for instance, who chaired the Council of Economic Advisers under President Ronald Reagan, notes that tax expenditures are “those features of the tax code that are a substitute for direct government spending.” And in 2010 Rep. Dave Camp (R-MI), the current chair of the House Ways and Means Committee, observed that:

… we must admit that not all of that spending has been through increased appropriations or expanded entitlements; much of it has been through the back-door proliferation of “tax expenditures” — provisions that technically reduce someone’s tax liability, but that in reality amount to spending through the tax code.

The House-passed Ryan budget would keep existing special tax breaks and give Big Oil additional tax cuts, while also slicing vital middle-class programs, including education, science, and infrastructure. Meanwhile, President Obama’s proposal to eliminate $40 billion of special tax breaks for Big Oil as part of comprehensive business tax reform would make the tax code more fair.

This post was originally published by Climate Progress.

 

Read more: , , , ,

Photo: jamesomalley/flickr

have you shared this story yet?

some of the best people we know are doing it

164 comments

+ add your own
12:31PM PST on Jan 14, 2014

did another check, found $113 million for fossil fuel r&d cuts, clean water & drinking water state revolving fund cut $359 million,area health ed. centers cut completely

4:46PM PST on Jan 12, 2014

Don't eliminate them over tens years, eliminate them now! Cut Big Oil off at the knees!

7:28AM PDT on Jun 5, 2013

thanks for sharing

2:27AM PDT on Apr 17, 2013

Thanks for the news.

8:40AM PDT on Apr 16, 2013

i see that they don't mention the 380 billion social security and 180 billion medicare COLA's cuts for the next 10 yrs in Obama's budget

9:42PM PDT on Apr 15, 2013

I hope that this subsidy cut actually comes to pass. Long overdue. So much in this country's politics and business has been the opposite of ethical for along time. Such as the revolving door policy allowing one of Monsanto's top exec's to be in a top position at the FDA.

5:38PM PDT on Apr 15, 2013

Thank you so much Virginia N. for posting this list of benefits for the lower income groups. We never hear about that.

11:35AM PDT on Apr 15, 2013

If only the Republican controlled House would vote this budget into law! But they would lose so much of their bribe money if they did anything against the big oil companies--or GE or Monsanto or any other multinational. They no longer represent the electorate, only the money interests.

6:26PM PDT on Apr 14, 2013

Thank you, but seeing is believing when it comes to this guy.

10:16AM PDT on Apr 14, 2013

Thank you Mr. President; Now if we could do that for all the corporations, that do not pay taxes and still get tax credits amounting to over $100 million dollars. We could clear up this debt in no time. The republicans will never admit that they drained our Treasury by having a war without reason, just so Chenney could make money for Halliburton. The republicans complain about the deaths of 4 people in the consul, WHAT ABOUT THE 4400 MEN AND WOMEN BUSH AND CHENNEY SENT TO THEIR DEATH because of a lie they told the american people and congress. Who is going to pay for that, ? no one, no one will ever go to jail for what that group of 4 politicians did to us and our country.

add your comment



Disclaimer: The views expressed above are solely those of the author and may not reflect those of
Care2, Inc., its employees or advertisers.

Care2 - Be Extraordinary - Start a Care2 Petition
ads keep care2 free
CONTACT THE EDITORS

Recent Comments from Causes

What is the matter with this minister Rosindell - no cruelty towards circus animals? - where's he been?…

Thanks for the great water-conserving ideas! *thumbs up*

I've already voted and I hope everybody will. If we have a high turnout, at least most of us will have…

ads keep care2 free

more from causes




Select names from your address book   |   Help
   

We hate spam. We do not sell or share the email addresses you provide.