Even with skyrocketing gasoline prices, Dems introduce bill to raise energy producers' taxes
Attempting to feign fiscal austerity, Democrats have looked to raise taxes on America’s oil and natural gas producers. With the nation fixated on deficits and debt, Senate Democrats, unwilling to seriously cut federal spending, have introduced the inaccurately named Close Big Oil Tax Loopholes Act of 2011—legislation to repeal expensing deductions and necessary tax policies employed by American oil and natural gas companies.
Are oil companies the recipients of government subsidies?
No, the federal government does not give oil and natural gas companies a cent to produce oil. Unlike other forms of energy, oil and natural gas producers receive zero grants or loan guarantees, nor does the government impose any consumption mandates.
According to its cosponsors, why is this legislation necessary?
“The American people are demanding to know why they are stuck paying $4.00 for a gallon of gasoline …And they want to know why these oil companies should continue to enjoy billions of dollars in subsidies when the working class, the needy, and the elderly are being asked to sacrifice in order to balance the budget?”
- No one seriously thinks that raising taxes on oil and natural gas producers will bring down the price of gasoline. In fact, raising taxes on oil producers, makes producing gasoline more expensive
- These Senators are purporting to protect the same people they are raising taxes on, “the working class, the needy, and the elderly:” 27 percent of oil companies are owned by pension funds, 23 percent by individual investors, 30 percent by mutual funds, and 14 percent by IRAs. Only 1.5 percent of oil stocks are held by corporate management.
Summary of the bill
Modify foreign tax credit: In order to prevent double taxation, oil and natural gas companies are allowed to credit income taxes paid abroad from their US income statement. Senate Dems have proposed to limit the amount US oil companies can deduct, crippling American companies competing abroad.
Repeal Sec 199, only for oil companies: In 2004 Congress enacted Section 199, the domestic manufacturing tax deduction. Not trying to hide their bias, Senate Democrats are attempting to repeal Sec 199—which is employed by every domestic manufacturer—only for oil and natural gas companies.
Repeal or limit expensing: Consistent with the belief that taxes should be paid only on profits, oil and natural gas companies are allowed to expense some of the costs associated with drilling a well or the lease purchase.
Supporting more than 9.2 million domestic jobs, America’s oil and natural gas producers are a pivotal part of the American economy. Repealing this industry’s expensing policies won’t put a dent in the deficit but will kill thousands of jobs and encourage Washington’s reckless spending habits.