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Unwilling to reign in Washington’s overspending problem, Democrats and their allies are stuck arguing for higher taxes. Raising the corporate income tax rate—already the highest in the world—or increasing the personal income rate are untenable, leaving Democrats no choice except to advocate for the repeal of tax credits and deductions.
In this vein, MSNBC Anchor Cenk Uygur has launched a miseducation campaign on the tax policies employed by the oil and natural gas industry.
Uygur: “It’s estimated that every year the United States Government gives approximately 4 billion dollars in tax subsidies to oil and gas companies.”
Fact: Unlike other sources of energy—wind, solar, ethanol, etc—the government does not give oil and natural gas producers any grants or loan guarantees, nor does it impose any consumption mandates. Since oil and natural gas companies receive none of the above actual subsidies, Uygur targets deductions these companies can write off on their income statement:
Subsidy?: Allowing a company to keep its own money is not a subsidy. The government taking money from Mr. Uygur and giving it to me is a subsidy, I have no claim on that money. Allowing Uygur to keep his own money, by employing a tax credit or deduction, is not a subsidy.
Uygur: “If I got $4 billion a year in subsidies, I’d be pretty good in that sport to. I wouldn’t have to work very hard at all.”
Fact: Since 2008 Congress has spent $65 billion funding renewable projects. Even after receiving enormous taxpayer subsidizes; these forms of energy are anything but ubiquitous. Again, the $4 billion Ugyur calls a subsidy is anything but—the government doesn’t spend a single dollar facilitating oil and natural gas production.
Uygur: “Meanwhile, we all know that these companies are pulling in absurd profits. Last year alone, the top five oil and gas companies earned a total of $77.4 billion in profits.”
Fact: Implicit in this statement is the sentiment that oil and natural gas companies are not “paying their fair share,” and gaming the system to achieve profits. This could not be farther from the truth: paying nearly $100 million a day in income taxes—and $300 billion in total income taxes between 2004-2008—the oil and natural gas industry tax expenses averages 48 percent, compared to 28 percent for other S&P Industrial companies. This number does not include an additional $60 billion in non-income taxes or $350 in excise taxes paid on petroleum products.
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 tax policies won’t put a dent in the deficit but will kill thousands of jobs, and encourage Washington’s reckless spending habits.