How big are the tax subsidies for oil companies? Why do we give subsidies to oil companies? Do big oil companies need these subsidies? Why should we eliminate tax subsidies for oil companies? What are the prospects for ending oil tax subsidies?
Seth Hanlon, Director of Fiscal Reform for CAP’s Doing What Works project, has the answers in this “Ask the Expert” video:
See also:
- Ending Big Oil’s Tax Holiday by Daniel J. Weiss and Kate Gordon
- Americans to Big Oil: We’ve Got Your Number by Daniel J. Weiss and Valeri Vasquez
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http://www.consumerenergyreport.com/2011/05/02/getting-even-with-exxonmobil/
It is not about punishing oil companies for making profit. It is about a massive federal budget deficit.
Yes, all sorts of industry subsidies should be eliminated. No where in the US Constitution does it say that the US government is responsible for ensuring industry profits by taking money away from working Americans and giving it away to industries.
We should also have a tariff on imported crude oil and refined products. That would eliminate the incentive to move production or refining offshore. Yes, that goes against free trade, but what part of the OPEC cartel could possibly be considered free trade?
Cartel study revealed gasoline price gouging http://translate.google.com/translate?u=http%3A%2F%2Fwww.spiegel.de%2Fwirtschaft%2Funternehmen%2F0%2C1518%2C764128%2C00.html&sl=de&tl=en&hl=&ie=UTF-8
The tax breaks that should be repealed are not the ones that every industry receives. The manufacturing deduction shouldn’t apply to oil because oil is in the business of extraction not manufacturing. And the price of oil is set by the global market, Exxon can’t charge higher prices just because they’re making less profit. Apple and Google aren’t getting special tax loopholes.
“It is not about punishing oil companies for making profit. It is about a massive federal budget deficit.”
Yet the oil industry is one of the largest tax paying industries in the U.S. When they profit, the government profits. It is an industry that has been successful and hasn’t required the kinds of bailouts required by the auto or banking industries.
“The manufacturing deduction shouldn’t apply to oil because oil is in the business of extraction not manufacturing.”
I take it then that you don’t know what goes on inside an oil refinery.
“And the price of oil is set by the global market, Exxon can’t charge higher prices just because they’re making less profit.”
Not sure what point you are trying to make. Of course the price is set on the global market. When the market is bid up, Exxon does well. When the price is low, they do less well (but we still don’t have to bail them out, and they still pay big taxes).
“Apple and Google aren’t getting special tax loopholes.”
They get the same Section 199 deduction that CNN deemed ‘the biggest oil subsidy.’ So you are wrong about that.
For me, ending the oil tax breaks are not only about the deficit, but about the fact that the product has a negative externality. I always have the fact that it is a fossil carbon product in my mind when thinking about this. But it’s also true that anything other than a flat or regularly progressive tax represents government interference in a market.