"How Much Does the Energy Industry Get in Tax Breaks? A New Wiki May Help Us Find Out"
Go ahead, admit it: You stay up late studying the tax system, pouring over every line of the tax code so you can understand the details of exempt facility bonds, accelerated cost recovery systems, and carryback credits.
If you’re a tax geek, I’ve got a job for you. Help the rest of us non-tax experts out by contributing to a new wiki designed to track the broad range of subsidies going to the energy industry.
The Institute for Policy Integrity just rolled out an “energy tax breaks wiki” that will attempt to log every tax subsidy provided to the fossil and renewable energy industries. With all the political hand-wringing over permanent tax credits for oil companies, short-term tax credits for clean energy that are set to expire, and the differences between the government support provided to both sectors, this is a very important resource for helping uncover the opaque world of energy tax law:
The truth is, estimates range widely. With the federal deficit still a hot topic, and energy tax breaks playing a recurring role in budget negotiations, it seems important to have a handle on exactly how much energy producers get from the government. To gain a more precise accounting of these de facto subsidies, we are marshaling the expertise of lawyers, economists and tax professionals and compiling the information here in the Energy Tax Breaks Wiki. We are looking for any tax code section that specifically provides tax relief to energy producing companies.
Around 44% of government spending on energy in 2010 came through preferential treatment in the tax code. However, as CAP’s Richard Caperton recently pointed out, these expenditures do not often receive the same scrutiny as direct spending:
Both companies and the government have an established system for paying and processing taxes, so providing investments through the tax code provides for efficient delivery of incentives by tapping existing infrastructure and rules. More cynically, however, tax expenditures are an expedient that may be at cross-purposes with good government practice because they are held to different budget standards than direct spending. This means that working through the tax code is less transparent and therefore far easier to pass through Congress with reduced budget scrutiny.
Therefore, you have tax subsidies on the books for the oil and gas industry that have been in place since the early 1900’s. And because tax expenditures are treated differently than direct expenditures, the government doesn’t evaluate the effectiveness of these credits like it should. (See America’s Hidden Power Bill: Examining Federal Energy Tax Expenditures.)
With a little crowd sourcing, perhaps energy tax experts can help us pull back the curtain on tax expenditures through this new wiki.