Tumblr Icon RSS Icon

Is There Any Hope For Two New Proposals That Would Cut Tax Breaks For Big Oil?

Posted on

"Is There Any Hope For Two New Proposals That Would Cut Tax Breaks For Big Oil?"

Share:

google plus icon
Senate Finance Committee Chairman Sen. Max Baucus, D-Mont. speaks to reporters on Capitol Hill in Washington.

Senate Finance Committee Chairman Sen. Max Baucus, D-Mont. speaks to reporters on Capitol Hill in Washington.

CREDIT: AP Photo/Manuel Balce Ceneta

Two proposals to end tax loopholes to the fossil fuel industry were proposed in both the House and Senate on Thursday, and one of them might actually have a chance of becoming law.

The End Polluter Welfare Act of 2013, introduced by Sen. Bernie Sanders (I-VT) and Rep. Keith Ellison (D-MN), would end taxpayer-funded research for the oil, gas, and coal industries. It would also ensure that the industry is not receiving subsidies — defined by the World Trade Organization as “any financial contribution by a government, or agent of a government, that confers a benefit on its recipient” — which otherwise would cost taxpayers more than $100 billion in the next decade, the lawmakers said.

The bill is substantially similar to identically named legislation proposed by the lawmakers in 2012, which was never heard by any of 9 committees that had jurisdiction over it. The bill promises to be able to cut more than $100 billion in taxpayer funded activities in the next 10 years, which seems like it would be an attractive option for a Congress that is currently struggling to reach a long term budget deal. However, the proposal has been historically lambasted by fiscal conservatives, and there is little to no chance that a Republican-led House would allow the bill to be brought to the floor.

What Republicans may be keener to is an overhaul of the tax code proposed by Senate Finance Committee Chairman Max Baucus (D-MT), which would end some — but not all — of the tax breaks currently given to the oil industry. Many of the tax breaks that Baucus proposes to end are given to independent oil producers, including their ability to not be taxed on the cost of drilling, and their current tax deduction on income from oil-and-gas production.

“America today is using a bloated tax code that was built for businesses close to 30 years ago,” Baucus said in a statement. “The code is completely outdated and acting as a brake on economic growth.”

One of the non-oil related proposals in Baucus’ tax bill is a rollback of the most expensive corporate break in the tax code, which allows businesses to write off property more quickly than it depreciates.

Baucus comes from a mostly red state and is historically more concerned about the economics of the oil and gas industry than climate change. He supports the Keystone XL pipeline. In 2009, he voted against legislation proposed by Sen. Barbara Boxer (D-CA) that would have mandated a 20 percent cut in carbon dioxide emissions by 2020, concerned that it would raise the price of gasoline.

Though those positions may ruffle the feathers of climate change activists, they are important in showing that pulling back tax breaks to the oil and gas industry is not just an environmental issue, but an economic one as well. And at a time when Congress is pressured to avoid another government shutdown and come to a long-term budget deal, a moderate proposal to ease the tax burden on individuals may be a feasible option.

The Independent Petroleum Association of America has already slammed Baucus’ bill, telling The Hill that it “jeopardizes America’s energy renaissance.”

“Current tax rules and laws ensure that industry pays its fair share in taxes, which is now one of the most heavily taxed industries in the country,” IPAA President Barry Russell told The Hill. “The current tax code also encourages investment resulting in massive new U.S. energy supplies and millions of jobs.”

Producers of oil, gas, and coal received more than $500 billion in government subsidies around the world in 2011, according to a recent report by the Overseas Development Institute. The governments of the richest nations collectively spend more than $70 billion every year to support fossil fuels.

« »

By clicking and submitting a comment I acknowledge the ThinkProgress Privacy Policy and agree to the ThinkProgress Terms of Use. I understand that my comments are also being governed by Facebook, Yahoo, AOL, or Hotmail’s Terms of Use and Privacy Policies as applicable, which can be found here.