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Senate: Oil and Gas Industry Tax Breaks Remain

June 16, 2010 · 9 comments

The Senate failed to say no to $35 billion worth of tax breaks for the oil and gas industry on yesterday. I know, double negatives. But that’s the easiest way to describe it. You see, Senator Bernie Sanders (I-VT) introduced a provision that would have limited write offs for drilling expenses, eliminated a tax deduction for the capital costs of oil and gas wells and repealed a tax deduction for domestic production of oil and gas. He needed 59 additional votes. He got 34.

So, the Senate said no to no tax breaks: the oil and gas companies get to keep them.

The low vote may be a warning shot for President Obama: those same breaks are included in his proposed budget for next year. While I didn’t expect the measure to pass, I thought that there might be more support – the timing was pretty good considering Obama’s “fire and brimstone” speech hammering BP. A poll showed that 75% of Americans blame BP “a great deal” for the spill (and I’m still scratching my head trying to figure out who the 2% of respondents are who thought BP wasn’t to blame at all – really, people?). Anti-oil company sentiment is probably at its peak right now so if you can’t get this measure through this year… well, I don’t see it happening next year.

Sanders, however, didn’t focus on the spill, though he did make reference to the environment, garnering support from organizations like the Sierra Club. Instead, Sanders stressed the economics of the provision, writing to his colleagues:

Over the last decade, the five largest oil companies (Exxon Mobil, Chevron, ConocoPhillips, BP and Shell) made more than $750 billion in profits. These profitable companies simply don’t deserve tax relief. With a record-breaking $13 trillion national debt and an unsustainable federal deficit, the last thing we should be doing is giving tax breaks to oil and gas companies that have been making enormous profits.

Sanders went on to note that Exxon Mobil, which he called “the most profitable corporation in the world” not only paid no US taxes last year, but also received a $156 million tax refund. Other federal tax refunds from last year included $19 million to Chevron and $157 to Valero Energy.

Nonetheless, Sanders’ arguments failed to sway Republican votes and most Democrats, despite the fact that the bill was co-sponsored by some fairly high-powered Democrats including Sen Frank Lautenberg (D-NJ). No word yet on whether there might be an alternate proposal.

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{ 7 comments… read them below or add one }

1 Jeff Day June 16, 2010 at 9:04 am

That was a typical ploy for a democrat/socialists, raise taxes on evil corporations. Ignore the FACT, that corporations don’t pay taxes they collect taxes! Which most ordinary folks do not realize. But when the democrats/socialists are allowed to raise taxes in USA, it encourages them to make the profits where more favorable. But when the democrats/socialists are allowed to raise taxes on the companies, the companies just raise the prices.

When the prices are raised to cover the increased taxes and the consumer pays the taxes, the consumer doesn’t realize it, the consumer doesn’t realize what the democrat/socialist agenda really costs.

Jeff Day EA
Evansville, IN

2 garagefather June 16, 2010 at 11:57 am

The fact that politicians are using this disaster to advance their anti business and especially their anti oil sentiment is as bad as the people who accepted lobbyist money and gave these special tax breaks to the oil companies in the first place. Whether Obama is temporarily stopping oil drilling in the gulf, or politicians are using this disaster to raise taxes on energy companies, they have to know that the end result is higher prices for the consumer. Some people may be dumb enough to believe that higher taxes on oil companies will teach the oil companies a lesson, but in the end, we will just pay more for gas.
Ending special tax breaks is a good thing if we end all of them and then readjust tax rates, w/o loopholes, and then the playing field will be balanced. Stop using the tax code as a political wedge, a tool to get votes, or a way to amass lobbying money. It is despicable in every case. The tax code shoudl be simple and be used to pay the governments bill’s. It should not be used to control behavior or punish those that don’t tow the government line.

3 galen June 19, 2010 at 10:03 pm

garagefather – “we will just pay more for gas.”

We should pay more for gas. Americans are spoiled rotten with cheap, government subsidized gas. Americans don’t pay the real cost of gas if you factor in bullshit tax breaks, the cost of foreign instability because we are propping up criminals in the Middle East, and of course the obvious environmental damage. We should probably be paying 15.00 a gallon if you make the American consumer pay the real cost.

And what has all this artificially cheap gas done to our country? Stiffed innovation and new jobs, so now we have to play catch up to China, Germany in the new industrial revolution for clean energy/manufacturing.

Higher gas prices would be the best thing that could happen to this country, if you are willing to take the long view and plan for the future. Of course now people selfishly think cheap gas is some kind of American right.

4 Jeff Day June 20, 2010 at 12:32 am

Some time ago it was written, that Warren Buffet, claimed it was just wrong that his tax rate was lower than his secretary, and that he should pay more.

That was all a bunch of “CRAP”, if he really thought he should pay more to the US Government he could just go ahead and make donations to the US Government for the difference.

Now Galen is putting out similar “CRXX”, “bullshit tax breaks”. How is it you can be a professional tax preparer and not realize that not only do large oil companies not pay taxes, but no other large company does either? They just collect taxes by increasing the prices accordingly?

Since he thinks higher gasoline prices would be “the best thing to this country”, he doesn’t mind the increased prices that we would pay at the grocery stores as a direct result of their increased costs. And he thinks this would be good for the middle income folks?

We have to play “catch up” to China as a direct result of Obama Administration borrowing our grandchildren’s future to subsidize his foolish socialist programs.

I guess he also thinks that the method in making the socialist program called earned income credit is also a system that works well?

Jeff Day EA
Evansville, IN

5 Kelly June 20, 2010 at 8:32 am

Jeff, you’re kidding, right, with blaming Obama for the federal debt? The debt level remained more or less at $4 trillion for the entirety of the 1990s. When Bush took office, it was about $5.5 trillion. When Obama took office, it was nearly $11 trillion and most of the fiscal year spending for 2009 had already been committed by Congress. Notwithstanding that I don’t believe that we’re headed in the right direction (the debt should be going down, not up), it’s clearly not the case that Obama put us in the hole we’re in.

6 Galen June 20, 2010 at 10:49 am

Thank you Kelly. People like Jeff have a very, very selective memory. We just had a near decade of massive tax breaks for the richest people, businesses in this country and where did that get us? Massive debt.

According to people like Jeff we should be reaping huge economic rewards of all theses massive tax breaks and deregulation…it’s obviously not the case.

And I don’t even have to go into the debt created by Bush’s wars. Trillions.

And I love how Jeff throws out this scary bogey man of “Obama’s socialist programs ” as the reason we are behind China in clean energy technology. What kind of twisted logic is that? The only program that Obama has passed that could even closely be tagged as “socialist” is the health care stuff – but even that was actually a huge benefit to the PRIVATE health care industry. And what does that have to do with subsidizing cheap gas and as a result stifling innovation, entrepreneurship in America anyway?

Kelly, you are right – the debt should be going down. But it’s going to take more than 18 months to clean up the mess of the last 8 years.

7 Evan Brockwell July 2, 2010 at 10:02 pm

I agree about paying more for gas. If we paid more there would be more innovation. Repealing tax breaks for oil should be used to create green energy jobs and retrofitting homes that still use oil for heating.

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